Texas Parks and Wildlife Commission
Finance Committee

April 7, 2005

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

BE IT REMEMBERED, that heretofore on the 6th day of April, 2005, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

PROCEEDINGS

COMMISSIONER HOLMES: We will convene the Finance Committee meeting.

The first order of business, approval of the previous committee meeting minutes which have already been distributed. Is there a motion?

COMMISSIONER WATSON: So moved.

COMMISSIONER HOLMES: Motion. Second?

COMMISSIONER BROWN: Second.

COMMISSIONER HOLMES: Second. All in favor say aye.

(A chorus of ayes.)

COMMISSIONER HOLMES: Opposed?

(No response.)

COMMISSIONER HOLMES: Motion carries.

Chairman's Charges.

MR. COOK: Thank you, sir.

Just a couple of items I want to inform the Commission about.

The Senate has passed its version of the Appropriations Bill and the House is currently hearing their version. We'll discuss how those bills compare to each other; I'll give you a little legislative update later. The next step for the bill will be to go to the Conference Committee which will probably be in early to mid April to work out the differences between the two versions. That's kind of where we are as far as our specific financial end with the Leg, and as I say, I'll give you a little more info on that later.

On another item, the State Comptroller's Office contracted with KPMG to perform the 2004 Statewide Federal Compliance Audit. Within this audit, KPMG reviewed our Sport Fish and Wildlife Restoration Programs which are two of the largest federal grants that we receive, of course. The auditors found one reportable condition relating to an error on a federal report. This report was corrected and resubmitted to the federal government before the auditors completed the audit, and we responded accordingly in the management response on that finding.

Overall we were very pleased with these audit results of the two federal programs, and we continue to work internally to find those kind of problems before they even come to the surface. But in this case, it was a good result.

As you may recall, at the beginning of the year we planned for at least a 2.9 percent lapse of salaries to meet our operating budget demand. And to kind of put that in my terms, we know that we're not going to have 100 percent of our positions filled at all times. People resign, people quit, people leave, and it takes some amount of time to advertise, and refill and interview and do all the things. So we budget some of that lapse that occurs because of that, which is actually a very wise thing to do.

The salary lapsed throughout the year because all positions did not remain filled. At mid year we found that we had met the 2.9 percent requirement and had an additional $1.1 million lapsing funds available to the budget. So in other words, after about six months we had met that lapse that we had budgeted for and we had $1.1 million available.

Based on the divisions' priority requests, we sat down with all the divisions and said, okay guys, give us an idea of what you got cut, what you had to leave out of your budget, and then we'll look at them. We made budget adjustments at that time to move those funds to the areas where the need was the most. As the year, the spring and the early summer progresses, we'll continue to monitor for additional salary lapses to ensure that these funds are used in the budget where appropriate.

Let me just give you a couple of ideas of how we allocated those funds, several different areas. But we continue to strive to get our financial system in good shape. We have some problems with the Oracle system; we've allocated about $300,000 of that money towards updating and improving our Oracle system. We put about a quarter of a million dollars into seasonal hourly positions in state parks. Where we had 64 funds available, that was a real high need. And we put another little over a quarter million dollars into our operating, and minor repair, and maintenance programs.

So that's kind of how we used those funds in mid year, looked at all the needs. So those funds have been allocated and we will continue to monitor our budgets and our lapsed salary, and if we have money available, we're going to put it back out to the divisions.

Thank you, sir.

COMMISSIONER HOLMES: Thank you.

Mary Fields will make her presentation.

MS. FIELDS: Good morning, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer, and I'm here to provide the financial review.

The focus of our presentation today will be to provide a revenue and budget status for Fiscal Year 2005, and update you on the progress of our Business Improvement Plan.

Let's start with revenue and budget. When comparing state park gross receipts through February 28th, we are at 4.7 percent, or $486,000 over last year's collections.

I have added the categories of park receipts to the graphic presentation this month, and as you can see, facilities and entrance fees are very close to last year's receipts, while concession and park pass sales and miscellaneous receipts are showing an increase. The largest component of revenue growth continues to be from state park pass sales. We've sold $1.25 million worth of the sales which is about $290,000 over last year's receipts.

Our boat revenue, as of February 2005, is up by 8.3 percent, or $460,000 compared to last year at this same time. The increased revenue relates to increased boat registrations and titles. The number of boat registrations is up by over 7 percent and the number of titles issued is up by 3 percent. We continue to transfer 15 percent of registration and titling revenue to Fund 64 which amounts to $798,000 based on revenues through February.

