Texas Parks and Wildlife Commission
Finance Committee

May 28, 2003

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

BE IT REMEMBERED, that heretofore on the 28th day of May, 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 10:15 a.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

Alvin L. Henry, Houston, Texas

Ned S. Holmes, Houston, Texas

Philip Montgomery, Dallas, Texas

Donato D. Ramos, Laredo, Texas

Kelly W. Rising, M.D., Beaumont, Texas (absent)

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

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

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

COMMISSIONER ANGELO: At this time, we'll convene the meeting of the Finance Committee.

And I'll ask the Committee members to approve the Committee minutes from the previous meeting. Are there any changes, or do we have a motion that they be approved as submitted?

COMMISSIONER FITZSIMONS: So moved.

COMMISSIONER WATSON: Second.

COMMISSIONER ANGELO: All in favor say aye.

(A chorus of ayes.)

COMMISSIONER ANGELO: Opposed?

(No response.)

COMMISSIONER ANGELO: The minutes are approved.

And, Mr. Cook, if we could have the Chairman's charges, please?

ITEM 1: CHAIRMAN'S CHARGES

MR. COOK: Thank you, Mr. Chairman.

I'd like to give the Commission an update on something that I hope you haven't heard a lot of bad things on recently, and that's our MCI WorldCom contract on our automated license issuing system. In a nutshell, I will say to you that I believe I have had fewer calls this year than any of the last seven or eight years in which we've had an automated system. I basically have had no calls – problems or objections – we've had very few, not very many.

The system seems to be working perfectly. The licenses are being issued, and money's being collected and reported fairly well. Our status – right now, we are in the process of negotiating with MCI WorldCom. They are in bankruptcy. Of course, that issue always stays in front of us in renegotiating our contract, doing some contract amendments and doing a contract settlement on liquidated damages, some of the issues, again, that we've had with them and their performance.

For just the most recent activities, we've met with MCI WorldCom, last week, to discuss the schedule for completion of programming for all outstanding system requirements, as well as the implementation of items for the license year coming up this August. Based on these discussions, all required outstanding features are expected to be completed prior to the end of this calendar year.

Possible legislative changes and fee increases for license year 2004 have been reviewed, and no system implementation problems are anticipated. Upon MCI receiving notification of any changes to our existing licenses or any new license types by June 6, just a week or so from now, the system will be ready for license sale on August 15.

All issues associated with the wording of the settlement agreement with MCI WorldCom were resolved last Friday, on the 23rd, via conference call with me and Jack Branham, and our contract person, and several of the people from MCI across the nation. Appropriate changes will be made to the latest draft. A settlement agreement and contract amendment for 2004 are expected to be fully executed within the next two to three weeks.

I guess, bottom line, I would say to you that I think any time you're dealing with an organization like MCI WorldCom, with the dependence – our dependence that we have on this system, I never sleep real well at night, but I also know that we have a back-up paper system in the box ready to go if we have to, which – we hope we don't have to go there. And I feel like this system will deliver. It has done well this year. We're continually making improvements to it and getting all of the parts in place. I believe they will be there.

There are still some issues with their bankruptcy folks that – every time we have a problem or every time we have an issue, they have to take it through the bankruptcy people. But in general, I believe we're going to get there.

We are beginning to talk very seriously with them about whether or not we're going to go for a contract renewal – contract extension. I would even say there that I believe it looks favorable. I think we can get those services provided by them – assuming we can continue to move along, I think we can continue to get those services provided by them, contract extension, cheaper than we can do the program ourselves or contract with someone else to do it. So that's where we are with MCI WorldCom.

COMMISSIONER ANGELO: Good news.

MR. COOK: I hope.

(Laughter.)

COMMISSIONER ANGELO: Relatively good news.

MR. COOK: Yes.

ITEM 2: LEGISLATIVE UPDATE

COMMISSIONER ANGELO: Then, I believe, Mr. Cook, you also have the legislative update for us.

MR. COOK: Yes, sir.

And I'm going to – I'm not going to spend a lot of time on this, and I want to before I start into it say it's not over until it's over. And we've still got several days left in this session. And as we have all seen demonstrated, just about anything can happen.

I guess if I had to summarize it to you again, I will say to you that the Texas Parks and Wildlife Department has many, many friends in the Texas Legislature and has many, many friends scattered across the State of Texas who support the organization and the things that we're about. And that is sincerely appreciated, and we appreciate all of your help. And the Chairman, needless to say, has absolutely been a tremendous asset as we've gone through this session.

I'm going to touch on several of these. The – probably the – when Phil Durocher – when you look out there now and you see Phil Durocher smile, that is because we have a freshwater fisheries stamp legislation that has been approved, has passed and is being given for the governor's signature – again, a bill that will provide us funding for renovation and/or rebuilding of our freshwater hatcheries across the state.

That bill has a ten-year drop-dead date on it and is one that we had great support for.

A gentleman just walked in over here on this far – my far right-hand side, Joey Park, also – who absolutely needs to be recognized. He and his associate, Harold Stone, down there have done – again done us an incredible job and have certainly burned the midnight oil with the best of them. And we appreciate this effort.

SB 1775 by Estes/House Bill 2926 by Geren is a licensed boat dealer/manufacturers piece of legislation that allows us to create a listing of boat dealers. And to be considered a boat dealer and deal and sell in new or used boats, you must be licensed, which – there's some flexibility on that now if you're dealing with a certain number of boats, and those kinds of things – again, a piece of legislation that was supported by the dealers, by the manufacturers and one that will help us, we believe, in some of the boat theft issues and ownership issues that we deal with.

