Texas Parks and Wildlife Commission
Finance Committee Meeting

Jan. 24, 2007

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

BE IT REMEMBERED, that heretofore on the 24th day of January, 2007, 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 Complex, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

P R O C E E D I N G S

COMMISSIONER FITZSIMONS: Good morning. This meeting is called to order. And before proceeding with any business, Mr. Cook, do you have a statement to make?

MR. COOK: Yes, I do.

COMMISSIONER FITZSIMONS: It is the one you always make.

(Simultaneous discussion.)

MR. COOK: Thank you, Mr. Chairman. A public notice of this meeting, containing all items on the proposed agenda, has been filed in the Office of the Secretary of State, as required by Chapter 551 of the Government Code, referred to as the Open Meetings Act. I would like for this fact to be noted in the official record of this meeting.

COMMISSIONER FITZSIMONS: All right. Thank you, Mr. Cook. Before we begin our committees today, I would like to announce that our good friend, Peter Holt, is going to pick up the gauntlet from our good friend, Ned Holmes, who, as you know, has gone to TxDOT. It is a great loss to this Commission, but a great addition, I think, to TxDOT. And, Peter, I have asked to chair the Finance Committee, and I know he is going to do a great job. He has been well briefed by Ned Holmes, and he has Ned's phone number, home phone number, email, and everything else.

So Peter, I will let you chair your Finance Committee. If you need the gavel ‑‑ no, you don't need it. I am not going to give it. You are not ready for a gavel, yet. A lot of noise. All right, Chairman Holt.

COMMISSIONER HOLT: Okay. Chairman Holt. I like that. The first order of business is the approval of the previous committee meeting minutes, which have already been distributed. Is there a motion for approval?

COMMISSIONER RAMOS: So moved.

COMMISSIONER BROWN: Second.

COMMISSIONER HOLT: Okay. That is by Donato Ramos first, and second by Robert Brown. Committee Item 1, Land and Water Plan update. Mr. Cook, will you please make your presentation.

MR. COOK: Thank you, Mr. Holt. As I believe you are aware, the State Auditors Office has been conducting an audit of our state parks and operations in an effort to evaluate the funding needs as it relates to our $85 million LAR request. The auditors are currently wrapping up their field work and will be issuing a report by mid-March, we understand.

Just a couple of notes on the legislative front. We saw, and we have provided you, copies of the Senate appointments, the Senate Committee appointments made by the Lieutenant Governor. So we have got that one in hand, or are making sure that you folks are aware of where we are and what our issues are. We also, you know, will be expecting of course, the appointments made by the House, by the Speaker, in the very near future. We hear tomorrow, we hear Friday. So probably something like that. And we anxiously await that.

As you may know, there have been five bills of some variety filed regarding the sporting goods sales tax and its application to our state parks funding needs. House Bill 6, submitted by Chairman Harvey Hilderbran now has something over 80 co-authors signed onto it. And the last I saw, I think it was about 83, 84. That proposed legislation has got a tremendous amount of support. It basically dedicates all of the sporting goods sales tax to our state parks request. Late last week, our friend, Senator Craig Estes of Wichita Falls filed Senate Bill 252, which is a mirror bill of that same HB 6. And I know that again, in the Senate, there is a lot of support for that. There are also bills, a little bit different twist, filed by Representative Sid Miller, Representative Kino Flores, and Representative David Liebowitz. And some of them have very much similarity. Some of them have a little bit different tweak to them.

We have for you, the last thing that I have for you ‑‑ we have finalized and Lydia's shop have finished, and prepared, and have ready for mailout, our FY '06 Annual Report. This a report that we do each year on our operations, our strategic goals, our expenditures, kind of how everything is going. I think you will find it interesting. And like I said, that will be mailed out this week. And that is all I have. Mr. Chairman, thank you, sir.

COMMISSIONER HOLT: Committee Item 2, Texas State Railroad update. Mr. Walt Dabney.

MR. DABNEY: Chairman and Commissioners, my name is Walt Dabney. I am the State Parks Director, and I am going to introduce a speaker from Rusk and Palestine in just a second. They are going to be talking about the Texas State Railroad, the Texas railroad. It is the largest and probably most complex unit of the state parks system. You have been aware that we have been struggling over the last number of years, trying to keep the train running, and trying to keep it fixed up, and operating properly. We have kind of come to the end of the road. We are operating fully through FY '07, and we are working with our friends over in the Rusk/Palestine area to see what can be done to perpetuate the operation of the Texas State Railroad. As you know, we have a Legislative Appropriations Request in that you submitted for consideration by the Legislature.

I want to introduce the City Councilman from Palestine, Mr. Steve Presley, who is actually also the President of the Texas State Railroad Operating Agency, which we are working with as park staff. But he will explain what that is. But Mr. Presley is here to talk to you, and to give you a briefing on where we are with the Texas State Railroad, and he will be available for any questions after that.

MR. PRESLEY: Commissioners, thank you very much for spending a little time to listen to us. I know you all have a very busy agenda and have a lot of things to cover, but this is very near and dear to us, so we really appreciate you taking the time to listen.