More positive news on license revenues and sales. As of February 28th at $69.1 million, we are up $3.8 million in revenues as compared to last year, or 5.7 percent. If you exclude the Freshwater Fish Stamp revenue of $2.7 million to be comparable to the prior year, we're still up by $1.1 million, or about 1.7 percent increase over last year. Combo revenue is up 2.7 percent; fishing is down by about 3 percent but we are gaining some ground here. The last time I reported on that, we were down by 5 percent. And as we move into the spring and summer, I think we'll continue to make headway there. Hunting is up 4.6 percent, and the other licenses are about even.

In reviewing the number of licenses sold, we are up 24.7 percent as of the end of February. Hunting is up 2 percent, fishing is down .9 percent, and total combo sales are down by 4.2 percent when compared to last year's sales. If you exclude the 568,000 of Freshwater Fishing Stamps from the total number sold, we're still up about 25,000 licenses which is about a 1.1 percent increase.

There's one thing I want to mention in the fishing category. As I mentioned ,on the revenue we're down by 3 percent, but when we talk about the number of licenses sold, it's only about 1 percent decrease. What we're seeing, you'll recall we implemented the Freshwater Fish Stamp and did the packages, and we also implemented a July and August fishing license and also a year from purchase license. What's happening is we're seeing more of the day-plus licenses being purchased at this point, so the number of licenses is higher but the revenue from those licenses is a little bit less.

So we're going to continue to monitor throughout the year to see kind of how these changes in our packages impact the fishing license sales. But we are heading into the spring and we'll just continue to monitor that, but I did want to mention kind of the difference there.

When comparing our 2005 revenue collections as of the 28th of February to our annual revenue estimate, we are progressing really as expected here. With 50 percent of the year elapsed, we've collected: 63.4 percent of our Fund 9 Game, Fish, and Water Safety funds; 44.6 percent of our State Park funds — that will pick up as we move into the spring and summer; 50.2 of our Local Park funds; and our Other category is about 47 percent.

In reviewing our 2005 budget versus expense, you can see we have $168.8 million, or 56.7 percent of the budget remaining, again with 50 percent of the year elapsed. Salary, and other personnel costs, and the benefits are right about where they should be at about 51 to 52 percent of the budget remaining. Spending on operating and equipment has slowed slightly with 54.9 percent of the budget remaining. Grant activity is right where it should be with 50.3 percent of the budget available. And we're showing 76.4 percent of capital project budget available, but there are several projects in progress and we'll expect this balance to continue to decline as the year progresses.

Our overall budget has increased by $5.7 million since the end of November. Budget adjustments made during the months of December, January and February are summarized on this slide, and I'm going to cover some of the more significant categories.

Our federal grant adjustments total approximately $6.6 million. There are several sizable grants in there; the most significant one was a $3.4 million grant for endangered species.

We also had a reduction of over $2.6 million which was a required transfer to the Comptroller's Office to pay for savings to be generated from the retirement incentive program.

Our settlement proceeds totaled a million, but the majority of those proceeds was from a construction settlement related to the Possum Kingdom Fish Hatchery.

We also had over $939,000 of adjustments to carry forward unexpended balances. Further adjustments were also made for donations and other miscellaneous adjustments.

We have seen some slight progress on our Business Improvement Plan over the last three months. The recommendation related to our new automated boat registration and titling system — which we're working on now — moved from the 60 percent complete to at least 70 percent complete category.

As you can see, we have 94 items in the plan; eight of the items remain to be completed, and you'll recall several of those are tied to those automated system improvements which are on a slower track for completion.

And that concludes my presentation. Are there any questions?

COMMISSIONER HOLMES: Any questions for Mary?

(No response.)

COMMISSIONER HOLMES: Thank you very much.

COMMISSIONER FITZSIMONS: Keep selling those licenses, Mary. Well done.

MS. FIELDS: We're doing well, it's going great.

COMMISSIONER HOLMES: Committee item number 3, Legislative Update. You covered part of that but you've got a little bit more to go?

MR. COOK: Yes, sir. I've got a lot more to go. Mary is going to help me with a few slides and I'm going to be very brief at this point and we'll take up a little more detail in the Conservation Committee.

The legislative process, I guess I would just say to you — and I've tried to keep you posted often and along — we've put a little summary sheet together, a little side-by-side thing that I hope is somewhat helpful in keeping you posted. And thanks to Harold Stone, our Legislative Liaison, Gene McCarty, Drew. Everybody involved is spending a tremendous amount of time down there, and it's going, in my opinion, quite well.

The LBB recommendation, after we made our Legislative Appropriation Request, the first step following that is the Legislative Budget Board comes in and makes a recommendation. Their recommendation for the biennium was a total of $405.5 million, as you see on this chart.

As we got through the House Appropriations and Senate Finance committees, those committees each made a recommendation, and as you can see, in the House committee it was $433.7, Senate was $444.2. And mostly, I guess what I'd say to you there is that as we go now to Conference Committee, some of the House bill included some items that the Senate bill didn't include, and vice versa. So it's going to leave some open opportunity for the Conference Committee to work out those differences. Obviously the Senate version, if you were to take a poll here at Texas Parks and Wildlife Department, the Senate version would be much favored, and I think we're going to end up okay there.