HB 2351 by Mr. Kuempel – again, a friend of the Department – and matched up with Senate Bill 1158 by Mr. Averitt, who – Mr. Averitt, in the Senate, really came forward this year and helped us a lot. This is the bill that allows 15 percent of the boat registration fees to go to state parks.

This will potentially, with our fee and proposed fee increases, put about $2.6 million into our state parks, an area that we've never put any of this money into. And it's important and I want to point out that we structured this as for those folks down there so that our Fund 9, our enforcement group, does not lose money. In fact, again, with the fee increase, they will gain about a million dollars a year, also, from this effort.

HB 943 by Mr. Krusee. We had some legislation that would allow our conservation license plates to be used on RVs, trailers, boat trailers and those kinds of things. Right now, they can't be put on those units. That bill is still in flux, I believe, Joey said and possibly has – is not breathing too well at this time, but it's a nice piece of legislation. We would like to have it, but it's not one that is going to make or break us. We are watching it closely.

HB 1529 by Robby Cook – Representative Cook, on the inspection of wildlife resources, gives our game wardens greater flexibility in enforcing game and fish laws. That legislation has passed and is awaiting the governor's signature.

There's a Senate Bill, 1952, and people have a lot of different terminology that they refer to this bill on. It's sort of a better-government bill or a very large bill, I think.

I think when the final version – when the first version of it really came out, there was something like 500 pages of information in that bill, and it is currently still working down there. And the last I heard, Joey said that they had submitted something like 4- or 500 amendments to it just within the last day or two. So I don't know, you know, where that's going to end up.

But one of the things that the bill does – we have some concerns about it, and we're following it very closely. And we're working with the legislators down there to address some of the concerns that we have, for example, one being that it would centralize all of our building support staff – the folks who maintain this building could keep the lights on and the air-conditioning running and the plumbing fixed – it would centralize them in General Services downtown. And General Services then would have to say, "Well, okay, you two guys go out to Parks and Wildlife today," or something like that, and, with housekeepers, the same way.

We would prefer, because of our location out here away from that central complex down there, to not have it that way, to have it where we can have our own staff out here, the people who work for us and report to us. So we're watching that one.

And, also, one of the things that is still in that piece of legislation is it gives the governor – as I'm sure you've seen in the papers, it gives the – Governor Perry some additional authority, one of which being Parks and Wildlife Commission potentially being – Commissioners being terminated and new Commissioners being appointed. I'm probably not saying that just right, but, in a nutshell, that's what it does: A one-time opportunity for the governor to reappoint Commissioners, appoint new Commissioners, or whatever he might choose to do, in – at Texas Parks and Wildlife, along with several others –

COMMISSIONER ANGELO: All other commissions, or just Parks and Wildlife?

MR. COOK: No, sir. There's about four or five commissions, I believe, named in there, Parks and Wildlife being one of them. So that one's still being worked on.

Senate Bill 155 by Zaffirini is the protection of state-owned river beds. This business we had starting a year or so ago, Dr. McKinney debriefed you folks on this traffic up and down the river beds, particularly down on the Nueces in the Uvalde area. That bill has passed, and – a very good bill, a clean bill. It had, again, a lot of support from a lot of different people, and it's awaiting the governor's signature.

The bill we were talking about a while ago, 1582, on political subdivisions and their ability to trap and move deer – that bill actually started out as a bill saying something like they can trap them and just take them anywhere they want to and release them. And, of course, we, obviously, had some real concerns about that, as it – we're losing habitat out there and whether or not those people that they're being released on, or their neighbors, really need more deer.

And I am glad to say that with Joey's help and Wildlife staff's help and law enforcement's, and everybody involved working with Senator Wentworth's office, we now have that piece of legislation where, I believe, it will be actually very helpful to political subdivisions and to dealing with that issue. So we think that one's in pretty good shape.

It's moving along and doing okay, Joey?

MR. PARK: It passed.

MR. COOK: It passed and is okay? Okay. Great.

And this is the way it's going. We – this morning when we walked in, I had an update, because there's a lot of things happening here in just the last 24 or 48 hours.

Senate Bill 1374 is another one – by Mr. Armbrister is another bill of just very, very high interest to us. What that bill does – and, again, it started out as a bill that kind of put some legislative drop-dead dates on the SMR, San Marcos River, situation down there.

And it has evolved through time and as it stands now is a piece of legislation that would create a study commission staffed by folks appointed by the governor, appointed by the lieutenant governor, members of the natural resources committees in the House and the Senate and with our chairman or our chairman's designee, the Chairman of the Texas Water Development Board and the Chairman of the Commission on Environmental Quality.

So it has the right players: River authorities, municipalities and conservation organizations. We think it's a positive bill.

This study commission's charge is to study ways to deal with and provide for environmental flows in our rivers. Now, that's the bottom line, and it's open. It leaves this study commission a lot of flexibility. Almost every opportunity – I believe every opportunity is still open for them to come forward with recommendations to the next legislature as to how that might be done.

That one has stumbled a little bit in the last day or two for a whole variety of reasons that, quite frankly, I don't think have a whole lot to do with the content of the bill, but is now it as it is. And in the process, it has been attached now with House Bill 2877, which is a bill that – Senate bill that is moving and has some germane association and is moving forward, it looks like.

We just saw this morning just another piece of legislation that will affect us and that will affect our funding, and Gene will talk to you a little bit more here in a minute. I noticed the – a retirement incentive passed last night that would basically give people who are eligible employees – state employees who are eligible to retire a one-shot incentive of 25 percent of their annual salary if they retire at that point in time that they are eligible, which – in other words, if you were eligible on August 31 of this year, you would need to retire September 1 in order to get that – or whenever you become eligible.

