Texas Parks and Wildlife Commission
Finance Committee

April 2, 2003

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 2nd day of April, under the regulatory authority of the Parks and Wildlife Commission of Texas, in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, beginning at 2:00 p.m., to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

FINANCE COMMITTEE:

Katharine Armstrong, Austin, Texas, Commission Chair

Joseph B.C. Fitzsimons, San Antonio, Texas

Ernest Angelo, Jr., Midland, Texas, Committee Chair

John Avila, Jr., Fort Worth, Texas

Alvin L. Henry, Houston, Texas

Philip Montgomery, Dallas, Texas

Donato D. Ramos, Laredo, Texas

Kelly W. Rising, M.D., Beaumont, Texas

Mark E. Watson, Jr., San Antonio, Texas

Lee M. Bass, Fort Worth, Texas, Chairman Emeritus

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

Robert L. Cook, Executive Director, and other personnel of the Texas Parks and Wildlife Department

P R O C E E D I N G S

CHAIRMAN ARMSTRONG:: We will now begin the meeting of the Finance Committee. Ernie Angelo is the Chairman of that Committee, and I will hand him the gavel.

COMMISSIONER ANGELO: Thank you, Madam Chairman.

The first item is the approval of the Committee minutes from the previous meeting. Do we have a motion to that effect or any changes or corrections?

COMMISSIONER FITZSIMONS: Move approval.

COMMISSIONER RISING:: Second.

COMMISSIONER ANGELO: All in favor say aye.

(A chorus of ayes.)

COMMISSIONER ANGELO: Opposed?

(No response.)

COMMISSIONER ANGELO: Approved as done.

And then we have the Chairman's charges.

Bob?

ITEM 1: CHAIRMAN'S CHARGES

MR. COOK: Thank you, sir.

First of all, for the Commission, I'd like to take a minute just to introduce our new Chief Financial Officer, Mary Fields. Mary, who is sitting right over here at the front row by Scott, has just recently joined us, as of yesterday, I guess. And we've been bothering her about why we haven't got everything done yet and what the holdup is, but ‑‑

(Laughter.)

MR. COOK: We are very, very fortunate to have Mary and are looking forward to it. She has a wealth of experience in state agency financial management, 17 to 18 years of experience in that area in a variety of positions within the Texas Department of Corrective and Regulatory Services and the State Auditor's Office.

On our agenda today are two items that are part of the Chairman's Charges. First, Drew Thigpen will provide you an update on the Business Practice Improvement Plan, and Gene McCarty will present a license fee increase briefing, as shown on your schedule.

COMMISSIONER ANGELO: Thank you.

Drew?

(No response.)

MR. COOK: Why don't we just go to Number 2?

COMMISSIONER ANGELO: Do you want to go to Number ‑‑ we'll go ahead and take the agenda in the regular order then ‑‑

MR. COOK: Yes.

ITEM 2: LEGISLATIVE UPDATE

COMMISSIONER ANGELO: ‑‑ and Number 2, being the legislative update.

And, again, Bob, we'll ask you to do that.

MR. COOK: Okay. Thank you.

I'm going to go through these fairly quickly and, quite frankly, just review some of what's going on at the legislature, because we are, as you know, about halfway through the session and just to give you the flavor of some of the bills and some of the actions that have taken place. And some of you are well aware of this.

As of yesterday afternoon, for example, we sat in on the Senate committee meeting on the 4 x 4 legislation to protect river beds of the state. Basically, that bill as it currently stands bans motor vehicle operation in river beds except in the Canadian River effective January 1, 2004.

There's a lot of provisions in it at this point providing public access, assuring other public access, exempting various functions like customary agricultural practices and use by nonprofit organizations. For example, the HEB camp just north of Leakey came up for discussion because they drive right up the river bed, you know, several miles to get to their facility. Very similar, you'll recall our visit last year to Parade Ranch, where there are miles of the basic roadway that go right up the river bed.

So that bill is moving along and seems to be going okay ‑‑ quite still, lots of discussion and concern, but it's moving along.

Senate Bill 1374 and House Bill 3340 by Armbrister and Puente respectively ‑‑ these bills would create a blue-ribbon study committee to study and recommend to the legislature and state leadership the best way to protect the in-stream flows and freshwater inflows into our bays and estuary. Now, this kind of all goes back to the San Marcos River Foundation permit ‑‑ the SMRF permit we call it ‑‑ and all of the various issues over water and in-stream flow and how we're going to ‑‑ how the state is going to provide in-stream flow ‑‑ water for in-stream flow.

The study commission, for example, as currently proposed in this legislation would include the chair of the three regulatory and resource agencies: Texas Water Development Board, Texas Commission on Environmental Quality and Texas Parks and Wildlife Department. It would also include conservation representatives, river authority representative, municipality, water districts and legislators.

That bill's kind of a compromise bill at this point, and there are still lots of people massaging on it, lots of interest in it from a lot of different directions. For example, there are bills on the table down there now that would prohibit TCEQ from granting a water right permit for in-stream flow. There's some discussion about whether or not you would be able to convert an existing water right and on getting that wording in there, that possibility.

So lots of discussion and lots of issues over water. And I might add that our Chairman and several other Commissioners have been very, very involved in that process, Commissioner Fitzsimons, in working with the legislators on the various water issues.

We've got our freshwater fisheries stamp bill that has been proposed in there and have got a lot of support for it. Staples sent it forward in the Senate, and Mr. Ellis in the House. Bottom line: It establishes a freshwater fisheries stamp that, if you're going to fish in the fresh waters in the State of Texas for freshwater fish, at least $5, the fee to be set by the Commission, specifically designated for fish hatchery renovation or replacement and for the purchase of fish for stocking purposes.

