Category Archives: 2011 InSites Archives

State Parks & the Private Sector: Growing the Camping Pie

With ARVC undertaking an aggressive effort to enroll state park campgrounds as members of ARVC, the long debated issue of the nature of the relationship between public and private campgrounds is once again heating up.

In my view, there is one compelling reason for the two groups to work together – to bring more firepower to the campaign to get more Americans to go camping. Whatever the number of campers there are today, and I’ve seen estimates ranging from 16 to 46 million, the future growth and success of the park industry lies in an ever expanding base of Americans who enjoy the great outdoors and camping.

The commercial industry is small – maybe 10,000 businesses and revenues estimated at around $6 billion. Engaging the public sector to join forces to promote camping brings additional resources to the effort to enlarge the pool. Since the commercial sector owns and operates the lion’s share of the camp sites and the likelihood of much growth in the state or federal campground side is quite low, the commercial sector is most likely to be the major beneficiary of growth in the number of campers.

For sure government parks will always have some distinct advantages in the competitive market place (and we all know too well what those advantages are) but over the years, the private sector has adjusted to the competition. As long as public park camping fees continue to rise – which they must because most government budgets no longer provide for significant subsidies to operate campgrounds – the playing field is more closely level than it’s been in some years.

A key part of growing the market of campers lies in both the public and private campground’s ability to meet the expectations and needs of the campers they serve. In this regard, both parties have a duty to provide quality camping. Poor camping experiences are not in our best interest. So, bringing both the public and private sectors into the industry tent so that both can improve and more effectively serve the consumer, is an important benefit. Both public and private sector interests have an obligation to provide positive experiences that are necessary to expanding the camping market.

As long as the commercial industry doesn’t expect more than the public sector can deliver i.e. a quality camping environment and experience together with promoting camping to the public, the relationship should be beneficial to all.

Now it’s up to the park industry to provide a level playing field within its associations for public parks. In Virginia, state parks are welcome to join the state association and ARVC on exactly the same terms as commercial parks. No discounts. All the benefits of membership. No discrimination between public and private. In our view, a campground is a campground and a camper is a camper.

Can the Scenic Byways Program Be Saved?

There’s a significant possibility that the very successful Scenic Byways and All American Roads programs could be victims of the deficit reduction/budget cutting efforts now underway in Washington. As the reauthorization of the Federal Highway Program is about to hit high gear in September, the Secretary of Transportation has already notified the Scenic Byways Resource Center that its funding is being eliminated on September 30th, and indications are that many parts of this important program are also likely to be cut from future highway funding legislation.

The program was created in the early 1990s and is designed to enhance the roads that take Americans into the scenic, historic, cultural and recreational heartland areas that are off the interstate highways. The program was seen as both an economic and recreational program to bolster the economies of smaller communities and to enable travelers to enjoy these special roads and byways. Strongly supported during its formative years and until today by the RV and camping industries together with the AAA, the American Recreation Coalition, the motorcycle industry, the National Trust for Historic Preservation, the Good Sam Club, the National Association of State Park Directors and other groups and organizations interested in preserving and protecting these off-highway areas, the program is now in danger.

The Scenic Byways program has three segments:

  • Federal designation of byways and All American Roads
  • Technical assistance to the communities and sponsors of the byways that is provided by the Byways Center in Duluth
  • Grant program to provide merit-based funding for development of replicable byways development and promotional programs that have national potential

At a meeting on August 5th of interested national groups in Washington, it was reported that there will likely be an extension of the Federal Highway Program by the end of September. In the House of Representatives, Cong. John Mica, chairman of the House committee with highway oversight, is pushing a six year, $250 billion program; in the Senate, Senator Barbara Boxer, chairman of the Senate committee, is proposing a two year program at about $209 billion. Cong. Mica’s proposal would fund the entire program through the Highway Trust Fund. In either case, the byways’ technical assistance and grant programs are likely to be cut.

Byways experts at the meeting noted that there is less support for the Byways program at the top levels of Federal Highway Administration (FWHA) to the byways constituencies than in past years and there appears to be a loss of a national constituency for the program at that agency.

In June, letters signed by many association that support the extension of the Scenic Byways went to House and Senate leadership urging the program be continued. A coalition of tourism-related interests that is working on assuring federal highway legislation that takes into account the needs of the tourism and recreation industries is including continuation of the Scenic Byways program as part of its lobbying efforts. And an outcome of the August 5th meeting is a renewed lobbying effort that will include face to face meetings with tourism and highway legislative leaders in late August and into September.