So lots of things still going on. It is not over. We are just on really, really high alert on a couple of these things. In general, I am so pleased and so proud of our staff and our folks that have worked on this and so thankful to each of you who have worked in this process. And, again, Texas Parks and Wildlife has some incredible support in the Texas Legislature – absolutely very positive.

CHAIRMAN ARMSTRONG: Before – I do want to – I notice there are some people in the audience that are here today that I want to thank. The legislation that gives us the freshwater fishing stamp is truly significant, I think; over the next ten years, that means $40 million, roughly, going into improving our hatcheries and making it possible for us to remain one of the – if not the best, one of the two best fishing states in the country.

And the groups that support fishing in Texas have been tremendously helpful in this process. They embrace this idea. They worked on it long and hard for not just this session, but in the past. And I guess everything came together right this time.

Phil Durocher, Joey and Harold, the organizations like BASS and FAA and the Texas Black Bass Unlimited, Trout Unlimited, TABC and many others who helped on this deserve our thanks. I think Phil said – and I agree – that this is important today, but the full significance of it will be realized in the fullness of time, that this is a very important piece of legislation for Parks and Wildlife and people who care about not only fishing but, also, about water.

Thank you.

And also on the – I think it's important that everybody get their due credit on the – what we were calling the Four-by-Four legislation, the river beds of Texas. This is a really significant step, I believe, in conservation and for Parks and Wildlife and couldn't – we couldn't have done it probably without Susan – Commissioner Susan Combs' help on this and the excellent work done by the task force that met over the last – What, a year or year-and-a-half?

MR. COOK: Almost two years.

CHAIRMAN ARMSTRONG: – almost two years.

And the process really worked, and we've got some excellent and clean legislation to help our river beds. And the staff was great – and Larry McKinney's shop and, again, Harold and Joey – and everything. But we really do – I mean I've had – this is the first legislative session that I've been able to kind of work through.

And I've got to tell the – my fellow Commissioners we have a wonderful team here at Parks and Wildlife. And Bob is right. We also have a whole lot of friends. So thanks to everybody.

MR. COOK: I would be remiss if I didn't tell one little story, Ms. Chairman.

You know, we are down there frequently. And Joey and Harold basically live down there at the Capitol. I noticed the other day when Joey and Harold and I walked in the side door of the Capitol – you know, they have the highway patrol – the capitol guard is there. And, you know, he searched all of us and looked in our bags and looked in our jackets.

And when the Chairman walked up, he said, Good morning, Madam Chairman, how are you this morning? And he let her right on in, you know.

(Laughter.)

MR. COOK: I cannot tell you how much this lady has worked and how hard and how committed she has – how much effort she has put into this. And then, staff, I sincerely appreciate you.

COMMISSIONER FITZSIMONS: Well done.

COMMISSIONER ANGELO: Any other questions or comments?

(No response.)

COMMISSIONER ANGELO: Thank you.

ITEM 3: FINANCIAL REVIEW AND UPDATE

Item 3 on the agenda is the financial review and update.

Mary Fields?

MS. FIELDS: Let me get situated here.

(Pause.)

MS. FIELDS: Good morning, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer, and I'm here to present a financial update for the Department.

The focus of my presentation today will be to provide an update of major revenue sources, the status of expenditures versus budget, the status of the Business Improvement Plan and to share conference committee recommendations for Legislative Appropriations.

We'll start off today with the revenue update. As you can see, state park revenues, amounting to $14.2 million, are down by $422,000, or 2.9 percent, compared to revenues of the same time last year. While revenues are down slightly, we expect park revenues to increase during the summer months. And in reviewing monthly activity, the last two months have shown an increase over the prior year, and we expect that trend to continue into the summer. So I think we're in good shape with our park revenue.

Boat revenues, amounting to $7.8 million, are also slightly down by approximately $220,000, or 2.7 percent, compared to revenues at this same time last year. The registration revenues of about $5.6 million are down by 6.4 percent; however, the titling revenue of $1.4 million is up by about 11 percent, and sales tax revenue of $816,000 is also up by about 4 percent.

While the registrations are down, we have seen progress over the past couple of months and expect that trend to continue into the summer. It's my understanding that we normally collect most of our boat registration fees between the months of March and June. And in looking at past reports, we're making significant progress in this area. So, again, I think we'll be on track with boat revenue.

License sales revenues, amounting to $62.4 million, are up by 1 percent, or $630,000. We've collected 97.5 percent of our license revenue estimate for Fiscal Year 2003.

In looking at the different license sales, you can see that our combo license sales of $22.8 million are up 1.2 percent compared to revenues at this time last year; fishing license revenues of $13.4 million are down by 1.6 percent compared to last year at this time. Hunting license revenues of $12.9 million are up by 4.8 percent since last year, and other revenues, including stamp sales of $13.3 million, are almost equal to the sales at this time last year.

This next slide really just correlates the number of licenses sold in those major categories and should relate pretty closely back to the revenues that I just spoke about. As expected, the number of combo licenses are up. Fishing licenses, primarily resident fishing, are down slightly; we really think this could actually be just a seasonal variance. And, again, we're going into the summer, so, hopefully, those licenses will pick up.

I mentioned hunting license revenue is up. And all the licenses in the hunting area being sold are up. The number of stamps and other licenses sold are actually down while this revenue – while the revenue in this category has remained almost equal to last year.

There's really numerous licenses and stamps included in this "Other" category, and some of the licenses and stamps have done well, while others have not kept up to pace with last year's sales. I think really the good news with the "Other" category is that we're breaking even with last year's revenue in this category.