It's a ten-year sunset on that stamp of 2014 and, at the same time, eliminates ‑‑ in the bill, it's proposed that we eliminate the archery, the trout stamp and the muzzle loader stamp, so, in other words: Some consolidation and simplification of that process. Bottom line: We don't lose a lot financially with the archery, trout or muzzle loader stamps, and the potential to fund hatchery renovation, hatchery ‑‑ rebuilding of our hatcheries, is a big issue for us.

If we are going to continue to stock fish in freshwater in the State of Texas, which, I believe, we have all agreed is something that we're looking at, we're going to have to do some major work and repair on our hatcheries. Potentially ‑‑ if this bill passes, it potentially could fund those projects, starting with the project at Jasper.

The different kinds of bills we're looking at is Representative Hupp's bill relating to the landowners' killing of certain depredating animals ‑‑ bottom line: To allow landowners and/or their agents to hunt and kill feral hogs without a hunting license. On the surface, it sounds reasonable and not a particular problem, but we have some concerns, and we have expressed those concerns.

Not that we're in favor of or opposed to any legislation, but we have expressed those concerns as it relates to the enforceability of the laws about hunting. You see someone out there carrying a rifle on their shoulder. They're apparently hunting. The question is: Are they hunting white-tailed deer, or are they hunting turkeys, or are they hunting squirrel, or are they hunting feral hogs?

So we have some concerns about that, and we've expressed those. That bill was favorably reported from committee yesterday.

There's a bill that has been laid out regarding the establishment of a program to provide grants to make voluntary purchases of development rights in real property. So we call it the PDR bill. It could be funded by bonds. It's not particularly clear right now. It's one that would potentially ‑‑ there's some discussion about potentially providing funding of $500 million over many ‑‑ a long period of time.

We have worked on our business about land sales and talked about our issues regarding land sales. There's a bill, 1304, relating to the receipts from the sale of land by Parks and Wildlife Department, which would direct the revenue received ‑‑ all revenue received from the sale of TPW land to GR, to General Revenue. There's a bill; it was dropped from the committee schedule yesterday, but it is still there and one that's still being looked at.

House Bill 1529 by Robby Cook: Relating to the inspection of wildlife resources and devices used to catch and hunt wildlife resources. Bottom line on this bill: This is a bill that would allow our wardens to inspect and search game bags or live wells or the stringer hanging off the side of the boat, et cetera, in the field.

There are some concerns over this bill: Constitutionality issues and those kinds of things. And all that will get worked out. It was favorably reported from committee yesterday.

Our law enforcement officers ‑‑ we believe that this is something that's needed. Right now, if a person in the field hunting with a shotgun ‑‑ if our warden walks up to that man and says, "Can I look in your game bag," that hunter has every right to say no. And ‑‑

COMMISSIONER ANGELO: Most of them don't know that.

MR. COOK: ‑‑ most of us do not know that and assume that he has every right.

COMMISSIONER ANGELO: Yes.

MR. COOK: But by law, that is not the case.

There's a bill by Mr. Janek ‑‑ Senator Janek relating to the creation of four separate fishing guide licenses, an issue we talked about this morning: A resident freshwater, a resident saltwater, a nonresident freshwater and a nonresident saltwater guide license. And it sets the bottom line at $75 bucks or as high as the Commission wants to go.

There's a bill that has been submitted relating to the prohibition of commercial fin fishing, crabbing and shrimping that basically eliminates commercial fishing in the bays and estuaries of the State of Texas.

Others that we always kind of sit up and take notice on? We have a bill that has been proposed ‑‑ we don't have the bill, but that has been proposed to have us acquire and operate the Odessa Meteor Crater. We had a bill that also ‑‑ we talked about croakers some this morning ‑‑ would prohibit the use of croaker for bait.

We have ‑‑ on the appropriations bill that is working its way through, we have riders that have been prepared and submitted to fund research on golden algae to the tune of $1.2 million. We have a rider that has been submitted to fund oversight and administration of aquatic vegetation control to the tune of $500,000.

This morning, we learned that last night there was a bill filed that ‑‑ there was a rider filed ‑‑ excuse me ‑‑ that, out of funds appropriated above, which, in my terminology, is out of our hides, debt service amounts of $850,000 for FY '04 and $907,000 for FY '05 shall be allocated for the payment of debt bond service at the Nimitz.

You will recall that there was, I think, something to the tune of $8- to $9 million in bonds approved for the Nimitz in the last session, but the debt service was not funded. We sought and we now have the funding mechanism proposed as a rider out of the existing funds.

So that gives you a little bit of an idea of kind of the cross-section of where we're headed. In the appropriations process, we're about halfway through the loop. I'm not going to take any more time on it, and Drew is going to go into that in some detail.

I guess I would just say this to you: Our ‑‑ my feeling is that our legislators have an incredibly difficult task in meeting and working around this budget shortfall. It is very difficult. I believe they're being fair and even-handed with us; I don't believe there's any target on us.

In fact, there is a tremendous amount of support for TPWD and what we do for our employees throughout the state; however, you need to be aware that as those discussions ‑‑ if you haven't heard it, as those discussions are taking place, particularly in appropriations, there is ‑‑ has been quite a lot of talk of sweeping funds, sweeping dedicated accounts ‑‑ Fund 9, the stamp accounts. Every one of those funds of money has been brought up specifically and discussed as possible sources of funding.