In general — and several of you have been down there and have spent a lot of time yourselves there, and I appreciate it — the support, in general, and the commitment to help conservation in Texas and to help state parks where they can is there, and I sincerely mean that, and I appreciate their help there.

To give you a little bit more look at what's in those bills, the Prop 8 bond funding, as you know, was our number one priority, to get some additional Prop 8 bonding authority so that we could continue our Critical Repair Maintenance Program.

Both the Senate and the House picked up our first number one priority which was $18.1 million for those programs. Now, that's a little more than half of what we have had in the previous bienniums. So we're going to have to make some adjustments, we're going to have to really focus on priorities.

In addition to that, however, the Senate picked up the $2.1 million for San Jacinto Monument repairs almost immediately, and then that got covered in House Bill 10 as we went along. So in both the cases on both sides — and again, they'll work it out in Conf. Committee — but funding for the San Jacinto repairs is there.

The Senate, as you see, also included a little more for Levi Jordan, for Admiral Nimitz. The Admiral Nimitz, let me point that one out to you. The Admiral Nimitz funding is to finish the hotel repairs and work that has already been started, that's just the rest of that funding; it doesn't have anything to do with additional expansion.

And as far as the East Texas Hatchery, see there on the next two items, both the House and the Senate in some form or fashion have expressed support for the East Texas Hatchery, want to get it done, but they have both done so via some sort of, again, bonding authority. We've got a little bit of tweaking to do as far as the timing of the bonds and the payback. And let me say this, there's no question there is some controversy about that, and the folks downtown, the officials, senators, and representatives are hearing that.

It goes something like this — and I forget the exact numbers, but to build a $15 million hatchery in East Texas via the bonding program, as a result of the interests involved in that, will actually cost us about $18- to $19 million — I think that's pretty close. However, in order to provide funding in some form or fashion, that allows the Leg to allocate that amount of $2- to $3 million a year in debt service as opposed to the whole $15 million, and that's basically the rationale behind that proposal. We intend to build that hatchery and will do a crackerjack job of it either way.

The next item will be restore the 5 percent reduction. As you may remember, when we prepared our Legislative Appropriations Request, the directions that we had received were to cut 5 percent, and we did so. So our number 2 priority in our Legislative Appropriations Request was to restore that. In both cases, in the House and in the Senate, both a little bit different — and we've talked about it some before, you've seen it on the comp. sheets — there is a provision to restore all or part of that 5 percent reduction.

Some other items of interest that are going on — both the Senate and the House are talking about some form of state pay raise for employees running somewhere around 3 percent to 4-1/2 percent, depending upon available funds. For instance, in the case of the House, that's what that Article 11 is there that we finally call Article 11, the Wish List. But it's all dependent upon availability of funds. Same thing in Law Enforcement for Schedule C. Our wardens are part of Schedule C, they are included in the recommendations in both the Senate and the House in regards to pay raises in that area for those employees.

Just a note or two on a few other bills that were very important to us. The Gulf Shrimp License Management Program in both the House and the Senate are moving, have been well received, we've got a lot of support for it. The Public Oyster License Management Program, again are both moving and both seem to have a lot of support. The Game Bird Stamp Consolidation has been a little bit rockier, but has moved well through the House and is out of committee now; in the Senate it is pending in committee. We heard earlier today that we think that's one is coming out, and that's an important one to us that we're watching very closely.

Allocation of sporting goods. There's been a lot of work and effort by a lot of different people to either get us up to the $32 million cap or to go all the way to as high as the number most frequently heard is to raise that allocation to $85 million which is available on the type of sporting goods that this rule was applicable to.

The latest thing that happened was that Mr. Hilderbran's HB 1292 — and there's still very much negotiating this — I think where we ended up the other day in talking to the Comptroller, Mr. Hilderbran's people talking to the Comptroller, they're basically trying to set a floor of 32- in hopes that it will not cost the bill. I haven't seen exactly how we're going to get there.

Again, a lot of support. That bill came out of Ways and Means and by the time it came out of Ways and Means, the chairman of Ways and Means, Mr. Keffer — who is a good friend of the Department and a leader down there — he was signed on, he was full support, everybody very supportive. There's not a companion bill in the Senate right now. A couple of other bills of interest —

COMMISSIONER PARKER: Bob?

MR. COOK: Yes, sir?

COMMISSIONER PARKER: Talk to me about that floor business, explain that to me.