With the economic picture in the US up in the air, and with consumer confidence lurking somewhere around the lowest points in many years, terminating a program that has been as beneficial to the park industry as Scenic Byways would not be an encouraging sign for recreational travelers.

The park industry, with leadership from the National Association of RV Parks & Campgrounds, the RV Industry Association, the RV Dealers Association and RVer consumer groups, should get behind the effort to keep the Scenic Byways program not only alive, but healthy and growing.

Some Mid-Summer Thoughts

As the summer goes on, the House Committee on Infrastructure & Transportation and the Senate Committee on Environment and Public Works are hard at work trying to develop a plan for a new Federal Highway Program to succeed the current program (TEA-LU) that expired some time ago. The new legislation is obviously tied closely to efforts in both Houses and in both parties to reduce the federal deficit.

Why the park industry should be concerned: All visitors to RV parks and campground travel over the nation’s road system. The condition of the roads and highways, the bridges and tunnels, and the ancillary services and components (rest areas, highway signage, services for passenger and tourist buses, and the connections between varying modes of travel) are all important to RVers and campers. The ability for RVers to travel safely and in a timely manner from home to their destinations play a large role in how often and how far RVers will go to enjoy the parks and places they wish to visit.

The federal highway program also provides funding for development and promotion of scenic byways, recreational trails, welcome centers, and other important tourist and traveler needs.

Where to reduce the federal highway program in order to contribute to the lowering of federal spending in the coming years is the problem facing the House and Senate. Early indications seem to indicate that many of the programs that are specific to tourism and travel may be trouble.

The National Park industry needs to stay on top of this issue. Failure to maintain important travel and tourist related programs at some reasonable level will have a long term impact on park businesses. That impact may not be dramatic, but it will be more like a slow leak that isn’t a big deal for one year, maybe for two years but as the leak goes on for more years, the impact will become obvious.

Another Discount Club Comes Calling

It took a while but it’s here now: the latest discount club, brought to us by the Family Motorcoach Association.

Just this morning news of new FMCA Campground Connection program arrived in the mail. FMCA is now creating the Campground Connection, a way for park owners to generate income by selling $40 a year FMCA memberships and keeping the first year’s dues from each membership they sell. And in return for the privilege of helping build FMCA’s membership, the parks need only provide a 10% discount to FMCA members! What a deal. Why didn’t I think of that?

Up to now, parks could become Commercial Members of FMCA and were promoted to the FMCA membership in return for their membership. No discounts necessary.

It looks like now FMCA is locked in a new battle for the minds and hearts of the RVer with Good Sam Enterprises, Camp Clubs of America (incidentally owned by Good Sam Enterprises), Escapees, Freedom Resorts, the Happy Camper Club, Passport America and probably several other discount groups. And KOA’s Value Card holders and Leisure Systems’ Club Yogi offer similar discounts to its loyal customers.

Last month, Go Camping America, ARVC’s national on-line directory of members, jumped into the discount game by offering a limited time 20% off camping deal at participating parks on Go Camping America. It would surprising only if ARVC wasn’t now considering if and how it might launch its own Go Camping America Camping Club with a discount at parks listed on Go Camping America – ARVC members.

Off the top of my head, I can’t think of any hotel chain that’s offering me a regular discount when I join their frequent visitor club. Or is there an airline that offers discount to frequent flyers?

We all know that almost every park that honors any discount program, will honor any other card that is presented and carries the same level of discount. So if a guest arrives with an FMCA card at a park that is part of the Good Sam park program and not FMCA, will the park deny the FMCA card discount? Doubt it. And if they try to sell the guest a card in their program and the guest declines to buy it, will the park not grant the discount anyway?

Seems like a big discount trap being set out there. The only way to avoid it may be to not accept any discount cards and concentrate on providing great camping experiences that compensate for the lack of a 10% discount. Everyone will always tell you that they’d prefer to pay a bit more for a great experience then a bit less for a just ok vacation. And 10% is certainly just a bit more (especially after you put all kinds of restrictions on the 10% saving).

Stay Alert…

During the week of July 18th, the Wall Street Journal ran a front page story pointing out that hacking computer systems and data theft were rapidly moving down the food chain to small business. With the papers daily reporting on major computer system break-ins and the theft of data from large banks and consumer companies, this article talked about a small retail outlet that experienced theft of its data stored in its cash register system � theft of credit card information, customer information, and sales records.

The moral of the story? As the big companies become more and more sophisticated in protecting their data and systems, the hackers and thieves are simply moving to the new low hanging fruit � small companies and businesses that lack the resources and knowledge to properly protect themselves from hacking and theft. Best to pay attention and take the necessary precautions to assure the security of all of your business and guest data.

