Price increases posed for lift tickets, season passes

Mon, 07/18/2016 - 01:59 pm

Lynda Clancy

CAMDEN — A proposed $920,000 budget to operate the Camden Snow Bowl for this coming year was presented to the Select Board in mid-July, and it already has generated strong debate. Bundled in it are expectations of ticket price increases, a proposal with which not everyone agrees.

Tuesday evening, Aug. 2, the Select Board will again take up the budget at a regularly scheduled meeting that begins at 6:30 p.m. in the Washington Street Meeting Room. The meeting will be televised and streamed live at http://www.townhallstreams.com/locations/camden-me.

At the heart of the debate are differing business approaches: Do you spend money — on maintaining an anticipated level of service, on marketing and on staff — in order to make money, or do you trim expenses and cut overhead with the hopes that a lean budget will be offset by revenue and lead to better times?

Both are considered effective in the business world, and both have been discussed extensively by two town subcommittees and the Select Board, the latter which is ultimately in charge of running the municipally-owned Ragged Mountain ski area.

There is a fundamental question on the table: Should the mountain raise ticket prices to help fund operations or reduce its overall expenditures so as not to necessitate an increase in ticket prices. The spinoff questions is whether the market will bear ticket price increases or drive away customers.

The ongoing budget discussion also includes the longtime question of whether taxpayers should help subsidize the Snow Bowl. Some argue that the ski area is a public benefit, like a library or opera house, and some of its expenses should be offset by taxpayers in lieu of the greater good it provides for community health, and the area’s larger economy.

But there are those who believe that town sentiment runs contrary and that taxpayers are fed up with appropriating general fund dollars to keep the ski area running. Some recall debates in prior decades on the floor of annual town meeting about the citizenry’s appetite for publicly funding the Snow Bowl. Until last year, the mountain has not asked the town to help with its finances, as good snow years and expanded snowmaking reduced annual deficits. But more recently, the weather, combined with Snow Bowl redevelopment snags, created a mounting deficit, until this year, when taxpayers agreed to pay off a approximate $300,000 deficit.

Now, the town is faced with how to shape this next season’s Snow Bowl budget, and without knowing what the weather holds and with fairly new equipment, the variables are many.

Currently, the Snow Bowl primarily operates fiscally outside the town’s general fund as an Enterprise Fund. This means that the operating budget for the Snow Bowl does not come under the purview of the town’s Budget Committee in February and March when the municipal budget is analyzed. Instead, it is reviewed and approved in the early summer by the Select Board, after annual town meeting occurs.

At its July 12 meeting, the Select Board received a proposed mountain budget from Snow Bowl Manager Landon Fake. His budget came bundled with the report of of the ad hoc FY 17 Snow Bowl Budget Team, an seven-member group of citizens that assisted town management this year in crafting a budget for the mountain.

Just days before the July 12 Select Board meeting, the Budget Team voted 4 to 1 to support Fake’s preliminary budget, although final details of that budget, including ticket prices, had yet to be established.

Fake submitted his $920,000 budget, which was built on an anticipated 60-day snow season, and the intention of growing a broader market that includes not just Midcoast skiers but those from other parts of Maine, New England and beyond.

“This budget is our best guess,” Fake told the Select Board July 12. He expressed confidence that the Snow Bowl was ready, operationally, to push past the turmoil of the last few years and begin to get back onto solid fiscal footing.

“Last year was an unfortunate maiden voyage that none of us want to repeat,” he said.

Also attending that meeting were several members of the Budget Team, who had just submitted their independent report (See attached PDF) to the Select Board. In it, they made recommendations to the Select Board and mountain management.

The committee, with T.C. Bland as chairman, consisted of Paul Cavalli, Dennis McGuirk, Dave Nazaroff, Brian Robinson, and nonvoting members Chris Morong and Pete Orne.

They did not mince words in advising municipal leadership to pay closer attention to the business of running its ski area.

But the Budget Team also had its own difference of opinion, with some members supporting the $920,000 budget and others believing that the budget should be reduced to approximately $800,000.

Team member Dennis McGuirk wrote to the Select Board on July 12, saying the $920,000 budget was feasible, but added, “there is more work to be done to improve its prospects for actually coming to pass.”

Bland, who had cast the dissenting vote against supporting the $920,000 budget, wrote in a July 26 memo to the Select Board that even with proposed ticket price increases, the Snow Bowl still risks a $75,000 annual deficit.

He recommended an $800,000 budget, with room for another $50,000 in contributions and grants. Such a budget, he maintained, would not require ticket price increases.

Chris Morong, an alternate on the Team, also opposed raising ticket prices.

“On the surface, a price increase may seem like an easy fix, but it may not be the prudent thing to do at this time,” he wrote in a memo to the Select Board. “We cannot and should not place the entire burden of balancing a budget solely on the backs of the skiing public while not attempting to control expenses. We should be budgeting for an average year, instead of budgeting for a ‘best year’ without any history to back up a ‘best year’ scenario.”

Proposed ticket price increases

Since that July 12 meeting, proposed ticket price increases have been suggested, all in varying degrees, depending on their classification as family passes, adult, seniors and groups.

Prices increased last year, and according to the recommendations of the Snow Bowl director and the recently formed Snow Bowl Four Season Committee, another group of citizens appointed by the Select Board to determine more revenue-generating ideas for the Snow Bowl, they should increase again this year.

The committee, consisting of Geoff Chapman, John Anders, Martin Cates, Jamie Weymouth, Sarah Ruef-Lindquist, Holly Edwards, Ray Andresen, Dennis McGurk and Morgan Laidlaw, who is chairman, met last week with Fake.