COMMISSIONER FITZSIMONS: I was with Chairman Hilderbran and his staff while we were all there at the hearings, and the issue came back that they really did not get the dynamic fiscal note that they'd wanted. If you remember John Sharp, when he was Comptroller, and really at that time Craddick and Sharp were the ones that came up with the concept of the dynamic fiscal note. It seems that Comptroller Rylander is applying it a little bit differently in that unless there's $100 million either way, not over the biennium but annually, they're really not looking at the dynamic fiscal note. So they looked at other ways of — how should I say — reducing the impact of the first answer which came back, and as we all know, a bad fiscal note is going to kill your bill. And one idea is to make it a floor and then just look at future revenues coming in to Parks and Wildlife, and that then taking us to the 85. In other words, outside the biennium, the growth in sales tax.

But I don't think they've given up the idea completely, Bob, of trying to, since it's not set in statute, applying the dynamic fiscal note concept to the existing bill.

COMMISSIONER HOLMES: But isn't that also related to how much you lift the cap to?

COMMISSIONER FITZSIMONS: Absolutely. If you don't do a dynamic fiscal note, then it's the very simple arithmetic of the difference between 32 and 85.

MR. COOK: I think where they ended up, Commissioner, was something like as opposed to a cap, it was open depending upon this increased revenue on these items.

COMMISSIONER FITZSIMONS: They did this in the highway bill in the past.

COMMISSIONER HOLMES: But it's kind of where we were at the beginning anyway.

COMMISSIONER FITZSIMONS: Not unlike where we began.

What's encouraging to me, and those of you who have been around this for a while, is not unlike the president and Social Security — I mean, 5-6 years ago people said don't even think about that. Remember? I mean, you can't get that, that's not going to happen. And here we are with a fair amount of support and people working to figure out how to do it.

Lee, is that accurate?

COMMISSIONER BASS: We've come a long way.

COMMISSIONER FITZSIMONS: Yes, we've come a long way.

MR. COOK: The other two items there — and I'm just going to mention them very briefly — there is a bill, SB 1288 by Mr. Lucio, to annualize hunting and fishing licences and waive fees for veterans. Now, the number one issue we have there, as we reported, is there's a considerable fiscal note with that item, and I worry about it and I've talked to Mr. Lucio's staff some about it. From the standpoint of our regulations cycle, how we're setting seasons and bag limits and our ability to sell a license, and that person knew what he has bought when he bought that license, what he has permission to do, seasons, bag limits, size limits, whatever it may be, to sell an annualized license, I think that creates a real law enforcement, and quite frankly, a management nightmare for us.

The cost of implementing such a program on the annualized license will require considerable reprogramming of the MCI system. That can be done, that's just money, as they say.

This other issue of a person who walks in on May 1st, let's say, and buys any kind of license, hunting and/or fishing license, and you as the Commission, us as the Agency, being able to say okay, sir, here's what your license means for the next 365 days, that's a very difficult one. And so we're working on that one.

Water Bill, I'm going to spend quite a bit of time, given our time frame that we're at right now, I'm not going to go into it other than to read you one sentence from the Water Bill. Senate Bill 3 by Mr. Armbrister was submitted earlier this week, and I want to read you one byline out of the Austin American Statesman: "In a major shift in state policy, the bill would dedicate water to protect bays and estuaries." And folks, as you know, our number one priority has been water for fish and wildlife, and I cannot even begin to estimate the number of hours and days that — talk about come a long way, and of course we've got a ways to go.

I saw the Houston paper this morning where the mayor of Houston really took issue with — there was a fee associated with the amount of water over 5,000 gallons, and of course, I've been on the Water Conservation Task Force a little over a year and the city water providers, that's one of their big issues was be careful about adding — in fact, they were a little more direct than saying being careful, they are really leery of any added fee to their users.

You know, we are very, very enthused and appreciative about the potential good things in this bill that we believe bode well for the environment, for conservation and for fish and wildlife, proprietary landowners included.

COMMISSIONER FITZSIMONS: Our friends helped us a lot. I've been working on this for four years and was on the Flows Commission that made the recommendations on the environmental part, and they took our recommendations verbatim, they didn't argue about it. And Lee and I started working on this in 2000 with the task force, and again, it was one of those things, we were a long way from even having people recognize that this is something we should deal with.

MR. COOK: If you haven't already seen it, I'll have you a little more detail when we get it into Conference.

COMMISSIONER FITZSIMONS: Let me tell you one other thing that is really important and that we worked very hard to get in addition to what will be referred to as the Reservation System. That's where TCEQ essentially takes off the table a certain amount of water — bay by bay, watershed by watershed. They can go back and what they call reopen in times of drought which means when you really need it, you're not going to have it.

So the most critical issue that I worked on and our environmental groups — TWA was a big help — was to make sure we had the ability for voluntary transfers of existing permits. Now, those are senior permits, those are the ones where you have the water in the driest year and that those could be recognized for environmental or in-stream use. That's never been the case in 150 years of Texas water law. We really made a seismic shift there. And there are a lot of people that opposed this over time.