The Park Industry Needs to Be On Its Toes, Keep Its Guard Up, Be on Level Orange Alert

It’s a wickedly crazy world out there today. We all know about the real big stuff business owners everywhere are contending with today…the erratic gas prices, the almost weekly ups and downs of consumer confidence and consumer spending, the seemingly impossible to deal with unemployment levels, an international monetary crises that threatens the economic markets around the world, the unrest in the Middle East countries (Yemen, Syria, Libya, Egypt), and the natural disasters that seem to be occurring more frequently and with greater devastation and consequences. These dark clouds hang over the general American economy and business community and are substantially dampening consumer and business enthusiasm across the board.

These are daunting issues big enough to make grown men and women business people wonder why they are trying to win in business. While the park industry needs to watch and respond to changes in these global issues and area, the industry also needs to stay at the top of its game, on it’s toes, with it’s guard up and attention levels at Orange. Being caught flat-footed is not a good idea. Nimbleness and attention to all circumstances will be rewarded; heads in the sand will be punished.

Here are a few things to think about.

The US Department of Interior has announced to great fanfare the National Park Service will build and operate a new campground in Brooklyn, NY – with possibly as many as 600 sites. If the NPS can pull this off successfully, where to next? Is the park industry about to be staring at the face of a new and expanded era of public land campgrounds being build in National Parks and tilting the competitive balance between public and private sectors that has grown into perhaps what is best characterized as a peaceful co-existance over many years?

The Florida Dept of Environmental Protection and the state parks in FL are fast tracking the proposed private development of as many as 56 new state park campgrounds. I may be missing something here, but in a state like Florida with literally hundreds of RV parks and campgrounds from one end of the state to another, unemployment rampant and the tax base eroding, why would they want to add maybe 5000, 6,000, 7,000 or more campsites into a industry that is already facing a shorter season and falling occupancies as a result of the economic situation of many winter Florida visitors who are reducing their lengths of stay to compensate for higher prices and the poor economic picture? And, on top of this, the last time I looked, development of new anything in Florida was pretty close to a standstill. I’d love to see the feasibility study done by the FL state parks that indicated that there were private individuals out there ready to invest in building a new campground under the thumb of the state government. Either the development levels will be so low as to maybe make financing construction doable, but cutting too many corners will lead to an inferior product that won’t sell at market prices or anywhere near market.

Just announced this week, the Obama Administration has created the Federal Interagency Recreation Council to develop and provide increased access for Americans to public lands and parks. A laudable goal no doubt and likely to be perhaps a valuable new program for the RV park and campground industry. I find it worrisome though that the federal government – yes, the federal government – in a time of budget deficits and many national priorities is now going to be advocating and promoting recreation on public lands. While I understand the connection between recreation and public health, this is a stretch in terms of governmental activity. Who will be the beneficiaries of the work of this Council? You can be sure it will be the snowmobilers who will secure more and more trails on public land. It will be the rock climbers, mountain bikers and hikers who will have improved access and trails on which to pursue their hobbies. It will be the horseback riders, the motorcyclists, the cross country skiers, etc. And the RV manufacturers who will see an increased number of campgrounds on public lands (a longtime objective of the RV industry), fully capable to handle RVs of almost any size and with utility hookups at each paved site, while the existing campgrounds in gateway communities will experience declining occupancy in face of this very difficult competition.

Recently, the Virginia Campground association in move to finally recognize the reality that the VA State Parks were actually operating their parks on a commercial business model, extended an invitation to the state parks for a full voting membership in the association. All 24 state park campgrounds were invited to become voting members of the VA campground association and ARVC. Their response…citing a lack of funds and budget they agreed to enroll maybe 3 parks as members. Sounds curiously like what we sometimes hear when talking to owners of private parks – oh, I’d like to join but I just don’t have the money.

And the new America’s State Parks Alliance that is promoting state parks as attractions and overnight venues as people travel across America. Competition from state parks across the US is not coming, it’s here now.

And here’s another indication of where things may be heading. The Kentucky Tourism Arts and Heritage Cabinet announced that the state agency plans to apply for a liquor license to sell alcoholic beverages at five Kentucky state parks.

And Lazy Days, the largest RV dealership in the nation either still operating under bankruptcy protection or perhaps just recently out of bankruptcy announces it is laying off 50 employees – not what Florida needs at this time. And John Bleakley Motor Homes, operator of 3 RV stores in Georgia and formerly the largest Blue Bird dealer and one of Monaco’s top 10 dealerships, announced its closing its doors. And not long ago, Dave Altman, a major RV dealer in California closed up his stores.