We are addressing these ‑‑ this funding issue every day. We have had the hiring freeze in place since January 23. We've got over 200 vacancies ‑‑ real, live, supposed-to-have-been-funded positions at Texas Parks and Wildlife Department that are now vacant. We're evaluating every single vacancy that comes open, one ‑‑ every single one of them.

If it goes ‑‑ if it gets past those two gentlemen right there ‑‑ if it gets past Drew and Scott, I look at it. And we're filling only those that are absolutely mission critical. We've reduced in-state and out-of-state travel to practically nothing. We've cut back on our capital expenditures.

So we're already working on it, and I think, quite frankly, we're ahead of the curve some. I think that's necessary. I think that'll help us as we go on through the summer and get into the fall and some of the decisions and some of the tough calls we're going to have to make.

It's an interesting session. We've had a lot of help from you this year; it is much appreciated. Staff sees you, hears you and appreciates your involvement and participation. And the Chairman has been down there with us almost every day, and we appreciate that.

Thank you, sir.

COMMISSIONER ANGELO: Any questions?

(No response.)

COMMISSIONER ANGELO: Thank you, Bob.

The next item would be a financial review and update.

Drew, you're on.

ITEM 3: FINANCIAL REVIEW & UPDATE

MR. THIGPEN: Good afternoon. My name's Drew Thigpen; I'm the Deputy Executive Director for Administration and have had a very interesting two months, the past two months, when I found out that both Suzy Whittenton was leaving to go over to the Comptroller's Office and Patsy Henry, our Director of Budget and Planning, was leaving at almost the same time to go to the Health and Human Services Commission. So we've had to draw on a lot of help from a lot of folks to get through these last two months, because it has been quite hectic.

The presentation today is the ‑‑ there are three things I'd like to really cover with the Committee today. The first is the Fiscal Year 2003 budget status, a review of both the expenditures and revenues. The second thing would be a ‑‑ the 7-percent reduction plan for 2003 that was submitted. And the third thing is the Fiscal Year 2004 and 2005 funding request.

The document that you've just been handed, I believe, is a set of financial reports that will be ‑‑ is really a lot greater detail of what I'll be covering today. It provides additional support. We had hoped to have a ‑‑ every month that we came back to you, we'd like to add some additional reporting requirements. Unfortunately, in the last two months, we've just been dealing with the legislative session, and so it's fairly similar to what you received last time.

The first area that I'd like to cover with you is looking at the license revenues as of March 26, a comparative look at 2002 and 2003. As you can see, total revenues have increased in 2003 from $57.9 million last year to 58.4 million. That's up about $500,000 over that same time frame.

Hunting revenues are up about $700,000, fishing revenues are down about $200,000, and then the combination license revenues are up about $300,000. Basically, what that means is that all other license revenues are down about $300,000.

The next slide is the super-combo historic sales comparison. In 1997, we sold about 157,000 of the super-combo licenses. So far this year, as of March 26, we had sold 375,000; that's an increase of about 13,000 from last year.

The next slide is a presentation of the state parks, just a comparison of revenue last year to this year. And you can see that we're down about $700,000. That's probably in part due to some weather conditions and part due to a couple of parks, particularly Garner, that haven't been open for the full time.

The next slide that we have is boat registration and titling revenue as of February. As you can see, it's relatively flat. There has been about a $30,000 increase in revenues coming in.

Moving to the expenditures, we have about 50 percent of the year that has been completed so far. This is a presentation. If you can see on the grand total, our total adjusted operating budget for the Agency is about $320 million. So far, we've spent about $136 million, leaving about $184 million available, roughly 57-1/2 percent.

As ‑‑ you can look at the division operating budgets, and you can see that we've got 49 percent of it ‑‑ of our budget remaining, with 50 percent of the year remaining. Those are skewed a little bit by a couple of things, primarily, the grants that we approve on the front end of the year. Another issue is that we have certain types of contracts that are heavily front-end loaded. So we think that we're just right on track with our expenditures at the divisions.

The capital projects is just the opposite. We've got 83 percent of the funding left, and those are typically because most ‑‑ many of our capital projects are multi-year kinds of activities.

Here's another presentation of the fiscal year 2003 expenditures: By type of expense, by object. As you can see going down personal services, fringe benefits, operating expenses and capital equipment, the percentages are all right in line with what you would expect to see. Grants, again, as we mentioned earlier, are front loaded. So you see that we have 29 percent available and then, in capital projects, again, 83 percent.

I'd like to move right on into the 7-percent reduction plan. As I know you are aware, in January, the state leadership sent letters to all state agencies asking them to make a reduction of 7 percent in all their GR ‑‑ state general revenue or general revenue-related funding. For us, that includes, of course, our Account 9 and what we call Fund 9 and Fund 64.

This is just a breakdown, and it shows that, roughly, 82 percent of the reductions came out of Fund 9 and 13 percent were out of Fund 64; the others contributed approximately 5 percent.

This is a presentation of the same information by object of expense. Again, this is just a ‑‑ to give you a sense of where the numbers or where the reductions were actually taken. Seventy-one percent of that reduction was taken out of capital expenditure-related types of funding, 15 percent came out of salaries, and 13 percent came from operating funds with about ‑‑ as Bob mentioned earlier, a significant reduction in travel and out-of-state travel.

And the last item I was going to cover as part of this presentation is to provide you a quick update on where we believe we are, where we understand that we are, at this point in time in the legislative appropriations process for our 2004 and 2005 funding.