And that language is in there verbatim.

What this means is the Department, friends of the Department, private conservation groups, can go out and acquire, lease, option, get by donation, the most senior rights on a watershed, and that water will be there in the drought and not subject to that re-opener when the inevitable drought comes. So that's good news. That also means we have to get busy with our friends in getting us some water now that we're allowed to own it.

MR. COOK: Or we get the bill fast too.

COMMISSIONER FITZSIMONS: Right. Well, that's the other interesting thing. I've got to tell you Armbrister did an amazing job, Arm-twister they call him — and he did an amazing job, and he has every party onboard before we finished writing it. So. big news.

COMMISSIONER MONTGOMERY: May I address this real quickly?

We're continuing to work on executive compensation which I feel strongly is very important to the long-term health of the Agency. I may be in contact with you all, so just please note that comes up next month, so I would appreciate your help on it.

I want to point out the problem with the fisheries financing because I think that's a significant policy move we made a couple of years ago. We took the recommendation of our staff that we need to replace Jasper and spend about $45 million upgrading our assets which were wearing out, and that we were going to maintain essentially the same capacity, but keep it from falling apart and deteriorating which it was going to do, and that's how that ten-year stamp was set and the budget for $45 million was set.

We looked, at the time, at whether we ought to finance that income stream and kind of went: Duh, when you do that you spend a whole bunch of money on interest, you don't have enough money to finish the program, let's don't do that. Well, for the purpose of having the state budget look better, we're now back in that position. I don't know who knows who, but inform key people in the legislature now — we are not doing — I guess I'd like on the record for our constituents to know that we are not breaking faith with what we said, but the fact is the financial covenant is being changed and that we will not have enough money to execute the program we laid out based on the stamp that we convinced the user groups to take on and which they supported, if we're forced to issue revenue bonds to build that program. So I think we need to recognize what's happening and communicate that effectively. I've already sent one letter to continue to request that not be done because it really changes the deal pretty materially from what we laid out.

So I just wanted everybody to be aware of that change, and what the consequences mean, and what the policy difference is on that one.

COMMISSIONER PARKER: To bolster what Phil stated, am I under the impression — I'll direct this question to you and you can find out — I think we've had about $4.7 million worth of Freshwater Fishing Stamps sold, or $3.8-, which is it?

MS. FIELDS: It's roughly $4.5- now.

COMMISSIONER PARKER: And I thought the original concept — and I might not have read it right — I thought from what Mr. Durocher had laid out that we will have collected enough money from the fishing stamp to pay for the Jasper Fish Hatchery by the time it's finished.

COMMISSIONER MONTGOMERY: Yes. It's not the Jasper Hatchery, it's the entire program over the 10-year program that you're shorting. You're shorting the back-end of the period by spending the interest. We'll still build the hatchery, that's not the issue.

COMMISSIONER PARKER: I know that, but what I'm saying is we're going to be building the Jasper Fish Hatchery and paying for it with a credit card.

COMMISSIONER MONTGOMERY: The interest cost is a straight deduction against the total program.

COMMISSIONER PARKER: And then it's not going to allow us to have the other money to upgrade the other fish hatcheries that are so desperate too. Isn't that right?

COMMISSIONER HOLMES: That's exactly the point.

COMMISSIONER PARKER: So that's the point we have to drive home to the folks downtown. Is that right?

MS. FIELDS: Yes. The reason the legislature is moving that way is because to pay debt service on bonds is a much lower price tag going against the bill than the full $15 million that we would want in appropriation authority. Although we have the funding, we'd have to increase the authority which is a cost to the bill.

COMMISSIONER MONTGOMERY: Well — and correct me if I'm wrong — as I understand it, though, that cash will simply be held.

MS. FIELDS: Yes.

COMMISSIONER MONTGOMERY: The cash is still going to be held, it can only be used from the stamp for this purpose. So it looks better right now but it really has no economic consequence other than the accounting device.

MR. COOK: Commissioner Montgomery, it is much like the cash that's being held in 467 for state parks and local parks.

COMMISSIONER MONTGOMERY: I understand.

COMMISSIONER HOLMES: And that's the discussion we had at the last meeting: exactly where was that cash.

COMMISSIONER MONTGOMERY: I'm concerned about both the reality of it, but also the perception that we went out and sold a program and we did not change the game, and it may be changed on us.

COMMISSIONER FITZSIMONS: You might notice the sponsor of that bill is former State Rep. Dan Ellis, I believe, is back there. Speaking of friends, our many friends. Thank you, Representative Ellis. We wouldn't have this to talk about.

COMMISSIONER MONTGOMERY: The last point I wanted to raise, and I don't know how you want to deal with it, I'm not fully knowledgeable, I haven't seen the language, but I am aware that there are several bills related to mitigation required of transportation agencies, particularly TxDOT.

