Last year’s budget fight threatened many Alabama State Parks with closure. In addition to budget cuts, $15 million in park revenues have been transferred to the General Fund since 2012. Senator Clay Scofield has proposed amending the state constitution to prevent future diversions of park revenues. While the Senator’s proposal is reasonable, I think that creative privatization offers a better option to protect our parks. And a case from American history illustrates the potential for creative private support.
America in the 1790s needed a massive infrastructure investment, to fund roads able to handle wagon traffic. Improved roads were needed to connect towns in the countryside with commercial centers. Private turnpike companies built hundreds of roads across the northeastern U.S.
The turnpike companies operated under rights granted by the states, were allowed to collect tolls, and typically sold stock to raise capital for road building. States limited the tolls and mandated toll exemptions, and travelers could detour around toll booths fairly easily. Consequently, the turnpikes generally lost money for the investors.
We might interpret this as evidence for government built roads. But George Mason University economist Dan Klein argues that turnpike companies were a means for local interests to provide for the common good. Purchasing turnpike stock essentially amounted to donating to a good cause. Contributing through stock purchases allowed community leaders to bring social pressure to bear on those who did not contribute. Turnpike companies lost money, but their communities prospered.
Today local communities typically look to the state or federal transportation departments to repair or improve roads. But state or federal funding depends on the whims of the political process, meaning that our roads might not get repaired. And ultimately state or federal money we hope to attract is really the taxes we have paid. Making decisions locally using local money is more reliable.
The case of turnpikes reminds us that American ingenuity can creatively harness our willingness to contribute to the common good. Alabamians today recognize the value of state parks: we pay fees when we visit, and want to spend more on preservation and improvements. We pay $9 billion in state taxes each year, and yet our officials can’t find money in the budget for parks.
We might be tempted to blame the parks’ plight on the deficiencies of our state officials. But our elected officials implement the policies which win elections, and often lose when they fail to do so. Spending money on state parks does not seem to be a winning electoral formula.
The solution I think is to take state politics out of the process. The Property and Environment Research Center at Montana State University has extensively examined the privatization of state and national parks. We can privatize parks without worrying that developers will have, to quote Joni Mitchell, “paved paradise, put up a parking lot.” Covenants in the deeds could prohibit conversion away from preservation and recreation. Or development rights could be placed in trust, with only the rights to operate, maintain, and improve the park privatized.
The owner or operator could be a nonprofit organization, including perhaps an existing environmental organization, or a for-profit company. A new form of organization introduced in 2010 known as a Benefit Corporation might be particularly appropriate. Benefit corporations resemble traditional corporations, except that the company commits to a specific public purpose or benefit in addition to profit. Explicit commitment allows company directors to act to advance the specified purpose when conflicts arise with near term profit maximization. Privatization via a benefit corporation might assure Alabamians that parks will never be compromised for a few extra dollars.
Alabamians, I think, are willing to pay for our state parks, and creative forms of privatization offer the best way to ensure funding. We naturally trust democracy, or government by the people, to do our bidding. But democracy in practice means the policies that win elections. Alabama’s parks are a legacy for future generations and too important to leave to the mercy of elections.
• • •
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.