And like the FY17 Snow Bowl Budget Team, there were dissenting votes on the final recommendations. Ruef-Lindquist and Edwards disagreed with the motion to raise ticket prices according to the proposed target. Ruef-Lindquist wanted more aggressive ticket prices increases and Edwards wanted the increases to equalize among the various categories, they said after the meeting.

The plan, as now proposed, is to increase adult weekday tickets from $29 to $33, and adult weekend tickets from $39 to $43.

Season passes are suggested to remain status quo for adults if purchases are made prior to Oct. 31, the designated Early Bird discount deadline. After that, rates could increase for Camden adults up to 58 percent.

Family passes, however, stand a chance of increasing for both Camden and non-resident (other towns) families, from $719 to $849, and $999 to $1,199, respectively.

Seniors could be facing the biggest increase. Season passes for seniors (70 and older) were due to increase last year, but did not. This coming year, however, they could increase from $10 to $219 for Camden seniors and $50 to $319 for non-resident seniors.

The overall goal is to increase season pass revenue from $236,250 in 2015-16 to $290,441 in 2016-17.

Budget Team recommendations

In its report, the Budget Team advised the Camden Select Board to: ”Employ professional skepticism when reviewing the budget and the assumptions that it is based upon. Professional skepticism is defined in accounting and auditing standards as an attitude that includes a questioning mind being alert to conditions that may indicate possible misstatement due to error, and a critical assessment of audit evidence. This involves taking a position of neutrality — don’t accept statements without testing and understanding the relevant facts.”

The team recommended to mountain management and the board the following:

1) increase ticket prices;

2) maintain current hours of operation;

3) do not cut service offerings;

4) get the mountain open by the Christmas week vacation;

5) reduce the number of complimentary passes (In 2015-2016, there were 325 free passes distributed to employees, ski patrol members, stewards, coaches and family members of the aforementioned);

6) reduce or eliminate granting complimentary daily passes;

7) research alternative funding sources for the Fourth Grade Learn to Ski program, which is offered to schools throughout the Midcoast;

8) negotiate “a win/win” contractual arrangement with the current rental shop operator;

9) pay closer attention to cost increases;

10) revisit the labor allocation between the town’s Parks and Recreation department and the Snow Bowl Enterprise Fund. There is a 50/50 split in the FY17 budget and recent prior actuals — six months of labor costs (salaries, payroll taxes and benefits) for full- and parttime Snow Bowl employees, the report said. “Several years ago, seven months was allocated to the General Fund, with five months to the Snow Bowl. For the years included in our analysis, it appears to be a consistently 50/50 split and therefore no increases in the labor costs can be attributed to this change.”

And, finally, the report advised that the Snow Bowl, and the town, explore new sources of revenue to support any new costs that are to be associated with the operation of the new lodge, “as it does not appear that current sources of revenue are sufficient to bear any additional costs.”

The report was clear in stating that running a ski area on the coast of Maine was inherently risky, given weather conditions.

But, it added: “There are many other risk factors that management can have a substantial influence over by making changes in staffing, snowmaking, grooming, ticket and lesson prices, hours of operation, safety programs, vendor management, etc.”

The committee also said in its report that it lacked a final budget from municipal management.

“To achieve the financial results in the proposed FY17 budget, management must be very active in the day-to-day operations, must strive to increase revenue and strive to understand in detail the factors that drive expenses at the redeveloped facility,” the report said, in its executive summary.

The committee also said in its report that the Snow Bowl management has: “projected increases in revenue beyond historical levels. With a shortened FY15 season, due to the delay in redevelopment, and a paltry FY16, due to very warm, poorly timed weather events, Management believes that FY17 can be very different and will result in higher revenue.”

How big a budget?

While the majority on both the Budget Team and the Four Season Snow Bowl Committee agreed to go with ticket price increases, and the the $920,000 budget, both Bland and Morong have been holding their more fiscally conservative positions.

Bland questioned in his memo the increase of expenses over the past four years from $700,000 to $920,000, and cited the 2013 Redevelopment and Sustainability Plan that has guided the overhaul of Ragged Mountain’s ski area.

“As it turns out, the redevelopment plan did not project expenses to increase this much,” he wrote. “We were told during the redevelopment project that decisions to make capital improvement changes (effectively change orders) would result in lower operating costs and they were therefore worth the extra capital investment above and beyond the redevelopment plan. This budget does not reflect that school of thought.”

Bland also cited the $800,000 revenue figure that the redevelopment plan targeted as sensible.

“The plan was about maintaining the balance between capital improvements and operating costs with the market potential for revenue to support it,” he wrote. “It was about balancing the demands on the infrastructure with the service offerings expected by today’s local ski mountain consumer.”

•Camden Select Board forms new Ragged Mountain committee to advise the Snow Bowl (June 7, 2016)

• Camden Select Board chastises itself for Snow Bowl deficit, forms new committees to help

• Camden leaders make plan to reduce Snow Bowl's two-year deficit

• What to do about the Camden Snow Bowl’s $260,000 deficit

• Sales, revenue up for season ski passes up at Camden Snow Bowl

• Camden readies Snow Bowl for new season; ticket, season pass price increases included (July 20, 2015)

• Camden approves Ledgewood contract for phase 2 of mountain work (May 20, 2015)

• With record snowfall, Camden's Ragged Mountain Recreation Area begins making financial headway

• Camden Snow Bowl Redevelopment Committee, Ragged Mountain Foundation hold community meeting (March 2, 2015)

• Camden Snow Bowl project up to $8.4 million, fundraising resumes (Feb. 3, 2015)

• Making tracks in some dreamy snow at Camden Snow Bowl (Jan. 30)

• Snow Bowl to fire up chairlifts; refunds offered to passholders (Jan 21)