Trust me, the purpose of this article is not to assume the title of Downer Dave, but to simply point out that as I said up front, staying nimble, staying informed, and staying alert and on your toes every day is very important in today’s world. And most of all keep in mind that in the worst of times, the best opportunities may be found.

Highway Funding, a Never-Ending Battle on Capitol Hill, is Critical to RV and Camping Travel

As the U.S. Congress and the administration grapple with reducing federal spending to get the federal deficit under control, federal highway and transportation programs are among the federal programs under close scrutiny by Congress.

If there’s one thing the RV park and campground industry could use from the federal government, it’s a federal highway program that assures that highways, bridges and tunnels are in good condition, that traffic congestion is reduced, and that travelers can have a safe, relaxing and easy trip along the nation’s highways.

As the U.S. Congress and the administration grapple with reducing federal spending to get the federal deficit under control, federal highway and transportation programs are among the federal programs under close scrutiny by Congress.

Funding for highways, transportation and the infrastructure necessary to support both is typically handled in a six-year cycle. Federal funding is used both on U.S. as well as state highway and transportation projects. In recent years, the six-year programs have been funded at about $360 billion over the six-year period. The programs were scheduled to be renewed in 2010 but the battle over the amount of funding and the scope of the programs is still under debate.

Earmarks, that dirty word that describes how members of Congress add self-serving funding for pet projects in their home districts, is under attack and while both Democrats and Republicans are talking a good public game on stopping earmarks altogether, most observers in Washington are skeptical that any substantial changes in the earmarking process will actually occur.

Members will somehow figure out how to ‘bring home the bacon” for local projects that their constituents really want – whether it’s a new parking lot at a hospital, a new bridge over the river, or a walking trail to the nearest train station.

A group of national associations with strong interests in tourism, travel and highways has been meeting in Washington for some months now, trying to develop a strategy to assure that the needs of these industries are not forgotten in the development of the next highway bill. Under the name Tourism Highway Group, this national group has been monitoring and lobbying with Rep. John Mica, R-Fla., who chairs the House Transportation Committee, and Sen. Max Baucus, D-Mont., who chairs the Senate committee.

Both chairmen have indicated that they plan to move legislation in both houses of Congress by the end of May. The Tourism Highway Group is greatly concerned that those tourism and recreation-related programs typically funded through the Highway Program are in grave danger of being victims of the budget axe. Among these programs that could be severely cut or even eliminated are the Scenic Byways Program that is very popular with RVers in addition to welcome center funding support, highway information systems funding, congestion-relieving measures, the recreation trails program and other similar programs that are important to tourists, vacationers, and recreation enthusiasts.

Try to imagine RV travel, even for short distances, on pot-hole marked roadways, on inadequate roads packed with commuters and others trying to leave the city on a Friday afternoon or holiday weekend, on roads through public lands that are two lanes wide and in bad repair. Visualize, if you can, welcome centers that are closed or reduced to just restrooms and a place to walk the dog. Then, hypothetically, in your mind, eliminate alternative roads of any quality so that RVers are left with only interstate highways with their heavy truck traffic at all hours of the day and night.

Doesn’t paint a pretty picture for enjoyable RV travel, does it?

With the varying political winds and the apparent desire of American’s to reduce the size of government and federal spending, the programs that are of great value and importance to RVers and recreationists are at great risk at this time.

The RV and park industry needs quality roads, bridges and tunnels, free flowing traffic, warm welcoming rest areas and information centers, reliable information signage, safe bridges and tunnels, and easy access to the scenic, cultural, historic and recreational places that make America great.

Park owners are urged to contact their federal legislators and let them know how important a well-funded highway program is for America and for your business. It’s almost a guarantee that if the park industry and its allies in related fields sit on their hands on this issue, the highway bill will be reduced to a bare minimum and those programs that are important to RV enthusiasts may well disappear.

If the park industry doesn’t show up on this issue, there’s likely to be great regret that it did not go to bat for its interests down the road, so to speak.

David Gorin, former ARVC CEO, is president of David Gorin & Associates, providing management consulting services to the outdoor hospitality industry. He’s also a partner in King & Gorin, specializing in Washington representation for associations and businesses in travel, tourism, transportation, recreation and public lands.