We've been working with the Governor's Office and TxDOT to implement a policy by which we manage a lot of that mitigation funding. And the bill's language, as I understand it — and Jack, you can correct me if I'm wrong — limits mitigation only to federally required mitigation. And I think the point we want to make to TxDOT and to the legislature, this agency has been really great at getting in front of the Endangered Species Act, for example, and coming with voluntary programs and preempting federal action which becomes much more expensive and punitive. And if the law limits TxDOT only to spending money when there's a federal requirement, it takes away their latitude to do something proactive and voluntary.

I think we've always been good partners with TxDOT, and other agencies, engaging in voluntary actions to do the right thing, however you define that, but I'd hate to see the legislature take away their latitude and our latitude to help them manage conservation in advance of having a federal problem.

COMMISSIONER FITZSIMONS: Particularly if it prohibits a voluntary mitigation.

COMMISSIONER MONTGOMERY: Am I right, Jack? Is that the way the language is reading?

COMMISSIONER HOLMES: Not mandating it, but prohibiting it.

COMMISSIONER MONTGOMERY: Prohibiting it is what I understand.

COMMISSIONER FITZSIMONS: Jack actually knows the facts, so let's get the facts.

MR. BAUER: Jack Bauer with the Land Conservation Program.

I don't have the bill in front of me, but the proposed bill would take existing mitigation authorization that TxDOT has and add a phrase that would say something like: only to the extent that would be required by a federal agency would we have the authority to do mitigation. So it would take away a range of mitigation options that we and TxDOT currently use.

I don't know if Ann has the bill, but the legal consultation that I've gotten from Robert Sweeney would indicate that the language, as it reads now, would limit TxDOT in a much greater way than it does now.

COMMISSIONER MONTGOMERY: Bob, I don't know who would communicate this, but to me it's very important that if the legislature does this they understand they're taking away the latitude to prevent detrimental actions in the future. We're not out there trying to impose things on folks, but we're real good at doing voluntary preemptive, proactive actions, and we're going to lose that latitude if that language is passed. To me that's a lot of dollars we use for conservation that are going to go away.

COMMISSIONER PARKER: Where is that language and what bill is that language in?

MR. BAUER: It's in two bills, a House bill and a Senate bill. It's in 1206 with Staples and Krusee, and the other bill is 2702.

COMMISSIONER HOLT: What's driving that, Jack. Is it part of a TxDOT bill?

MR. BAUER: My sense — this is my opinion — that it's probably driven by TxDOT as a cost avoidance mechanism that will save them money.

COMMISSIONER HOLT: And it also gets them off the hook, in a way, until something is forced on them.

COMMISSIONER MONTGOMERY: I don't think it does, that wasn't the point.

COMMISSIONER FITZSIMONS: It forestalls the inevitable and it's already a train wreck by the time you're dealing with it.

(General talking.)

COMMISSIONER HOLMES: Have there been complaints about the current status? I mean, have we had more than normal difficulty?

COMMISSIONER MONTGOMERY: Can I take a quick shot at that, Jack? Because I think I know the answer.

MR. BAUER: Yes, sir.

COMMISSIONER MONTGOMERY: The answer is there are complaints about the mitigation banks we have sponsored in the past because they were purchased prior to receipt of credits, and then the Corps of Engineers and other agencies are withholding all those credits, or they've become more difficult to receive than anticipated. The mitigation programs we're working under now, however, address that problem in that they only require an expenditure by TxDOT when the credits are given. It's a big change. So the criticism you may hear is old news, it's being dealt with, and it's structured into the new programs we're working on with respect to the Land and Water Conservation Plan. The plan Jack is working on, TxDOT actually gets the option to buy the credits when they want them, not being forced to go buy the land and become a credit banker which is what's happened in the past.

COMMISSIONER FITZSIMONS: So the criticism is banking.

COMMISSIONER MONTGOMERY: Yes. I think the concern too is that somehow they're going to get forced into programs they don't want to be in. I think that has not been a policy, nor a practice, nor our intent, but the law will take away the latitude for that gray area in which you attempt to be proactive, prevent federal actions, and do things in an anticipatory manner which from a business standpoint, I believe ultimately is going to be less expensive to them.

MR. BAUER: If I may comment a little bit further. If we bring it back to impacts to fish and wildlife — which we're interested in — a major transportation development project is basically an investment in infrastructure of state resources, but that infrastructure development is going to have impacts to another set of state resources, that being fish and wildlife resources. We as an agency, and only a component of those state resources, has another layer of federal regulation on top of it, Waters of the U.S., Wetlands and Endangered Species.