In reviewing our revenue collections as compared to our annual estimates, I've really just included statistics for three of our larger funds. As of the end of April, we're about 67 percent through the fiscal year, and, as you can see, our Game, Fish and Water Safety Fund has collected 68.5 percent of the estimated revenues.

This is somewhat deceiving with this statistic, since the majority of our license revenues have been received this year. You'll recall I just mentioned 97.5 percent of the license sales are in. The reason you're seeing this at 68.5 percent is because we're still receiving federal revenues that actually go into this fund. So we're on track.

The state park fund collections are slightly behind, at 65.8 percent, but, as I stated earlier, really, we expect the summer months to pick up. So I really think we'll catch up with this estimate. It's just slightly off.

And the local park fund is actually slightly ahead from the 67 percent. And basically, that's just more interest being earned on the fund balances within that fund than what we had originally anticipated.

In reviewing our expenditures status, this slide compares our adjusted budget of $332.5 million to the amounts that are expended or obligated, basically. And, again, we're 67 percent through the year. And within our divisional operating budgets, we've expended 65.9 percent of the budget, which is basically on track.

In our capital project budgets, we've expended 23.2 percent there. It's not uncommon to see a lesser percentage expended in the capital budgets since several of the projects extend beyond one fiscal year. So I would say, just overall here, the Department has done a good job of managing operations within our budgeted resources.

So let's see. We continue to make progress on completing items within our Business Improvement Plan; 61 of the 94 items in the plan have been completed, and this represents about a 65 percent plan completion. Seven items have been completed since our last Commission meeting, and five additional items are over 90 percent complete.

Executive management? Really, we plan to reevaluate the Business Improvement Plan in the middle of June just to ensure that all the items within the plan are still realistic and – just as far as the time frames and considering the resources that are available. But this, again, is moving right along just as it should.

So while decisions are still being made by the legislature – and Bob highlighted several of the bills – we did want to provide a summary of some of the actions that have occurred and indicate the impact of those actions on our Department. Our – this slide really just shows our Legislative Appropriations Request as revised in January. It amounted to $505.1 million for the upcoming biennium. You'll recall that this request included a 16.1 million reduction of general revenue that was originally requested for Local Park Grants.

The conference committee has recommended $460.4 million for our agency, and this is really just considering the Department's bill pattern in Article VI. That's what this total represents.

And the recommended amount does include the contingency rider to increase fee revenues by up to $31.5 million over the biennium; of course, this revenue is dependent upon Commission action to increase fees and actually collecting the revenue as we've estimated, and we're also required to maintain the Department's fund balances.

The Committee's recommendation actually represents a $44.7 million reduction from our Department's revised request. And I'm going to highlight some of the components of that reduction. It basically includes a $34.3 million general obligation bond reduction – that was intended for construction and major repairs – $5.8 million of capital budget reductions, and it included $3.3 million reduced for vehicles and $2.5 million for information technology acquisitions. The remainder – the remaining balance of $4.6 million represents operating reductions that will be taken over the biennium.

And I just want to remind everybody that these reductions represent a conservative amount, as we anticipate additional operating reductions when considering Article IX provisions and other bills that can impact our operations. Bob actually mentioned one of those bills earlier: The Retirement Incentive Bill. There's a couple of others that I'll mention here.

There's a Management Ratio Reduction Bill that will require agencies to get to an eight-to-one ratio of staff to managers by Fiscal Year 2004 and nine-to-one by Fiscal Year 2005. This bill could cost the Agency up to $1.5 million, although we do feel like that estimate could be a little bit high for us.

There's also the possibility of across-the-board reductions to state agencies; that may be required to balance the state's budget. So we'll continue to monitor all of these issues to finalize their impact on the Department's appropriations. And then we're going to actually get started with our FY '04 operating budget based on some of the numbers that I've just showed you and what updates as more issues and decisions get made by the legislature.

I'll conclude this by saying that this financial review provides information at a fairly high level, and detailed financial reports will be mailed out to you later this week. After you've had a chance to take a look at those reports, please feel free to give me a call if you have any questions. And at this point, I think that concludes my presentation.

COMMISSIONER ANGELO: Thank you, Mary.

Does anybody with the Commission have a question or comment?

COMMISSIONER FITZSIMONS: I have one question on the state park revenue. Obviously, there's a significant amount of revenue that comes from a few very popular parks, because some of them were – Garner, for instance – damaged badly in the last floods. Is that any part of that reduced revenue, or is everything pretty much on line now that was damaged in the floods?

MS. FIELDS: I think that weather, Garner, and some of those issues actually did have our revenue running a little bit behind. We did see some pretty good activity in December. And as I mentioned, when I looked at March and April activity, we're actually picking up speed. And we're looking better than last year, and I really expect that trend to continue.

You might also recall that we've increased the park fees.

COMMISSIONER FITZSIMONS: Right.

MS. FIELDS: And I think that'll also help us to catch up with the revenues.

COMMISSIONER ANGELO: This is a considerably better position than we were in at the last meeting percentage wise.

COMMISSIONER FITZSIMONS: Yes. I didn't know if there was anything still closed.

COMMISSIONER ANGELO: Any other comments or questions?

(No response.)

COMMISSIONER ANGELO: If not, thank you, Mary.

MS. FIELDS: I was just going to say, I believe Garner has opened back up, didn't they?

MR. COOK: Yes. It's –

MS. FIELDS: And for –

MR. COOK: Garner's back up to full speed, but they were off – until, I think, in – maybe into like November, they were only limited operations. And –

COMMISSIONER ANGELO: So it's –

MR. COOK: – they're back up to full speed now.