This first schedule is a high-level comparative summary of where the House Appropriations Committee recommendations and the Senate Finance Committee recommendations are. We ‑‑ our starting point on here is our base request excluding exceptional items. This includes the amount that when ‑‑ the legislature in January also sent instructions to all agencies to resubmit their legislative funding requests. So the LAR that we did in the summer we had to redo in a period of a couple of weeks and resubmit.

So that total equals $521.2 million. The legislature also had us as a part of our building blocks submission to cut that by $16.1 million, our general revenue funds. And we had initially shown that reduction in the Local Park Grants.

As you can see, that ‑‑ the committee recommendations for the House Appropriations Committee is $436 million; the Senate Finance Committee, $442 million. So that ‑‑ the initial reductions by the House Appropriations Committee is $85 million, roughly, or about a 16-percent reduction.

On the Senate side, they initially reduced us by about $78 million, or about a 15-percent reduction. The Senate did one additional step, though, that was very helpful to the Agency. They added a rider which would allow the Agency to restore up to $31-1/2 million contingent on our Commission adopting fees or revenue increases as ‑‑ so that the balances would be available to us next biennium. If you take that into account, then the Senate's reduction is actually $46.8 million, or, roughly, about a 9-percent reduction.

This next slide is a presentation of this information, just a summary of where they took the reductions. The first issue there is the new bond funding for 2004 and '5. Both the House Appropriations Committee and the Senate Finance Committee chose to reduce that item so that there would not ‑‑ they would not recommend new bond funding for next biennium. That's $34 million.

The second item is the Local Parks Grant Program. On the House side, they reduced about $15 million, whereas the Senate Finance Committee took a little bit deeper cut, at about $23 million. Capital budget reductions were $8.6 million in the House and $5.6 million in the Senate. The difference there is primarily that the Senate Finance Committee recommended acquisitions at 3.3 million a year while the House Appropriations Committee said $1.8 million.

We have a little bit of a concern in this item because of the fact that we do get about $5 million a year in federal funding that can be used for this purpose, and this would restrict ‑‑ as it's written right now or recommended right now, restrict both state and federal funding.

And then the next grouping is just everything else. When we submitted our revised building blocks, they were broken out into, if I'm not mistaken, 31 separate building blocks. And so as ‑‑ and then they went through each and every one of those and made reductions individually as they went through them.

On the House side, they reduced $27 million ‑‑ on the Senate side, about $15 million ‑‑ out of all those various building blocks other than capital. And so that brings you back again to the total recommended reductions of about $84.8 million on the House side and $78.3 on the Senate side, and then, of course, the Senate included their contingency rider.

That actually concludes my presentation. There's really at this point no telling where we're going to finally end up. The way the House and the Senate approached it, they ‑‑ their recommendations were quite different where ‑‑ so that all of those issues where they don't agree go to conference committee. It's possible that ‑‑ because of the way this process works, it's possible that they could restore virtually everything.

For example, on the Senate side, they chose to take the reductions out of just a couple of strategies or a couple of building blocks, primarily outreach and education and the local parks grants. On the House side, they chose to take pretty much an across-the-board reduction in virtually every strategy.

They protected state parks and law enforcement on the House side; on the Senate side, they protected pretty much everything except for law enforcement. There, the needs are pretty incredible right now, so it's likely that there are going to be additional riders that are going to be introduced where someone might say, Well, we might ‑‑ we recommend taking this funding from this agency, Parks and Wildlife, or some other agency and transfer it to another agency for another purpose.

I think that, typically, they try to avoid making those kinds of transfers from one agency to a dissimilar type of agency, but there's no telling. There's ‑‑ and I guess, with that, I'd certainly be willing to answer any questions.

MR. COOK: There was ‑‑ Drew, there was, in fact, an article in today's Austin American Statesman to that effect, where one of the elected folks had recommended taking money and he specified from Parks and Wildlife to go to health care or something. I forget what it was. And so those ‑‑ the one thing that I would emphasize to you here: Both House and Senate have said basically in this, in where we are, there's not going to be any additional Prop 8 bonds provided right now.

We've got enough ‑‑ bottom line there: We've got enough work approved in that first tranche to carry us, to keep us busy and keep us working on 40 or 50 really, really good, important projects for the next couple of years. But at that point, we're out of money to do repairs ‑‑ you know, the Prop 8, the critical bond repair-type programs are out.

COMMISSIONER AVILA: Steve may be covering this when it gets to infrastructure, but the last bond amount that we've got ‑‑ we're committed to spend that amount, are we not, or are you saying they're not going to issue any additional ‑‑

MR. COOK: We still have that first tranche ‑‑

COMMISSIONER AVILA: Right.

MR. COOK: ‑‑ that will ‑‑ like I say, of the Prop 8 money, we've still got some. In fact, we've still got some projects that are wrapping up in the original $60 million critical repair thing that we've got ‑‑

COMMISSIONER AVILA: Right.

MR. COOK: ‑‑ on the ground out there right now going. But ‑‑

COMMISSIONER AVILA: And then the next ‑‑

MR. COOK: Yes.

COMMISSIONER AVILA: But there's not going to be a third?

MR. COOK: That's correct.

COMMISSIONER AVILA: And the reductions that were shown there in construction that you briefed on ‑‑ those are maintenance? Or what are those dollars there?

MR. BORUFF: That's the funding for the second tranche.

COMMISSIONER AVILA: Okay. Tranche?

MR. BORUFF: Yes.

MR. COOK: That's a Boruff word.

(Laughter.)

MR. COOK: But it's ‑‑ and, again, I ‑‑ you know, we're halfway through this process. Those two committees have got to come together, and we'll be working with them. And we are working with them every day on every one of these issues.

