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	State of Michigan
JENNIFER M. GRANHOLM governor	DEPARTMENT OF NATURAL RESOURCES Lansing	REBECCA A. HUMPHRIES director

BILL ANALYSIS

BILL NUMBER:	Senate Bill 338, (S-1)
TOPIC:	Gift certificates offered to the public
SPONSOR:	Senator McManus
CO-SPONSORS:	Senators Garcia, Birkholz, Richardville, George
COMMITTEE:	Natural Resources and Environmental Affairs
Analysis Done:	July 9, 2007

POSITION

Support - The Department supports the concept of gift certificates as it will enhance the convenience to serve our outdoor recreation customers and generate added revenue. The plan also enhances opportunities to market the sale of services, including reservations, permits and licenses. However, implementation of the new program should be phased in to accommodate modifying the accounting systems.

PROBLEM/BACKGROUND

The bill expands the types of transactions for which gift certificates can be used, presumably to generate revenue for the Department. Parks and Recreation Division (PRD) is currently offering $25 gift certificates to be used only for Parks-related purchases. There is a stipulation that the PRD gift certificates are only available for sale at the PRD main office in Lansing or on the DNR e-store, and they are only redeemable by walk-in customers at state parks, recreation areas, and state operated harbors. Implementation of a Department-wide gifting system, valid for all goods and services offered by the Department, significantly adds to the “value” of the certificates. Gift cards, with magnetic stripe capability, are extremely popular in the private sector. Department-issued gift cards would bring the kind of new technology flexibility utilized widely in the private sector.

DESCRIPTION OF BILL

This bill would require the Department to make gift certificates available to the public. The gift certificates would be redeemable for at least all of the following: hunting and fishing licenses, state park motor vehicle permits and camping fees, mooring fees, off-road vehicle license fees, and snowmobile license fees.

SUMMARY OF ARGUMENTS

Pro

There could be potential to generate additional revenue. In this era when the DNR is experiencing a decline in hunting and fishing license sales, this program offers another open sales channel that allows the gifting of such purchases by others. Since the gift certificate would be valid for any DNR purchase, it becomes more attractive to purchasers who may not know what the gift recipient actually wishes to purchase, and provides a great way to market our outdoor recreation opportunities. The PRD sold more than 1,000 gift certificates within months of their introduction. The broader appeal of a DNR-wide gifting opportunity should be even more attractive.

FISCAL/ECONOMIC IMPACT

Are there revenue or budgetary implications in the bill to the --

(a) Department

Budgetary:

The Department would incur development costs for the Retail Sales System (RSS) and the Central Reservation System (CRS), as well as staffing costs to deal with the manual transactions that would have to occur in order to accommodate accepting gift certificates.

Revenue:

It is estimated that an increase in revenue would occur by gift certificate sales. However, it needs to be clear that the revenue collected would remain in the appropriate DNR fund if the gift certificate is not redeemed within the defined time limit.

Comments:

None

(b) State

Budgetary:

None

Revenue:

None

Comments:

None

(c) Local Government

Comments:

None

OTHER STATE DEPARTMENTS

None

ANY OTHER PERTINENT INFORMATION

Department systems such as the CRS and the RSS capture a significant portion of the revenues collected by the Department. These systems can be modified in order to properly track the revenues into the specific restricted funds as the law requires. For this reason, the Department recommends that the initial gift certificate program be limited to redemption through one of these two systems.

The Department recommends the following changes to the bill:

• Limit the mooring fees to harbors (State-Owned and Grant-In-Aid facilities) utilizing the Central Reservation System. (C) MOORING FEES UNDER PART 781 AT HARBORS UTILIZING THE CENTRAL RESERVATION SYSTEM.
• Add a sub (F) that states: (F) MERCHANDISE SOLD AT STATE PARKS, STATE RECREATION AREAS AND STATE HARBORS. This concept was in the introduced bill, but is missing in (S-1).
• Add language to ensure that any escheated funds remain with the Department rather than returning them to the state General Fund, e.g.

Unredeemed gift certificates sold pursuant to this section shall not be considered abandoned property under MCL 567.235. Revenue from unredeemed gift certificates which have exceeded the expiration date shall be distributed pro-rata based on the previous year's redemptions.

These recommended changes would allow for the redemption of gift cards through the two major automated systems managed by the Department, the RSS (hunting, fishing, ORV, snowmobile) and the CRS (camping, motor vehicle permits, mooring, and products). In addition, the use of gift cards would allow for the “banking” of refunds for later use for other DNR products as an alternative to a cash refund.

ADMINISTRATIVE RULES IMPACT

N/A

_______________________________

Rebecca A. Humphries

Director

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Date

PRD/BSS/FS/FMFM