COMMISSIONER ANGELO: Considering that, it's pretty amazing we're in as good a shape as we are –

MR. COOK: That's right.

COMMISSIONER ANGELO: – as big of a component as that is.

Thank you.

MS. FIELDS: Thank you.

ITEM 4: FEE CHANGES

COMMISSIONER ANGELO: We'll move on to Item Number 4, fee changes.

Gene McCarty?

MR. McCARTY: Mr. Chairman and Commissioners, my name is Gene McCarty; I'm Chief of Staff for the Agency. The item I bring before you today is proposed increases to hunting and fishing license fees and boat registration fees.

First let me give you a little background on the Agency's fee structure. License fees were last increased in 1996; that was about seven years ago.

In 2001, the Department did an extensive evaluation of license fees. Associated with that evaluation, we had a survey done of anglers and hunters in the state, and that survey indicated that about 90 percent of licensed resident hunters and anglers were satisfied or very satisfied with the job done by Texas Parks and Wildlife, and nearly half indicated their support for an increase in license fees to increase funding to Texas Parks and Wildlife Department.

At the end of this evaluation in 2001, we were also in the middle of our formal review, and a number of other things were going on. And at that particular time, we decided not to propose fee increases. And as it turns out, that's probably a good decision, because everybody knows what happened on September 11 of 2001, and that really changed the whole landscape that we were working on.

However, when we did that evaluation, we came up with two principal questions that continue to be posed to us by ourselves and by the public. The first question was, What have you done with the revenues generated from the last fee increase? I'd like to take a few minutes here and go through just an assortment of accomplishments that we believe are fairly significant.

And one thing about these accomplishments – when we started putting together a presentation to go out to the public hearings, we asked the divisions to provide us with a list of accomplishments. Well, by the time we got multiple, multiple pages of accomplishments in, we realized that we have something to toot our horn about in terms of what we've done with those fees since that time.

So I'd like to kind of run through this real quick. This is a – one small segment of the presentation that we made in the public hearings, and it – I think it gives you a good snapshot of the accomplishments that the Agency has had.

First, what have we done with your fees since 1996? A 200 percent increase in public dove hunting access. We have opened 41 counties in East Texas to spring turkey hunting through our stocking efforts of stocking over 2,600 turkeys in 145 sites. The number of acres in private land wildlife management areas or – wildlife management plans has doubled to almost 15.5 million acres.

We – in 1998, we established the Environment Investigation Unit. This team has filed over 220 cases, producing $2.7 million in supplemental environmental funds.

We'll catch up.

(Pause.)

MR. McCARTY: There we go. In 2002, we created a Boat Theft Investigation Unit. Since 1996, we've graduated 144 new game wardens. In 1996, we opened Sea Center Texas. And since that time, we've had almost 600,000 visitors to that facility. In 1996, we also opened the Texas Freshwater Fisheries Center. And since that time, we've had almost 400,000 visitors to that facility.

Since 1996, we've stocked over 431 million fingerlings into Texas coastal and freshwaters. We've completed, developed and implemented the Seagrass Conservation Plan. Dr. McKinney was doing a briefing for Commissioner Holmes yesterday and made the statement that one of the significant things about this plan is that since its implementation, it's almost entirely complete, which is fairly significant in and of itself.

We've completed all of our freshwater inflow studies to all major Texas estuaries. Florida bass stocking programs and regulations have increased the number of lakes that produce lunkers by over 55 percent. We've maintained a winter trout fishery in 82 sites, stocking over 2.5 million rainbow trout.

In 2002, we initiated an Abandoned Crab Trap Clean-up Program. We had an event in 2002 and another event in 2003, and we've collected over 12,000 abandoned crab traps out of the coastal waters of Texas.

We've increased the number of public hunting opportunity days statewide by 57 percent. We've added an additional 27,000 acres of land to our Wildlife Management Areas.

We've taken over 950,000 children across Texas to their first opportunity to go fishing or hunting in over – at 4,000 different events. We've established a statewide youth-only weekend hunting season for deer, wild turkey, waterfowl and squirrels. We've established 38 new artificial reefs, bringing in $5.2 million in donations.

That is just a real quick run-through of some of the significant accomplishments that we have done with the – with our revenue since 1996.

The second question that kept coming up is, Why do we need additional revenue? We need additional revenue to address inflation and increased expenses. We've got – we've had a number of increased costs since 1996, many of them very, very much wanted by the Agency, such as salary increases, and others not so desired, such as just the effective inflation. Since 1996, we've had an average inflation rate of 2.5 percent per year.

We've got to address Chronic Wasting Disease. We need additional wardens in the field. We need to do additional technical guidance on private lands. We have aging fish hatcheries. As we talked about, we've got to address our aging fish hatcheries; of course, our freshwater stamp will help that, but additional fees will help in the interim.

We have aquatic vegetation control issues. You heard a little bit about grass carp this morning. We have Golden Algae research and response that we're going to have to do as directed by the legislature.

In addition, as we heard, the retirement incentive package was passed. A conservative estimate is that that could potentially give us – impact us by about a million dollars. It probably has the potential of even more than a million dollars, but, just looking at the number of individuals in the Agency that at this particular point in time that are eligible to retire, we will have to – while they will get a 25 percent of their annual salary retirement bonus, we will need to transfer 30 percent of their salary to the Comptroller.

And the Comptroller's revenue estimates -- as you'll remember, the – as we went into this legislative session, the Comptroller estimated that we had revenue for the coming year or – the coming biennium of about $179 million while our Fund 9 operating expenses were estimated at about $190 million, leaving us about an $11 million shortfall over the biennium.