But, you know, it's ‑‑ we walked away from one of these last meetings, and, you know, Drew or Gene ‑‑ one ‑‑ made the comment that, Well, you know, it's kind of strange when you walk away and you've only been cut, you know, $78 million and you feel good about it. And so that's kind of the way it has been going. It's an interesting session.

COMMISSIONER ANGELO: Any other questions?

(No response.)

COMMISSIONER ANGELO: Okay. Thank you.

I believe we'll move on to Item Number 4, which is the Business Improvement Plan update, and that will be also from Drew.

ITEM 4: BUSINESS IMPROVEMENT PRACTICES PLAN

MR. THIGPEN: Well, thank you. Again, for the record, my name is Drew Thigpen; I'm Deputy Executive Director for Administration.

This part of the presentation is going to be on the Business Practices Improvement Plan project. I believe your ‑‑ you are going to be provided a copy of the most recent update of our Business Practice Improvement Plan status. And these are ‑‑ the document that you are receiving right now is a handout that includes only the outstanding items so that ‑‑ and the items that have been completed since the last Commission meeting.

The slide that's showing on ‑‑ right now reflects the comparison at the last time we were in front of you and is showing that there was an ‑‑ that 49 percent had been completed at January 15. Today, there are 57 percent that have been completed. There's ‑‑ basically, eight additional items have been completed in that period of time.

The items that were completed since the last meeting were ‑‑ the first one was having to do with monitoring deposits ‑‑ excuse me ‑‑ Texas Parks and Wildlife deposits out in the field for timeliness. That has been ‑‑ processes have been put in place to make sure that those are occurring as they're supposed to by law.

The second item has to do with the completion of a state park study by Stacy Tomas and John Crompton with Texas A&M. And, basically, it provides the economic multiplier information for us to share with the legislature on 37 selected state parks, an excellent report.

The next four items relate to reconciliation items that have been completed, and those are all in place, and we're feeling pretty good about those. The last two items were procurement card-related items. The first one was implementing a new policy, and the second one was cutting the number of card holders from about ‑‑ from over 1,700 card holders to right at 1,000 card holders. So that was a pretty good reduction.

I guess I would like to just mention that this is ‑‑ we're using this as a dynamic management tool; that is, as additional items come to our attention that need attention, we would like to put them on this document and manage them in this way. For example, the E Texas report that came out in January included a couple of items that we'll want to include on our list.

So as we come forward to you each month, we may add something if the State Auditor's Office or E Texas or someone has added something. We think this is a very effective manner of tracking that information and making sure that it's addressed and making sure that you're aware of how it's being addressed.

And with that, I'm certainly open for any questions.

COMMISSIONER ANGELO: Really good information.

Any questions or comments?

(No response.)

ITEM 5: BOAT RAMP FUNDING

COMMISSIONER ANGELO: Thank you, Drew.

Item Number 5 is the boat ramp funding, with Tim Hogsett.

Tim?

MR. HOGSETT: Good afternoon, Mr. Chairman and members of the Commission. I'm Tim Hogsett, Director of the Recreation Grants Program in the State Parks Division. Tomorrow, we are going to be bringing you requests for two local government boat ramps, one being in Jefferson County and the other being in Aransas County.

This is the first time that we've brought local boat ramp requests before you in a couple of years. During that interim period, we've been using most of this federal pass-through money that we've received from the Fish and Wildlife Service to supplement our bond and critical repair program by doing some major rehabilitations in state park and wildlife management areas on boat ramp facilities. Those are either completed or are substantially underway.

So given that we do have about $1.8 million that we receive annually from this program, we would like to go back and do a couple of ramps that have been really sort of hanging in the wings since about 2001.

The boat ramp program was authorized by the Texas Legislature in 1975; originally, it was all Fund 9 funds. Since then, we've begun to receive revenue from the federal government through the Sport Fish Restoration Act. This money is eligible to be used for 75-percent matching grants to local governments or, as I mentioned, within our own system for acquisition and development of boat access facilities.

In the case of boat ramps for local governments, we enter into an agreement with the local government that they agree to take that on as their facility and permanently operate and maintain it. As I said, we've received two applications, both of which have been here for awhile, requesting $669,739, one being from Aransas County requesting $263,465, and the second one from Jefferson County at $406,284. We'll be bringing those to you for requests for funding at tomorrow's meeting. I'd be glad to answer any questions that you might have.

COMMISSIONER ANGELO: Do we not receive a lot of requests for this item because people don't know about the funding availability, or because there's just not any need for boat ramps?

MR. HOGSETT: We have been turning a lot of folks away during this period that I was talking about, while we've been using the majority of the money for our own facilities. So yes, I anticipate we're going to start to see a regular flow of requests come back to us.

COMMISSIONER ANGELO: So that the people that would be in that field of interest know about the ‑‑

MR. HOGSETT: Yes. In fact, I just had a lengthy conversation and then a long e-mail conversation yesterday with the boating ‑‑ Texas Boating Trades Association.

COMMISSIONER ANGELO: Yes?

MR. HOGSETT: And we're putting the word out through our own electronic newsletters, et cetera. So I think the information's out there.

COMMISSIONER ANGELO: Good.

Any other questions or comments?

(No response.)

COMMISSIONER ANGELO: If not, with no further discussion, we'll ask the staff to place this item on the agenda for tomorrow's public hearing and for the action item.

MR. HOGSETT: Thank you.

COMMISSIONER ANGELO: Thank you, Tim.