Moving on…

For the first time in almost 24 years, as of the end of April I’ll not have any official role with the National Association of RV Parks & Campgrounds (ARVC). In late March, ARVC announced that it has engaged a “powerhouse” law firm to handle the association’s government relations activities on the national level. The firm replaces yours truly and my longtime associate Aubrey King as ARVC’s Washington public affairs team. Aubrey and I have represented ARVC since 1996 during my tenure as President of AR VC and then since 2002 when I left ARVC and continued to represent the association together with Aubrey. We will both miss the relationship with the ARVC staff and leadership and wish Jeff Sims, ARVC’s new Director of Membership & Government Relations continued success.

Aubrey and I did submit a proposal to ARVC in response to their RFP and hoped to continue to work with ARVC but it was not possible to compete with two strong decision-making factors. First, ARVC leadership and President Paul Bambei are committed to changing the association to hopefully better serve the needs of the members. Coming on the heels of several recent years of turmoil in the association that has led to some loss of enthusiasm, support and interest in ARVC , change, if for the better, is probably necessary to get ARVC back on track as an important player in the park industry.

The second competitive factor in ARVC’s decision was that Aubrey and I simply can not compete with a law firm with 1000 lawyers and 16 offices. As a small 2 person shop, King & Gorin relied on our expertise in several narrowly focused areas – park zoning, permitting and local operational concerns, small business, unfair competition, public lands, travel and tourism, recreation and highway and transportation issues. We believed that these areas encompassed the areas of greatest interest and importance to ARVC members. Clearly, we cannot cover these issues with the depth and comprehensive knowledge that 1000 lawyers can. If you’re going to lose on a competitive bidding situation, losing to the firm of McDermott, Will & Emory is understandable.

Aubrey and I wish ARVC and Jeff Sims as well as the new firm great success in continuing to represent the interests of park owners on the national scene. We both expect to continue to serve our other clients on these issues that are important to travel, tourism and outdoor recreation and we look forward to perhaps working with some of the lawyers at McDermott who will now be representing ARVC.

Lessons Learned…

Over the years in Washington, I’ve learned lots of valuable lessons about how to best address the issues of importance to any industry group. Four important keys to success stand out in my mind and I share them here as they apply to the national, state and local levels of dealing with government.

First, as the saying goes, all politics is local. That means political power, relationships and actions all start at the very local level. Politicians respond first to the needs and interests of their direct constituents – those who cast votes in the politicians’ home district. Regardless of who lobbies a legislator or what the issue is, if the politician does not see a direct connection and interest to their primary consitutents, it is hard to get them to take the issue on as a major and serious interest.

Second, to be successful in promoting legislation on any level, every industry group needs allies to build a critical mass of support. Very, very few industry segments are significantly powerful enough to have legislative initiatives enacted unless they have a broad base of support from allied industries or groups that share their views. Coalitions of interested industries or groups are just about essential to achieving objectives in the political arena. In the campground and RV park industry, to be politically successful requires allies such as RV manufacturers and dealers, RVers and camping consumers, travel and recreation groups, and product and services suppliers and vendors. Trying to achieve political objectives without a core group of allied interests is always a real challenge and is most likely to end short of success.

Third, providing politicians with reliable and accurate information about the issues and objectives is critical. Every issue must stand on its merits and identifying and understanding the merits of an issue can only be done with information properly documented and presented to clarify and support the issue. The primary job of a good lobbyist is to provide information to support their positions.

Fourth, like it or not, money talks in the political arena. Money does not buy or guarantee votes or results but it takes money to get attention and be taken seriously. It costs money to do research and gather and present credible information. It costs money to get the attention of politicians at all levels by participating in their campaigns, attending events and supporting them financially. It costs money to reach out to the media to explain issues and garner coverage of an issue. And it costs money to devote the time and energy to pursue important legislative and political goals.

These four principals apply at every level of government. Achieving political and legislative goals requires grassroots local involvement, creating coalitions of allies who support the goals, gathering and presenting information to make the case for support and funding the efforts are all key to success.

Going forward��

As many of you may know, the publisher of Woodalls Campground Management (WCM) for the last dozen or so years has been Sherman Goldenberg, the Vice President of Publications for Affinity Group, the owner of Woodalls. As Affinity is going through many changes itself, Sherman is no longer with Affinity and therefore will no longer be associated with WCM. Steve Bibler is continuing as the editor of WCM but the power behind the publication is now based in Minneapolis, MN and comes from a publishing background outside the RV and park business. Changes in WCM are probably inevitable with the changes going on throughout Affinity – now known as either Good Sam Family or Good Sam Enterprises.