We have always proposed, in offering recommendations for publicly funded projects, to have a balance and identify all of the impacts and then negotiate the best deal we can for the resources, to assist in minimizing impacts and allowing the developer to get his project done. And I think that remains a sound philosophy. To the extent that that would be altered by legislation, it could be detrimental to the Agency and the fish and wildlife.

COMMISSIONER MONTGOMERY: And I think all we want is to leave the latitude for TxDOT to do voluntary actions, as simple as that. Anyway, I wanted to bring up those few points.

COMMISSIONER FITZSIMONS: Thank you, sir.

COMMISSIONER HOLMES: Anything further?

Item number 4, State Parks Pass.

MR. DABNEY: Chairman, Commissioners. I'm Walt Dabney, State Parks Director. Good afternoon to you.

I'm going to try to update the State Park Annual Pass that Mary alluded to a minute ago, let you know how that's gone.

Two years ago we had the Texas Conservation Passport which, first of all, people didn't know what that meant, they didn't know whether it was an erosion control permit or whatever it was. The TCP folks didn't even know what to ask for until they came in and asked for a pass. There was great frustration by the public with it because it was a window sticker, you had to know what car you were always going to come to a park in, or buy you some more stickers. One of the great frustrations, we called it an entry pass to the state parks but when you rolled up to most of our historic sites, we would tell them no, this isn't an entry fee, we have a tour fee at the McGoughlin Home or whatever and they'd go — they just got totally frustrated with that because of bait-and-switch or whatever you want to call it. We agreed with that.

(General laughter.)

MR. DABNEY: We went to the State Parks Advisory Board when we were doing the whole fee program review for state parks and asked them to give us some feedback. They all confirmed what we surmised, that this was a very frustrating thing and that we needed something novel like a State Park Annual Pass, pure and simple, and we established that.

We put a group together of outside the Agency and inside the Agency to give us some recommendations which they have done and we've implemented.

I think Chairman Fitzsimons and Bob were at the annual meeting in Nacogdoches when the Stephen F. Austin cheerleaders came in and kicked off our troops with a rousing sendoff to go sell annual passes, and it was fun from there.

Everybody that showed up at a state park saw the beginning of our promotional information which was a banner advising people that there was a new way to get into the parks and that they should look at it.

We put a neat package together that had a window sticker "I belong in Texas State Parks" and a getaway planner that they could pull up on the internet website to tell them what's going on in parks and that sort of thing, a book of coupons, valued added, which was everything from discounts on camping to discounts in the state park store and so forth.

We did a spring and summer promotional focus, again working very closely with Lydia's shop in communications, targeting park users and their families: Texas Highways in their wildflower issue in the spring, it was a really beautiful layout; Texas Journeys which is a AAA magazine; newspaper articles. Someone recommended that we go down to San Antonio and hit the military, let them know about this pass which again is a great deal. Then in the fall we were targeting more the Winter Texans, and we hit the Texas Co-Op Power which has a huge circulation, Texas Highways, and again the AAA magazine, all of which was letting people know that this was a great idea.

The promotional focus of the State Park Pass as a gift was a really great success. I sold, I think, eight or ten of them in my office with people that had come in for a meeting and I wouldn't turn them loose until they had considered buying these things to give as Christmas presents. And we packaged them, as you can see down in the lower right, in a nice package that gave you a gift certificate which gave you a year in the parks from the day you turned that gift certificate in and turned it into a pass. It also gave you the state park Christmas tree ornament which was a very nice package. And we sold quite a lot of those. Remember that this coming year because we'll do it again, and it would make a good commissioners' Christmas present for all their friends.

Also, we partnered up to go out to a lot of shows: RV shows were big parts of this; the Good Sam Club has an annual Samboree, we were there; Bass Pro Shops outdoor show; of course the Wildlife Expo. We were getting the word out on these things. One of our target goals is every RV sold in the state of Texas ought to have one of these in it, and we've had pretty good success. At the Austin RV Show, every RV that was purchased had one of these in them, and the dealership bought them and put them in there. The big RV Outlet Mall and Crestview RV now are committed to every RV that they sell, an annual pass to state parks goes with it, and they just keep reordering them as they sell.

Interesting innovation is REI has agreed not only to sell the State Park Annual Pass but they're selling some of our state park products as well which has been really good.

We visited with 26 of the bass fishing and other kinds of fishing clubs, telling them the best way to come rolling into Ray Roberts with your trailer is to have that annual pass showing on your window or hanging in your window if you go in before daylight and no problems, and we're selling a lot of them.

Just to give you an idea of the success — and Mary mentioned this — the TCP we were pretty well capped out at selling 50,000 of them for $2.7 million. The first effort at selling the annual pass last year, we sold approximately 61,000 of them for an additional million dollars worth of revenue, which is not bad for our first year.

We've got a renewal notice that's going out to everyone that bought one, and there will be ten of them going out here to all the Commissioners. Let me get you one too, Lee. I know you will renew them and it's a great deal, and I hope you used them a lot.