In considering these fee increases, it's important to remember that there are several fee or – several licenses that we did not propose to be increased – the senior combo, the senior super-combo, the resident special hunting and the resident special fishing and our stamps – principally in an effort not to impact the older citizens and not to impact the – our recruitment efforts for youth.

Let me give you a – just a quick run-down on some of the key licenses that we proposed. Our super-combo package currently is at $49; we proposed it to go to $59. Our resident hunting is $19; we proposed it to go to $23. Our resident – our non-resident hunting at $250 we'd propose to go to $300. Our resident fishing at $19 we'd propose to go to $23. And our non-resident fishing at $30 we'd propose to go to $50.

You can see that these are mostly all within the seven-year inflation value estimate of what they should be at this point if you applied inflation to them.

One thing in the process of going through the public hearings – you have in front of you a full listing of the proposed licensed fee increases. One thing that we realized that – we published in the Texas Register a proposal to increase the duplicate TCP. That's the Texas Conservation Passport.

State parks is currently in the process of doing a full evaluation of the Conservation Passport and the duplicate Conservation Passport. So we would like to propose to remove that. It's marked with that red tab on the item that you have in front of you. We would propose to remove that from consideration for increase as state parks puts together their Annual Pass Program.

What would these fees do – these license fees do in terms of producing revenue? It's estimated that this increase would produce about $10.2 million per year – for hunting and fishing license fees.

Let me go through boat registration real quickly. Again, let me give you a little background. Again, boat registration fees were increased in 1996. Texas ranks among the top five states in terms of boat registration and titling. We have a lot of boating activity in Texas that the Agency has to address either by titling or registration or by enforcement.

What do we need these increased fees for? A redesign and update of our boat registration system, increased boat theft enforcement, addressing boating fuel costs for law enforcement, addressing the increased costs for BWI enforcement and, as we discussed earlier, addressing a piece of legislation that provides us the opportunity to split the funds or the fees or the revenue from boat registration, 15 percent to state parks and 85 percent remaining in Fund 9.

Just a quick overview of our proposed increases. Remember, these are two-year – this registration is for two years. So if you're registering a 16 – a less-than-16-foot boat, you're paying $25, $12.50 a year. We're proposing that it go to $30, or $15 a year. That's – and you can see how the rest of the proposed fees kind of lay out.

What will this generate? This will generate an additional $3.6 million in revenue.

We went to public hearings. We had a very, very extensive, I guess, publicity campaign on this proposed fee increase. You – there was articles written in every major outdoor magazine and in most newspapers, et cetera. We conducted seven public hearings around the state.

All that being said, overall public comment on this item was extremely light. We only received 219 comments. If you figure there's over 2 million registered or – over 2 million licenses sold by the Agency, that's a very, very small proportion of that in terms of comment.

In the several public hearings held across the state, comments were mostly in favor of the fee increases. Comments received by telephone, correspondence and on the TPWD website were generally opposed.

Of those opposed, they mostly stated the condition of the economy, additional impacts of additional costs to their budgets. They indicated that TPWD should review expenditures and cut waste instead of raising fees – as you know, the Agency has done that over the last three years and continuously had budget cuts to address shortfalls in funding up to this point – and TPWD should raise non-resident fees or change other user fees.

We did address the issue of non-resident fees in the non-resident fishing. Notice that's one of the few proposed licenses that went out way outside the inflation value, so – but we felt like that license, as from the public comment that we received before, is undervalued. And so we did change that.

In changes to other fees, there's – there was a great deal of comment on other users that currently aren't paying into the system. However, the Commission – Parks and Wildlife Commission and Parks and Wildlife Department really doesn't have any mechanism to address that. That's – generally, in terms of those kinds of fees, we have to be directed through statute by the legislature.

With that being said, I'll take any questions that you may have concerning the proposed fee increases.

COMMISSIONER ANGELO: Gene, would you explain the mathematics of calculating what you expect to gain in revenue based on historical declines in sales as a result of fee increases? Would –

MR. McCARTY: Yes, sir.

We – when we – the value of – includes a 4 percent reduction, or what we call a 4 percent slide. When we went back in, we looked at license sales over the last few years – the last couple of years, we took the average of that, and then we applied a 4 percent reduction, knowing that the last two fee increases had resulted in a short-term 4 percent reduction in sales.

And so the proposed or – the value that we have here in terms of the amount of revenue takes into consideration a 4 percent reduction in sales.

COMMISSIONER ANGELO: Do you suppose there's anything that could be done from a public relations standpoint that would reduce that slide?

MR. McCARTY: I do, yes. I do. I think that we need to continue to – as witnessed by these lists of accomplishments, we need to do maybe a little bit better job of tooting our horn in that regard. And I think that, you know, in terms of as the season goes by, as we implement this, as we look at the FY '04 licensees, we need to do a little better job of making the public aware of the things that we do and the accomplishments that we've had.

COMMISSIONER ANGELO: You might combine that with a brief explanation of the cuts that have been – that have taken place in terms of the economies of our expenditures over the last three years, as you've mentioned.

MR. McCARTY: Yes, sir. Okay.

MR. COOK: There's –

MR. McCARTY: That's a good –

MR. COOK: I think there's a good chance that we will not see that decline this time, but that's what we have historically seen. And one of the reasons I believe that is because of our – you know, our exclusion from any fee increase of our exempt licenses – the youth and the older folks and the disabled folks – where we took them off right at the start. So I don't think – I think there's a good chance we won't see, you know, quite that decline.