Before ‑‑ let's see. We've got Item Number 6, which is a fee change discussion to be presented by Gene McCarty.

ITEM 6: FEE CHANGES

MR. McCARTY: Chairman and Commissioners, my name is Gene McCarty; I'm Chief of Staff for the Agency. I have before you today an item that addresses hunting and fishing license fee and boat registration fee increases.

I'd like to start with giving you a little background on the license fees. And license fees were last increased about seven years ago, in 1996.

In 2001, we completed an evaluation of the impact of inflation rates since 1996, comparable license fees and other states, attitudes and opinions of anglers and hunters and a means of addressing additional demands on TPWD. It was decided that rather than increase fees at that time, we would look at ways to improve operational efficiency as outlined in the Business Practices Improvement Plan that you just heard about.

Having done that, however, there is a continuing need to address growing demands on the Agency, for example, inflation and increased expenses. Key examples of that are, in many cases, places across the state where we have hatcheries and state parks and other facilities that are key users of electricity; we've had over a 30-percent increase in electrical costs since 1996. And everybody knows what gasoline is doing, and you can imagine what that does to law enforcement with the million or so miles a year that they drive.

We have continuing needs for additional game wardens and law enforcement in the field. There's a ‑‑ as you heard this morning, there's a growing concern about chronic wasting disease, including the need for testing and a response plan. There's continuing need for additional technical guidance on private land, and there's a need to address the infrastructure of our aging fish hatcheries.

As Mr. Cook told you a few minutes ago, we've already received a rider that addresses aquatic vegetation control and takes about $500,000 over the biennium and another rider that addresses golden algae research and response, which takes about $1.2 million over the biennium. In addition, the Comptroller's most recent revenue estimate indicates that with our current revenue stream and our current budget, Fund 9 will be facing about a $10-million shortfall at the end of FY '05.

As previously mentioned, in 2001, Texas Parks and Wildlife contracted with Mark Duda from Responsive Management to survey hunters and anglers. He found that over 90 percent were either very satisfied or somewhat satisfied with Texas Parks and Wildlife as a government agency and that over 70 percent said Texas Parks and Wildlife's efforts to provide recreational opportunity were excellent to good. In addition, nearly half strongly to moderately supported an increase in fees to increase funding for Texas Parks and Wildlife Department.

Based on this support and the average inflation rate of about 2.5 percent per year since 1996, which resulted in about a 20-percent overall increase, we have developed the fee increase proposals which you have in front of you that Ms. Estrada gave you. I'm going to take a quick look at just some representatives. You've got ‑‑ you still have a cut that are just representatives, but we're going to ‑‑ and I'm going to take just a broader-brushed look at that, and, also, I want you to take a look at the 7-year inflation value associated with those licenses.

For example, our super-combo package which is currently priced at $49, we ‑‑ our proposal takes it to $59. The seven-year inflation value on that was $58.25. Resident hunting, at $19: Our proposal is to go to $23. Nonresident hunting, at $250: Our proposal is to go to $300. Resident fishing, at $19: Our proposal is to go to $23. And nonresident fishing: The current is $30, and the proposal is to go to $50.

I think it's important to note that we're not proposing an increase in all licenses. We have about 215 different licensed actions or ‑‑ and about 162 different license sets. We're only proposing to look at about 100 of those, and a bit ‑‑ large chunk of those is replacement or duplicate licenses, and so forth.

Specifically, we're not proposing to change the senior combo ‑‑ the senior super-combo, the resident special fishing, the resident special hunting or the stamps. I think this gets at one of many of our issues in terms of trying to encourage family use in the outdoors and not to discourage the youth opportunities in the outdoors.

The second page that you have in your package there gives you kind of a summary of what this fee increase would generate. This ‑‑ it would generate approximately $10.2 million per year.

Let's take a look at the boat registration and titling fees, and, again, let's start off with a little bit of a background. Boat registration fees were last changed in 1996. Texas ranks among the top five states, including Minnesota, Florida, California and Michigan, in terms of the number of boats registered and titled.

There have been numerous increased costs for boating-related functions in Texas Parks and Wildlife, including titling and registration and boat theft enforcement, boat accident investigation and training, a redesign of our boat registration system, which was a component of the Business Practices Improvement Plan, increased costs for law enforcement, increased costs on DWI enforcement and equipment and an increase in boating and fishing in state parks.

It's kind of interesting that we had this boat ramp issue just in ‑‑ just before. As Mr. Hogsett said, we have been spending a great deal of our boat ramp money on our facilities, and those are all in state parks.

I'm going to kind of go over kind of an overview of the proposal. Boat registration for a vessel less than 16 feet in length ‑‑ it's currently $25. We're proposing it to go to $30. Boat registration for a vessel that's 16 to 26, which is where the bulk of our vessels are and where the bulk of our money is, is going from $40 to $50. Boat registration for a 26-to-40-foot vessel is going from $55 to $70.

Not listed here is registration for vessels over 40 feet in length ‑‑ that's currently $70, and we're proposing it to go to $90 ‑‑ and then a number of different registration transactions and duplication fees.

MR. COOK: Is that a two-year?

MR. McCARTY: Yes. I was going to bring that up.

One thing to keep in mind: This particular registration is a two-year fee. So you're paying $30 for two years of registration on a boat less than 16 feet.

This proposal would bring in an additional $3.6 million per year for the Agency.

On a side-note, there's currently a piece of legislation out there that would propose to allocate as much as 15 percent of boat registration and titling fee revenue to Fund 9 in an effort to try to or ‑‑ Fund 64 ‑‑ I'm sorry ‑‑ in an effort to try to provide some assistance to the many state parks that are water-related that have a great deal of boating activity associated with those state parks and in association with all of the boat ramps that we've been recently working on.