Our revenue goal, while last year was to sell 62,000, this year we're looking at selling 66,000 with a revenue goal of nearly $4 million.

Our theme this year is "Our Parks won't be the same without you" and if that's on your car, that's just driving advertisement for us.

In addition, the State Park Guide — if you haven't gotten that yet, we'll get it to you — is much better this year than it was last year, again working with the communications shop. It really is a quality thing. It's not a one time look at it and throw it in the recycle bin, it goes in your glove compartment and it's a ready reference for just about everything going on in the state parks.

The annual pass for this year, which was different than the Fort Davis picture you saw last year, is Caddo Lake, and it corresponds with the front cover of the State Park Guide, so it really helps as far as recognition of the symbol, and we'll be changing that each year.

Just a comparison from last year to this, in January of '04 we had sold about $780,000 worth of these, this year we're already up 9 percent and have sold $851,000. I think the key piece to this is, I am really sure that anybody that bought one last year — part of that is we've had zero complaints about this. In fact, everybody I run into that's a state park user and get to talking, eventually comes around to the fact that: Man, you changing the annual pass is one of the best things you've done. We use it all the time and we're in now for the duration. So we think it's been a great success. Again, our goal is 66,000 and we are at about 16,000 now plus a number of gift certificates.

Yes, sir?

COMMISSIONER BASS: It's also good at historical sites and wildlife management areas?

MR. DABNEY: Yes. And anybody that's got one, I tell them if you ever have a problem getting in a place, let me know, and they don't.

COMMISSIONER BASS: What about like for the Athens Fish Hatchery?

MR. DABNEY: No, sir, this is a State Park Pass only.

COMMISSIONER BASS: So wildlife management areas aren't.

MR. DABNEY: They are not. This is only to get into the state parks.

COMMISSIONER BASS: Historic sites?

MR. DABNEY: Yes, sir, all state park properties, all the historic sites. There's no more of this tour fee business.

COMMISSIONER HOLMES: Any other questions for Walt?

MR. DABNEY: One other thing we did with it, Bob authorized us to send a card to each member of the legislature, and it's really kind of a business pass because these are sites that are owned by the state. We want the members of the legislature to go out and look at them, and in many cases it's probably something that's just not on their mind.

With the card there — and there's a card in the office that says "Staff of District whatever" — they can pick that up and say, I'm going out here to see so-and-so, I think I'm going to run into Garner and check it out. And there's no hassle, they've got that card, they don't have to pull out ID. I think it's going to be a really good stroke.

COMMISSIONER HOLMES: Any further questions or comments for Walt?

(No response.)

COMMISSIONER HOLMES: Thank you, Walt.

MR. DABNEY: Thank you very much, sir.

COMMISSIONER HOLMES: Before we conclude this, Al Henry had a comment or two he wanted to make.

COMMISSIONER HENRY: Since I'm not reporting today, I promised the Commission previously that we would update you at every meeting until the Sheldon campaign is finished.

As we mentioned at the last meeting, we had recessed the campaign pending the hopefully conclusion of the Tsunami campaign in Houston where they were trying to raise $10 million, and we were going to the same people and we didn't want to get 50 cents when we could get $1,000, and that's what you're facing when you're looking at something like this.

I just wanted to let you know during December, January and February, we recessed the campaign for that period. We did make letter contact and application contact with a number of the foundations. We've contacted all the larger foundations in Houston now. We're going to smaller foundations not only in Houston, but in specific cases, other areas of the state. And I reported to the Chairman about ten days ago that we had received, since the restart of the campaign, the first gift which was $100,000 three-year gift from Fondren. This is due in large part to contacts made by the Chairman of the Finance Committee. I wanted to recognize it and say thanks.

We're going to be campaigning the rest of the year, we hope to close it out at the end of the year, so I'll be there, along with other members of the committee. And if any of you can help in any way, by contacts or otherwise, we certainly would appreciate it.

Just wanted to let you know where we are. Thank you, Mr. Chairman.

COMMISSIONER HOLMES: Al, you've done a terrific job on that, and you're entirely too modest about it. You've really done a wonderful job.

COMMISSIONER HENRY: A lot of help.

COMMISSIONER HOLMES: Mr. Cook, do you have anything further?

MR. COOK: No.

COMMISSIONER HOLMES: Nothing further to come before the Finance Committee, we're adjourned.

(Whereupon, at 12:40 p.m., the meeting was concluded.)

CERTIFICATE

MEETING OF: Texas Parks and Wildlife Commission Finance Committee

LOCATION: Austin, Texas

DATE: April 6, 2005

I do hereby certify that the foregoing pages, numbers 1 through 41, 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.

4/20/05

(Transcriber) (Date)

On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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