- “The State of New York is subsidizing the operation of its three ski centers.
- “The three state-operated ski centers incurred a loss of nearly $1.8 million during the 1974-75 and 1975-76 ski seasons.
- “The Department of Environmental Conservation did not maintain adequate cost records to determine if the ski centers were generating enough revenue to cover their costs of operation.
- “State ski centers do not incur some of the costs that private ski centers do, such as state and federal taxes on income, local property taxes, sales tax on purchases and insurance premiums.
- “Since the areas are losing money, it could be an indication that the ski centers may not be operating as efficiently as possible.
- “Since the ski centers are not recovering all of their operating costs, there is a need for the Division of the Budget to review the setting of lift ticket rates.”
These statements concerning the operation of Belleayre, Gore and Whiteface were not made by Mike Brandt, operator of West Mountain at Glens Falls, or David Vanderzee, operator of Willard Mountain, although both have said as much and more for years. These are statements taken from the audit report of “certain financial and operating practices and rate setting procedures at state operated ski centers,” released on Aug. 1, 1977, by the State of New York Department of Audit and Control.
The bombshell report was filed by the Office of State Comptroller Arthur Levitt’s Division of Audits and Accounts on July 25. It was released a few days later, a short time after the New York State Legislature had adjourned for the summer. Several legislators commented on the contents of the report from their home offices, but since the senators and assemblymen were out of session there was no public debate or comment from the Legislature.
Brandt, who has fought the state ski operations in court, claimed the indepth look at the state operations by another division of state government, showed he had been correct in claiming unfair competition from the state areas.
Brandt claimed that his business at West Mountain had suffered since the state opened Gore Mountain in 1964. Gore is about 45 miles from West Mountain.
He and Vanderzee have battled the state to raise ticket prices for years, especially the state’s policy on low cost family season tickets.
Brandt was quick to point out one paragraph of the Department of Audit and Control Report, which said, “On a seasonal basis, the rates at the state’s centers are on the low side, but on a daily basis they are competitive.”
Brandt noted that the state had only increased its daily ticket rate to $10 for the 1976-77 ski season, after charging less for many years.
EnCon Commissioner Peter A.A. Berle said he thought the audit report, “ . . . contained few surprises.” Berle said he felt the auditors had selected two very poor snow years to study the fiscal operations of the three ski centers.
Berle refused to be drawn into a verbal battle with Brandt and the private operators and said he found the audit had two areas of common agreement with his Department: a need for tighter auditing procedures and a need for more ski area advertising funds.
Gerald Buyce, supervisor of EnCon’s special facilities said, “The report didn’t say anything right or wrong. It just said there were problems. We already knew that.” Buyce added he was not “worried” about the contents of the report, but that the Department of Environmental Conservation did plan to take “corrective steps.”
“I don’t know why this report got so much ballyhoo,” he said, “They picked two very bad years, snow-wise; there is no doubt about that.”
In its “Managerial Summary,” the Department of Audit and Control noted, “The rates charged for the use of the facilities at the ski centers were developed by the Department (EnCon) and approved by the Division of the Budget. In computing the rates, the Department attempted to recover only direct costs. No consideration was given to such items as fringe benefits, allocable central office costs, and a proportionate share of the value of the capital facilities located at the ski centers. To the extent that these costs are not recovered, the state is subsidizing the operation of the ski center.”
The Post-Star, the Adirondack region’s largest daily, noted in its lead editorial following release of the audit report, “The taxpayers of this state provide all types of goods and services to the poor and needy. This state has the most generous welfare system in the nation.
“It is difficult to cut funds from programs that provide food and shelter for those in need, even at times we felt some of these ‘needy’ might go to work to support themselves.
“However, we can see no way the State of New York can justify providing services for ‘needy skiers’.”
The newspaper pointed out there are more than 90 private ski areas in New York State. “There used to be more but several located near state areas found the competition too tough and have closed. Therefore, we can find no reason that the state must provide this service, subsidized by the taxpayers.”
The audit report noted that the three ski areas had lost nearly $1.8 million during the two seasons of the investigation, and also added, “The Department (EnCon) did not maintain the complete cost data necessary to ascertain the costs of operating the ski centers. We recommend that the Department maintain the required cost data and use it in developing rates.”
The report also noted that the Department is not provided with funds to advertise the availability of the state’s ski centers, and urged funds be made available to resume direct advertising of ski centers.
The auditors also called for the scheduling of working hours to achieve maximum use of available resources, that an annual reconciliation of lift tickets be made and controls over payroll procedures be improved.
In its final report, Audit and Control stated, “In responding to our draft report, the Department (EnCon) agreed with most of the recommendations we made concerning the operation of the ski centers. Also, they justified the rate-setting practice on the basis that even though there is no stated policy on subsidizing ski center operations, annual appropriations have been made to pay the operating costs with the realization that revenues generated do not necessarily meet the costs incurred.”
Members of the group from Audit and Control making the report visited Belleayre and Gore Mountain and following their review of the ski center operations noted several areas “ . . . where controls and operating practices could be strengthened to improve operations.”
The auditors called for an improvement in the control over the sale and use of lift tickets. They told of purchasing lift tickets during their visit to Gore Mountain, putting the tickets inside their jackets, “ . . . and (we) were able to ride on the lifts without any of the attendants requesting to see our lift tickets.”
“Because the ski lift operators failed to request to see lift tickets,” the auditors noted, “there is no assurance that all skiers utilizing the lifts had purchased a lift ticket at the appropriate rate and that all revenues due the State from the sale of lift tickets were collected.”
The report also criticized the control procedures over the sale of lift tickets. “No one at the Department level takes an inventory of unsold lift tickets at the end of the year to determine the number of lift tickets sold,” the report stated. “Since the number of tickets sold is not verified, the Department has no assurance that all revenue due from the sale of lift tickets has been received.”
The report also criticized excess overtime payments to the director of the Whiteface Mountain Ski School, and directed EnCon to recover the funds. It also noted that 41,000 ski lift tickets, “considered obsolete” were destroyed without the proper prior approvals.
A study of the ski schools at the three mountains led ghe auditors to state, “Our review showed that the ski schools could be operated more efficiently and the Department (EnCon) needs to monitor the personal service costs to better utilize the amounts paid instructors. The Department should also consider operating the ski school at Belleayre directly rather than through the present concession arrangement.”
The auditors said they felt the ski schools should be able to operate at a level which would permit the recovery of the full personal service cost of the instructor’s time.
The study showed that the rates for ski lessons at the state areas were below those charged at other private areas. “The Department should review the rates charged by the state ski centers to determine if more revenue could be generated if class time was reduced and an additional class period instituted,” the report said.
Since the release of the report, the Department of Environmental Conservation has reportedly increased its prices for the 1977-78 season. While there has been no public announcement of the price structure for this season, letters to season pass holders noted a price hike and an increase in a weekend day ticket to $11.