In conversations with Steve, I’ve been invited to continue to contribute a column to WCM and I look forward to doing that in the months and years ahead. I plan to continue to report on important government activities on the federal level and I also plan to report on trends and developments I encounter in my role as an industry consultant.

I am continually astounded by the number of people I meet who tell me they read my columns regularly and who are interested in my views and the information provided. I thank all of you who have read this column over the years and I hope you will continue to do so.

See you next month…

STOP THE PRESS…

FORM 1099 REPEALED BY SENATE. BILL NOW GOES TO THE PRESIDENT
On Tuesday, April 5, the US Senate passed H.R. the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act, by a 87 to 12 margin, without changing anything in the House-passed bill. So it is now up to the President to decide whether to sign the bill or veto it. Sixty votes were needed for approval.

As of this writing, the Administration has not officially indicated what the President will do, the President has repeatedly said the expansion should be repealed. The open question is whether the President can accept the revenue offset that is part of the bill. The offset alters the formula for recapturing excessive health care insurance premium assistance that is advanced based on estimates to individuals and families with incomes up to 400 percent above the family poverty level, if the later official calculations determine the amount should have been lower. It will be very difficult for the President to veto this repeal bill. On Tuesday, April 5, the White House issued a statement that leaves most observers scratching their head over what the President will do. The White Statement:
“As the President said during the State of the Union, we are open to working with Republicans and Democrats to improve the health reform law and we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses. Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do. As we move forward, we look forward to improving the tax credit policy in this legislation to ensure we protect small businesses and middle-class families. And the Administration remains eager to work with anyone with ideas about how we can make health care better or more affordable for all Americans.”

If you’re a betting man, bet that the President will sign the bill into law. He can’t afford not to at this time.

What’s up with Congress?

For way too many years, small business association types have repeatedly voiced to members of Congress our members’ unhappiness over the constant uncertainty about the tax code. Tinkering with federal taxes of all kinds seems to be something that Congressmen of all stripes enjoy doing, much to the dismay of business people but much to the joy of tax accountants and lawyers.

Some Examples:

  • Direct expensing provisions: Over the last 10 years, the ability of business to write off capital expenses in a single year has ranged from $25,000 to $125,000. And now, Congress is toying around with allowing a 100% write-off for capital expenses in 2011 and 2012.
  • Tax rates: Until the Bush tax cuts in 2003, the top tax rate was 39.5%. For the last few years it was 35%. And now, maybe it will be 35% for some and higher for others. Who knows? Only time will tell.
  • Capital Gains & Taxes on Dividends: 20% until 2003, 15% since then and maybe 15 or 20% this year or next.And the most egregious vacillation and the most costly to small business, our old friend the estate tax. Formerly the tax was set at 55% with a $1 million exclusion. Then in 2003, the rate began to drop and the exclusion started rising until this year when it disappeared all together. And it’s scheduled to reappear on Jan. 1, 2011 at the old 55% rate and $1 million exclusion. This after years of trying to convince Congress to change this onerous tax to something everyone could live with – permanently. So what do we have, an administration and Republican agreement to move to a 35% rate and a $3.5 million exclusion – but only for two years. Leaving everyone hanging in mid-air during the two years. Except for the estate planning lawyers who will make who knows how many millions adjusting our estate plans to meet the new situation.Here’s our plea: Please let small businesses off the estate tax planning treadmill and pass permanent estate tax relief. It is time folks understood that it is as much about the stupid and wasteful estate planning things small business owners do to avoid having their heirs close or sell the business in order to pay the estate tax as it is about how many pay the tax.

    Small businesses crave certainty. Earlier in this Congress Senators Kyl and Lincoln had been promoting a proposal that would phase in a permanent $5 million dollar exemption and a lower top rate. If you have to phase it in, that is fine with us, but the goal is certainty and permanence. Nothing happened.

    It is time to give small businesses estate tax peace of mind. Let them off the expensive rollercoaster of temporary estate tax policy.

    I’m afraid that we’re not likely to have this seasonal prayer answered anytime soon. The Democrats see no reason to do anything because it is losing revenue for the feds, and the Republicans, as powerful as they might be now in the House, will never be able to get the D’s in the Senate to give in on this.

    About This White House – Republican Tax Compromise

    In case you may have missed it (maybe as the latest Geico commercial says, “you live under a rock”), here’s a recap Cialis Online of the White House/Congress passed compromise on the extension of various tax breaks that passed in late December.

    First and foremost on the topic of major concern to all business, the compromise legislation does not include a repeal of the Form 1099 requirement at this time. According to a senior Treasury official, “the White House was not the problem.”