With that, I'd entertain any questions or ‑‑ concerning this item.

COMMISSIONER ANGELO: Are there any questions?

COMMISSIONER AVILA: What's our feeling on the 15 percent, Gene, on the legislation?

MR. McCARTY: I think it's good. I think it's very important for us to recognize that a tremendous amount of boating activity occurs on state parks and that, you know, we need to be ‑‑ I mean, we need to share that revenue in a responsible manner.

MR. COOK: We have worked with the folks that are carrying this legislation closely. Bottom line, what this does in conjunction with this proposed fee increase: It will increase our revenues into Fund 9 into the traditional area that those funds go to by about a million dollars. And it'll put about $2-1/2 million in 64. So it ‑‑ you know, we for sure did not want to reduce the Fund 9. We didn't want it to have that kind of impact. And I believe the way we've got it structured, it's going to be ‑‑

COMMISSIONER FITZSIMONS: So it's a net gain?

MR. COOK: Yes. A net gain for both.

COMMISSIONER FITZSIMONS: Presumably, you looked at this when you came up with the $3.6 million. What's the trend on boat registration ‑‑

MR. McCARTY: It's ‑‑

COMMISSIONER FITZSIMONS: ‑‑ right now?

MR. McCARTY: It has been flat to going down a little bit, but our ‑‑ actually, our $3.6 takes into consideration that recent decline trend.

COMMISSIONER FITZSIMONS: And any possible reduction due to price increase?

MR. McCARTY: Yes. We ‑‑ in our fee ‑‑ our $10.2 million there takes that into consideration, too. We have historically taken about a ‑‑ what we call about a 4-percent slide whenever we do a fee increase. And we factored in a 4-percent slide on these to make that estimate of $10.2 million.

MR. COOK: As you saw, I thought one good thing this morning ‑‑ and I meant to point it out and didn't. And I think you probably saw it in ‑‑ maybe it was in ‑‑ Drew's presentation awhile ago about the number of people who are now buying the super-combo. You know, it's steadily growing now up to over 300,000. And, you know, that's ‑‑ $49 bucks is a great deal, and, you know, at $59 bucks, it's still a great deal.

COMMISSIONER ANGELO: Yes.

Do I have ‑‑ I believe, Madam Chairman, do you want to ‑‑ did you have a suggestion about the youth?

CHAIRMAN ARMSTRONG:: Yes. I think it is worth considering by the Commission the possibility of raising the age on the youth license to 21.

I think all of us have encouraged the staff and our friends in every quarter we can communicate with to go out there and try to encourage new hunters and new fishermen. And I think having ‑‑ raising that age on the youth to, say, 21 and have people up to that age pay what $6 ‑‑ the $6 fee for a license sends a strong message that the Parks and Wildlife Commission wants to encourage young people to hunt and fish.

And so I'll be ‑‑ if you all are comfortable with that, I think we have an opportunity perhaps to get a bill introduced under a suspension of rules-type of thing before the end of the legislature and try to get some statutory help on that or to get that done before the end of the session. But it's, I think, worthy of discussion, and we'll be looking into that. And we'll be reporting back.

MR. COOK: Yes, ma'am. I think we ‑‑ the initial look at it looked like if we did that, if we went from the current 17 to 19 and then to 21 or go straight to 21, then we're looking at about a million-and-a-half dollar impact, as I recall.

VOICE: That much?

COMMISSIONER ANGELO: But it might ‑‑ over the long term, it might actually ‑‑

MR. COOK: In the long run ‑‑

COMMISSIONER ANGELO: ‑‑ increase revenues ‑‑

MR. COOK: Absolutely. In the long run, it increases ‑‑

COMMISSIONER ANGELO: ‑‑ and increase the number of hunters.

COMMISSIONER AVILA: The research that was presented by the future of hunting group indicated that that is an age group where we're losing.

CHAIRMAN ARMSTRONG:: That's correct.

MR. McCARTY: We lose a lot of them.

COMMISSIONER AVILA: And so that's important.

COMMISSIONER ANGELO: Well, Gene, obviously, if we don't get the contingency rider, there's no point in raising fees. Is that correct?

MR. McCARTY: That's correct.

COMMISSIONER ANGELO: So that ‑‑ the Commission would have an opportunity to make that decision after that factor's determined?

MR. McCARTY: Yes, sir.

COMMISSIONER ANGELO: Okay.

Are there any other questions or comments?

(No response.)

COMMISSIONER ANGELO: If not, I ‑‑ we need to authorize the publication. Is that correct?

MR. McCARTY: Yes, sir. Authorize publication in the Texas Register for public comment.

COMMISSIONER ANGELO: Is there ‑‑ do we do that by motion, or a, There being no objection?

MR. McCARTY: You can direct me to do that.

MR. COOK: Chairman Emeritus ‑‑

COMMISSIONER ANGELO: Chairman Emeritus Bass, do you have a comment?

MR. BASS: Thank you.

Gene, the past couple of times we've increased fees, we have heard, you know, that there's a slide where we've actually increased revenue but reduced sales of hunting and fishing licenses ‑‑

MR. McCARTY: Yes, sir.

MR. BASS: ‑‑ as a result.

MR. McCARTY: Yes, sir.