COMMISSIONER ANGELO: And probably in publicizing and doing this PR, we really ought to emphasize that fact –

MR. COOK: Yes.

COMMISSIONER ANGELO: – because they're going to think they're going to increase and maybe not even go find out.

MR. COOK: I think, right up front, that was – we pushed that right up front. I think it was real important. I think that's part of the reason why we only got 200, you know, comments in general.

Let me give you an example. Vernon Bevill – and I think I saw him walk in a while ago, but – in – the last time we made some proposed change in dove zones, we got over a thousand comments. We got slightly over 200 comments on this thing. One – another –

COMMISSIONER ANGELO: Unlike with the mule deer in the Trans-Pecos.

MR. COOK: We had 100 percent comments right out of there.

(Laughter.)

MR. COOK: Also, one of the things we did at the start of this process was – we invited a large number of our constituent groups: The Texas Wildlife Association, the bass clubs, the people who are going to pay these fees, the organizations that they represent – TWA – all of those different organizations. We invited them to a meeting right here in this room, and we talked about this.

We talked about our needs. We talked about our accomplishments. Everyone agreed – and that's kind of where we're coming from. We would like to continue to do those kinds of – achieve those kinds of accomplishments, achieve that kind of success. And that group of constituents – a very broad-based, a very general group, very supportive – offered some suggestions as to how we could improve our presentation and make some adjustments in some of the numbers. We did that.

And, again, several of those folks are in this list of people who came to the public meetings and spoke in favor. And we appreciated that very much.

COMMISSIONER ANGELO: Well, I would certainly encourage that we do everything we can to emphasize the positive aspects of this fee increase and see if we can't reduce that slide because everything we're trying to do is to increase the number of people hunting and fishing and if we took a 4 percent hit, that would be a significant –

MR. McCARTY: Yes, sir.

COMMISSIONER ANGELO: – setback. So I hope that we can try to do everything possible to reduce that.

COMMISSIONER RAMOS: Gene, in line with that, have we done any follow-up on perhaps setting some fees for bass tournaments? I know we've talked about it. Have we gone anywhere with that at this point, or we're still looking at it?

MR. McCARTY: I need to call Phil and Hal up, but I know that they're working on putting together a little task force to address the tournament fishing issue.

Do you all want to address that? Or –

MR. DUROCHER: We would have to – it would require some legislation, I believe, first of all, for us to do that. And my understanding is there is some discussion in the legislature about doing an interim study of some sort to look at this issue. And, of course, we'll do whatever they direct us to do.

COMMISSIONER RAMOS: I would be interested in knowing what other states are doing in that regard and just getting a feel as to what kind of revenues are being generated by other states –

COMMISSIONER ANGELO: Okay.

COMMISSIONER RAMOS: – that may have –

MR. DUROCHER: We are doing that –

COMMISSIONER RAMOS: You're doing that?

MR. DUROCHER: – as we speak.

COMMISSIONER RAMOS: That's great. Thank you.

COMMISSIONER ANGELO: Are there any other questions?

Madam Chairman?

CHAIRMAN ARMSTRONG: Well, I've got a comment here. We've been talking about fee increases. And I must say I agree with everything I've heard today and have been gratified – I guess that's the right word – that the support for this has been what it has been.

But I also want to take this opportunity to mention that we probably wouldn't be talking about this if we had not been able to get an entrepreneurial rider or contingency rider, as it is known in the legislature, making it – making us able to keep the increased fees to reinvest in the things that our stakeholders want us to invest in. And we got the contingency rider included in the budget.

Is that the right term?

MR. COOK: Yes.

CHAIRMAN ARMSTRONG: And there was a lot of hard work put into that. And I want to thank all the people involved in that and, most especially, our Vice Chairman, Ernest Angelo, who dropped what he was doing and came to Austin and helped us go to the right people and explain and make our case and get that done.

And so I think, Ernie, we owe you a big thanks on that.

COMMISSIONER ANGELO: Thank you.

Any other comments or questions?

(No response.)

COMMISSIONER ANGELO: There being –

CHAIRMAN ARMSTRONG: We –

COMMISSIONER ANGELO: Madam Chairman?

CHAIRMAN ARMSTRONG: Well, go ahead and conclude the Committee meeting. And I'll make an announcement.

COMMISSIONER ANGELO: Okay. We've got one other item after this, too.

But if there's no further questions or discussion, without objection, we'll place this item on the agenda for the Thursday Commission meeting for public comment and action.

ITEM 5: BOAT REGISTRATION REVISED DECAL

And we've got Item Number 5, which is the boat registration revised decal.

Frances Stiles?

(Pause.)

COMMISSIONER ANGELO: Do you want to do it right now?

CHAIRMAN ARMSTRONG: Well, I can.

COMMISSIONER ANGELO: Frances, before you come, the Chairman has a comment to make.

CHAIRMAN ARMSTRONG: I just want to introduce some folks that came in a minute ago. My eyes aren't that good, but at – back in the far right corner of the room are our friends from the U. S. Fish and Wildlife Service: Dale Hall, who's the regional director from Albuquerque –

Hello.

– and David Smith from Washington, who is a good friend of Parks and Wildlife.

Thank you all for coming. And we'll see you all tonight.

COMMISSIONER ANGELO: Frances?

MS. STILES: Good morning. My name is Frances Stiles; I'm with the Administrative Resources Division, and I'm the manager of the boat titling and registration section. I'm here to bring you a briefing item on the revised design for the boat registration decal. What I've handed out are a couple of samples of that so you all can take a closer look at those.