    The Senate passed a repeal bill in late January but the future of that repeal in the House of Representatives is far from certain.

    The following are the provisions of most interest to small business:

    • Temporarily extends the 35% bracket: This proposal extends the 35% individual income tax bracket for two years, through 2012.
    • Temporarily extends the capital gains and dividend rates: Under current law, the capital gains and dividend rates for taxpayers below the 25% bracket is equal to 0%. For those in the 25% bracket and above, the capital gains and dividend rates are currently 15%. The current capital gains and dividends rates for all taxpayers are extended for an additional two years, through 2012.
    • Two-year Alternative Minimum Tax (AMT) patch: The proposal increases the exemption amounts for 2010 to $47,450 (individuals) and $72,450 (married filing jointly) and for 2011 to $48,450 (individuals) and $74,450 (married filing jointly).
    • Deduction of state and local general sales taxes: The bill extends through 2011 the election to take an itemized deduction for state and local general sales taxes in lieu of the standard deduction permitted for state and local income taxes.
    • Temporary estate, gift and generation skipping transfer tax relief: There is a two-year extension, and it comes with a couple of positive twists. But it is not permanent! The proposal sets the exemption at $5 million per person and $10 million per couple and fixes a top tax rate of 35% for the estate, gift, and generation-skipping transfer taxes for two years, through 2012. The exemption amount is indexed beginning in 2012.
    • Extension of bonus depreciation: The bill extended and temporarily increased this bonus depreciation provision for investments in new business equipment. For investments placed in service after Sept. 8, 2010, and through Dec. 31, 2011, the bill provides for 100% bonus depreciation. For investments placed in service after Dec. 31, 2011, and through Dec. 31, 2012, the bill provides for 50% bonus depreciation.
    • Temporarily extend the increase in the maximum amount and phase-out threshold under section 179. This proposal extends the 2007 maximum amount at $125,000 and phase-out threshold at $500,000 for taxable years beginning in 2012, indexed for inflation. The proposal is effective for taxable years after Dec. 31, 2011.
    • Temporary reduction in employee-paid payroll taxes. Under current law, employees pay a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed individuals pay a 12.4% Social Security self-employment taxes on all their self-employment income up to the same threshold. The bill provides a payroll/self-employment tax holiday during 2011 of two percentage points. This means employees will pay only 4.2% on wages and self-employment individuals will pay only 10.4% on self-employment income up to the threshold.
    • Exclusion of small business capital gains. The provision extends the 100% exclusion of the gain from the sale of qualifying small business stock that is acquired before Jan. 1, 2012, and held for more than five years.

Three Federal Issues Impacting the Campground Industry in 2011

dg photo 1 12 30 2010

As the economy appears to be on a strong road to recovery, one would hope that the economic outlook for American business in general and the park industry in particular would mirror the upturn in the overall economic picture. Although the park industry has weathered the financial storms in pretty good shape, our brothers in the RV manufacturing and dealership side of the industry have not done nearly as well and a turn around in those sectors is certainly critical to the future of the park business. Signs of recovery of RV sales appear positive as the recent shipment numbers indicate and most importantly, as the attendance and interest in RVing at the early 2011 RV shows indicates.

With the good economic news, it would be easy to overlook some of the challenges that will face the industry as a new Congress and a re-focused Administration head into 2011. Here are a few of the challenges that the park industry will confront in the months ahead.

Repeal of the Form 1099 Legislation

As most know, the health care legislation passed in 2010 contained an extraordinary provision requiring business to send 1099 forms to every vendor or supplier with whom they did more than $600 in business. The burden that this requirement places on business is extreme and the small business community has made this a priority issue for 2011. The provision is slated to go into effect on January 1, 2012 so repeal this year is critical.

The campaign to repeal the “Form 1099” expansion has begun and there are high hopes that the new Congress will act swiftly to repeal the bill. In the House, Representative Dan Lungren (R-CA) has introduced H.R. 4, the Small Business Paperwork Mandate Elimination Act of 2011, legislation to repeal the expanded tax information reporting requirement established by the health care reform law. He has 245 co-sponsors.

The expansion provision was inserted into the health care reform legislation, even though it has nothing to do with health care, as a revenue offset. The last Congress was required to “pay for” any increase in spending or reduction in tax revenues with offsetting decreases in spending or revenue increases elsewhere. The Form 1099 provision, which refers to the Internal Revenue Service (IRS) form number, was projected to raise $17 billion. With increased attention to the health care reform issue and the House vote to repeal that legislation, there may be sufficient support to repeal this provision.