MR. BASS: And you quantified that as about 4 percent. Is my recollection right that there's a ‑‑ the first year, there's the drop, and then, over this ‑‑

MR. McCARTY: Over the ‑‑

MR. BASS: ‑‑ following Year 2 or Year 3 ‑‑

MR. McCARTY: There's a slight ‑‑

MR. BASS: ‑‑ most of that ‑‑

MR. McCARTY: There's a slight recovery.

MR. BASS: ‑‑ there's a rebound of some?

MR. McCARTY: Yes. And it never really comes all the way back, but you get about, you know, 95 percent of it back.

MR. BASS: You basically get to the long-term trend lines ‑‑

MR. McCARTY: Yes, sir.

MR. BASS: ‑‑ at ‑‑ in year what, Three?

MR. McCARTY: Three to four, yes, sir.

MR. BASS: Three to four?

MR. McCARTY: Yes, sir.

MR. BASS: And that's all in the projected revenue in fact. So you did a slide of ‑‑

MR. McCARTY: Actually, we don't really look at that recovery. We simply look at the first year pattern.

MR. BASS: You just looked at Year 1?

MR. McCARTY: Yes, sir. We don't protect ‑‑ we don't project that recovery. We've assumed that over the long run, we would get some additional revenue from that recovery, but we did not project that with this ‑‑ with the $10.2 million.

MR. BASS: The $10.2 is a one-year figure?

MR. McCARTY: Yes, sir. That's the first year.

COMMISSIONER ANGELO: And we've actually been looking at a slight increase for the last several years in total license sales. Correct?

MR. McCARTY: Yes, sir.

COMMISSIONER ANGELO: Overall. So they've come back to the extent that it has been a net increase. And it's ‑‑ I don't know whether it's ‑‑ it is back higher than it was in '96.

CHAIRMAN ARMSTRONG:: Would the ‑‑

COMMISSIONER ANGELO: Is that correct?

MR. McCARTY: Yes. It is.

COMMISSIONER ANGELO: It is? That's what I thought I remembered.

MR. BASS: Do we have the authority to do an out-of-state lifetime ‑‑ nonresident lifetime license?

(Pause.)

MR. BASS: Do we have the authority to do a nonresident lifetime ‑‑

MR. McCARTY: I don't know.

MR. BASS: ‑‑ license?

MR. McCARTY: I don't know. I'd have to look at that. I also don't know ‑‑

MR. BASS: I don't know how ‑‑ I know there's a market for it, but I don't know how big, simply because of the convenience factor for a certain amount of certain out-of-state individuals. And I don't know how you'd begin to price it, but ‑‑

MR. COOK: We'll have to find out if we can, if we've got that or not.

MR. McCARTY: In my looking at it, I think both ‑‑ California and Colorado both have an out-of-state lifetime license. I know California does, and I can take a look at that, but it's pretty pricey.

COMMISSIONER ANGELO: Madam Chairman has a ‑‑

MR. BASS: But the resident lifetime is pretty pricey, too.

COMMISSIONER ANGELO: Madam Chairman?

CHAIRMAN ARMSTRONG:: In ‑‑ the last time we had a large fee increase, was it across the board, or was it selective?

MR. McCARTY: It was selective.

CHAIRMAN ARMSTRONG:: Okay.

MR. McCARTY: It ‑‑ as ‑‑ about as broad as this one is.

COMMISSIONER ANGELO: Commissioner Ramos?

MR. McCARTY: And remember that we would quite often look at commercial fees at a different time. So, certainly, the last time we ‑‑ commercial fees weren't included. And commercial fees aren't included this time.

COMMISSIONER RAMOS: In line with Chairman Armstrong's comments regarding increasing the age from 18 to 21, it seems to me that if our goal is to get more of the youth involved, we need to do more than that, that we need to more aggressively, like I mentioned earlier, expand and maybe prioritize the hunting opportunities in these public hunts for the youth, because there's no point in having more licensed youth if they don't have a place to go hunt. So ‑‑ and I fully support what you say, but I think we're going to have to couple it with a priority in these public hunts for the youth or, somehow, expand it a little.

CHAIRMAN ARMSTRONG:: Well, I agree with Commissioner Ramos. I also remind everybody that it's hunting and fishing licenses, and fishing will ‑‑ we will continue to have excellent public access for youth for far into the future ‑‑ on the fishing side of that equation, anyway.

MR. McCARTY: Yes.

COMMISSIONER ANGELO: Any other comments or discussion?

(No response.)

COMMISSIONER ANGELO: If not, before we adjourn the meeting, I would like to make a comment regarding this financial report that Drew prepared for us. We didn't get a whole lot of discussion on financial matters in comparison to how much we had on the more glamorous Regulation Committee items this morning ‑‑

(Laughter.)

COMMISSIONER ANGELO: ‑‑ but there's certainly nothing more important that the Commission does than what's included in this.

And as we mentioned at the last meeting, Drew has made an effort to really present to the Commissioners some detailed information that allows you to focus on how the Department's financing is undertaken and how it's going. So I would encourage all of you to make the effort to go through this information and absorb as much of it as you can, because it's extremely important, and it's a lot of effort on the staff's part to prepare it.

So with that little bit of encouragement, if there's no further business, we'll adjourn the meeting of the Finance Committee.

Madam Chairman?

CHAIRMAN ARMSTRONG:: Thank you, Chairman Angelo.

(Whereupon, at 3:00 p.m., the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission

Finance

LOCATION: Austin, Texas

DATE: April 2, 2003

I do hereby certify that the foregoing pages, numbers 1 through, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Parks and Wildlife Commission.

4/25/03

(Transcriber) (Date)

On the Record Reporting, Inc.

3307 Northland, Suite 315

Austin, Texas 78731


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