Why do we need a new design? Well, three things that this will add. It will add an individualized serial number to each decal set. We can reduce the amount of our stock ordered and held in our inventories, and we can expand the issuance of these decals to our county offices – there are 130 of those – that cannot issue those right now. And we can do all that without a significant cost increase to the Agency.

On the screen now is our current decal design that is in use, and it represents the month and the year of expiration. This decal's good for a two-year time period, and every year, on the calendar year, we change the color; as per Coast Guard regulations, we cycle between green, red, blue and orange colors.

What happens now is that for each of our field offices and our headquarter offices – there are 30 field offices and then our headquarters – we have to issue 27 sets of decals, one for each month. The decals are good for two years. So that's 24 months. And then we have three additional months that have to be issued. We allow boat registration renewals 90 days in advance of the expiration. So that adds an additional three months, to come up with 27 months out in each office.

This next slide is a visual representation of one month of inventory that has to be issued. Double that, and then add three more months to that, and that's what each office has to carry.

The new design that you all have in front of you changes that inventory to this: One year – one decal/one year. So we'll significantly reduce it. It gives the year of the expiration, and then the months are around the edge. And they will either be punched out for the expiration or it can be a print-over if we do a high-speed printer.

This is similar to what DPS uses for our windshield registration stickers on your car except these have to be exposed to the elements for two years whereas the decals we have on our vehicles are inside the windshields. So we do have a little extra factor of rain, sun and saltwater that adds to this.

The advantages to this decal are: Better law enforcement – our law enforcement staff will be able to match the decals to the boats and to the owners. Currently, you can get a decal – if you have more than one boat, you can come in and get a decal for the less expensive boat and put it on your more expensive boat. And without that serial number, they have to do a lot of tracking to tie up what that registration number goes to.

Having the number on these decals will tie it to the card that each person has to carry on their boat, as well as it will be information available to the game wardens. This provides a visual message to the public that these are now being tied to your boat, and the number will make inventory assignment and tracking easier. And the color is – the color that represents the expiration of the year will be visible at a distance – as well as the big number in the middle.

And this has been a coordinated effort between our Administrative Resources Branch and our law enforcement. I'd like to thank Dennis Johnson especially; he has worked with us significantly on this and taken the various designs to his staff and gotten comments, and we've worked together to bring about a consolidated design that will benefit the Agency and be one that law enforcement can work with.

More advantages. I mentioned that this can be expanded to 130 of our county offices. Right now, we only have 130 of the counties that participate in boat registration. Currently, they do not issue decals. When we have a revised automated system, they will be able to issue these decals, and that system is projected for implementation in August of 2004.

And from the counties – we meet with the counties twice a year. And every time we meet, this is the one first-on-the-top-of-their-list item that they want. They want to be able to hand out these decals to those customers. So this is something that they are very appreciative of, the ability to finally be able to get these out.

And you can see what I have up here is a chart that tells us for Fiscal Year 2002 what our distribution was. The 130 county offices really only account for 7 percent of these decals that are issued. We feel that once they can issue those out in the field, that percentage is going to go up, because people can go in and get the decals and come back out with them. Our law enforcement field offices account for 48 percent of these decals, and our headquarters operation accounts for 45 percent.

At headquarters, we have a system effort with the Comptroller that's called the Lock Box Operation. When you get your renewal, you can mail it back in, and it goes directly to the Comptroller. They deposit the money for us, log in that, come back and send us a file, and then we issue those decals. So just from that operation, we issue about 131,000 decals every year just from headquarters.

By expanding this decal out to the counties, just the postage alone of mailing those decals out from here is about a savings of about $9,000, not a great amount, but it's still saving a little bit of money.

More advantages are – this design that we have will allow us to use this in a preprinted format, which is the design that you all have in front of you, and that is produced by TDCJ, as well as this design can be used on a high-speed printer, which we're looking into purchasing for our headquarters workload.

And that concludes the advantages of this design. Just as an added note – Mr. Cook talked about House Bill 2926, which was kind of titled the Marine Dealers. In that, we're also recommending to stop issuing non-negotiable titles. And that in itself will also save the Agency about $30,000 in postage and supplies. So there's – between this decal and the House bill that's proposed, we've got a couple of initiatives going on to make us work a little better.

COMMISSIONER MONTGOMERY: How many of these go through the mail? How many are distributed by mail, approximately? I'm just curious.

MS. STILES: About 170,000 or 180-.

COMMISSIONER MONTGOMERY: What percentage?

MS. STILES: About 52 –

COMMISSIONER MONTGOMERY: And –

MS. STILES: – percent.

COMMISSIONER MONTGOMERY: – are we doing any investigation into how to handle that over the internet so people could apply and then have it mailed out and just do it over – with a PC?

MS. STILES: Yes. That's – actually in our project plan for the revised automated system is internet renewal.

COMMISSIONER MONTGOMERY: Okay. Good.

COMMISSIONER ANGELO: It looks like a great improvement. I commend you and the staff for coming up with it. It ought to be much more efficient.

MS. STILES: Thank you.

COMMISSIONER ANGELO: Any other comments or questions?

(No response.)

COMMISSIONER ANGELO: If not, we'll – let's see. Does that item need to be published – I mean that needs to come on for our agenda tomorrow, or not?

MS. STILES: It's just a briefing item.

COMMISSIONER ANGELO: That's what I thought. Okay.

Is there any other business to come before the Finance Committee?

(No response.)

COMMISSIONER ANGELO: There being none, the Finance Committee is adjourned.

(Whereupon, at 11:15 a.m., this 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: May 28, 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.

6/05/03

(Transcriber) (Date)

On the Record Reporting, Inc.

3307 Northland, Suite 315

Austin, Texas 78731


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