This issue is a high priority. RV park and campground owners are encouraged to write to their Members of Congress and senators urging repeal of the 1099 requirements.

Health Care

Although the House has voted to repeal the 2010 health care reform legislation, there’s little chance that the Senate will support that repeal. However, there’s a good chance that there may be some modifications to the legislation.

From the perspective of the RV park and campground businesses, there are a few elements that are critically important to park owners.

First, preserving the prohibition against discriminating in providing health insurance based on pre-existing conditions is a top priority. As many park owners, operators and employees come to the industry from other careers or from large corporations where they’ve worked for many years, changing to business ownership can make obtaining health insurance difficult and the issue is often compounded when one of the spouses or children has a pre-existing condition. Retaining the prohibition against discrimination based on that, is a key element.

Second, affordable health insurance available to all is a second key priority. Controlling health insurance premiums and making affordable coverage available to all is another key element to be preserved. Everyone who wants and needs health insurance should be able to secure it.

Third, permitting associations and groups to work together to offer health care to members is another key for the future. While ARVC may not be big enough to have its own program, the association should be permitted to work cooperatively with other trade associations to bring its members quality affordable health care.

Highway Legislation

As a road-based recreational activity, RVers and campers rely on the ability to travel safely and efficiently on the nation’s highways, bridges and tunnels. This includes travel in urban, suburban and rural areas and on interstate highways, scenic roads, and state and county roads. Passage of a new federal highway program during this session of Congress is critically important.

A very important sidelight to funding the federal highway program is maintaining the Highway Trust Fund, funded through the federal gasoline tax, as the source of funds for this important program. With more efficient vehicles, with Americans traveling shorter distances and with the growth of public transportation systems, the current gasoline tax does not provide sufficient funds for the Trust Fund. The issue of raising the federal gas tax by a penny or more at a time when gas prices are rising and unstable may further impact on road travel. The park industry will need to reach some conclusion on where it stands on the gas tax.

In dealing with the highway legislation, there is always tension between various highway users – truckers, commuters, recreational travelers, business travelers, emergency vehicles, intercity and tour busses, motorcyclists, and bicyclists all want a piece of the pie. Further complicating the issue is the question of population growth, shifting populations and changing road and highway needs. The road building industry has its agenda.

Further complicating the outlook is the desire of the new Congress to cut federal spending. There are few federal programs that can make a dent in the federal budget and highway funding is certainly one that could impact on the deficit and budget, even though it is funded entirely be a dedicated tax. There is certain to be legislators who will try to use the Highway Trust Fund for other purposes and the highway interests must be vigilant.

It’s all a very difficult situation with many conflicting interests.

The ARVC Public Affairs Committee last March requested that the association’s Washington representatives take a lead role in bringing together the travel, tourism and recreation communities to develop united positions and work cooperatively to protect the interests and needs of these various industries that serve the travel, tourism and recreation world. The Tourism Highway Coalition is now meeting regularly to assess the status of the possible renewal of the federal highway program and to work with Members of Congress and with the various industry groups to assure that the interests of these groups are served in any legislation that emerges. The coalition is being staffed primarily by Aubrey King with assistance from David Gorin.

Among the interests the coalition is working on include…

  • Continued funding and support for Scenic Byways
  • Continued support for the federal recreation trails program, rails to trails, bike lanes and similar alternative travel options
  • Continued support for travel enhancements such as visitor centers, information systems and safety enhancements to roads
  • Continued funding for maintaining and upgrading roads on public lands

The future of the federal highway program is a high priority for the RV park and campground industry.

Public Campground Competition

In recent years, public land agencies on the local, county, state and federal levels have all been engaged in upgrading campgrounds to grow their visitation and generate fee revenue to help support public lands and parks. As budgets get tighter and the need to balance budgets at every level becomes more and more prevalent, these public campgrounds represent a potential source of revenue for public agencies. More and more, public campgrounds are looking, acting and marketing themselves as if they were private sector businesses.

This increased competition from public sector facilities presents a challenge to the private, commercial park business. Should the industry embrace these facilities and treat them as just another business competing for the guest? Should the industry continue to exclude the public parks from participation with the private sector? I’d expect that these questions will come up more and more often in the coming years.

These are among the key federal issues of importance to the park business. There are others. Promoting international visitation to the US. Funding the new Tourism Promotion Board. Estate taxes. The role of recreation on federal public lands. Energy prices and availability. During 2011, this column will try to keep the park industry abreast of these issues and others that we can’t now envision but are sure to come up.