My name is Steve Presley. I am a pharmacist in Palestine, and I am a City Councilman there. I grew up there and have been used to hearing that railroad whistle blow for really most all of my life. Where I live ‑‑ every Saturday morning, when it comes in, I can go out in the morning and listen to it, and it is a wonderful thing to hear. You all should be there to enjoy it. It is a great thing. So we have really been interested in making sure that the railroad is saved for several legislative sessions now. We have come to Austin to battle with the Department to try to get funding, additional funding for it because it has a huge funding requirement. When we appeared before, we heard a little over a year ago that the funding was just not there to keep it operating as it was. We came down and asked for it to be extended, for you to continue operations as they were. You did. And at that time, we understood that it would close January 1st of this year, if further funding was not received, and that it would probably close after that, altogether. We also were told both by the Department and by the ‑‑ well, told by the Department that it would close. Told by the legislative leadership that they would not support further funding of the railroad on any long term basis, the way it had been funded in the past. So we set out to find an alternative method of operating the railroad if the need arose.

What we have come up with is that the Cities of Palestine and Rusk got together and formed through an interlocal agreement, formed this Texas State Railroad Operating Agency, which has the powers of municipalities. So it can deal with governments and all. And that was an outgrowth from our old task force that we had first established to just gather the information. The Operating Agency has gone out and done what it needed to do to find credible operators to ‑‑ that could operate this railroad at a profit long term.

If you will open your notebooks, just this first page, we just briefly discuss how we were formed, and that we have developed a plan to ensure the long-term operations of the Texas State Railroad outside of the normal fluctuations in the state budgets. And we know that those are things that we cannot do. We can't make this successful without this Department and the staff, and you Commissioners. And we know that. If you will flip on to, under Tab 1, the operating agency. We feel that the best option for the railroad for long term funding, or the option that is most practical to us appears to be one where we would have found a credible private entity that would come in and operate the railroad, but under the guidance and control of a local public agency. A local public authority in this case, that would be a district created by the Legislature that would ‑‑ a State-created authority that would control the operations, oversee any private operator that would operate this.

We have the ‑‑ we have released RFQ, Request for Qualifications, for operators that requires them to have a lot of things. That RFQ, the entire RFQ is under Tab 2, if you want to flip through that. And the qualifications are in there. Just briefly, I will try to keep everything limited and then if you have questions, we can go into it more deeply. But basically, we are saying that you must have experience operating a railroad. You must have experience operating a profitable railroad and you must have financial strength enough to continue with these operations as we do this. We have a lot of requirements in there on things that they must do to protect the assets, to preserve the history, to preserve historical accuracy in the railroad. All of those things are important to us.

In our preliminary work with operators, we have found that we can ‑‑ their preliminary estimates were that their long term costs, above capital improvements and temporary subsidies to get them over the hump, until they get their ridership up, is probably going to be in the range of $12 to $15 million total. Long-term, forever. When we get the final RFQ in, it may even be less than that, and that is what we are hoping for. But we won't know that until we have gotten that in, and done the final negotiations with them. As of today, we have three operators that have told us they will submit bids. That in that price range, they feel they can easily come in and turn it into a profitable operation. And that most of that money, we are expecting probably a very small amount of that money would go to operating subsidies and a large portion of that money would go back to do rail and right-of-way repair, that is going to have to be done anyway. Now, our plan is to leave the rails and right-of-way in state hands, with Parks and Wildlife, hopefully. So what we are really doing is, we are asking this private entity to come in and spend state money to repair state assets. Then we are also asking them, since that is not enough to take care of it, right now the State ‑‑ the Parks and Wildlife Department estimates there is about $30 million worth of work that needs to be done out there ‑‑ we are going to basically give them ten or $12 million and say, the rest of it comes out of your pocket, but you have to do it if you are going to take this railroad. So, that is what we are asking someone to come in and do, is pay that much money out of their pocket for the privilege of operating this railroad. And right now, we have three credible operators to do that.

One operator that has said they are going to submit a bid is American Heritage Railways. They currently operate the Durango Silverton Railway in Colorado and the Great Smokey Mountains Railway in Western North Carolina. Another one is, I think it is ‑‑ we just got this one this week. I am not as familiar with this second group. It is the Sierra ‑‑ I think they operate the Sierra Railroad, the Skunk Train and another train, and then they just have gotten the Virginia & Truckee in Nevada. And then there is a third group that has said they are going to submit. And we are expecting probably one more. But we have three. And again, we are requiring that they have multi years of experience coming in, they have good financial statements and background, and we will research all those out to assure ourselves that we are getting, that anyone that we would invite in would be profitable. It was our understanding that that was what we really needed to do to be able to ‑‑ that the Legislature was instructing us to do, to come up with this alternative. And that is what we have done.

The last thing that I wanted to point out to you is the economic benefits under Tab 3. At that amount of money, basically, what it boils down to is that we are in a rural area. Rural economies are not like the metropolitan areas and it is much more difficult to stimulate a rural economy economically, than it is the metropolitan areas. There are very few things that you can get in there. You don't just, you know, move a factory down there. You don't do a lot of things because it is harder to find people that are qualified from our area to do things. This is one thing that can be done that is a great economic stimulus to our area.

The advantage of having a local public/private partnership is that all of the projections that we see from these private operators are that they will triple or quadruple a ridership, and double the employment in our area. They will also expend large sums of money on advertising, bringing people in. Those people, those additional riders, the people that would come in are not just going to ride the train. They bring them in for a weekend experience, is the way they view it, which gets them there overnight. They are going to spend the entire weekend there, and they spend a lot more than just money on the railroad. That pumps a lot of dollars, not only from nearby areas, but from outside into our regional economy, actually. And so it is very important for us to have this extra economic engine, so to speak, to drive our economies forward. And again, they view turning it to profitability by increasing those ridership numbers. How do they do that? One of the easy ways is, they bring in special events. Thomas the Tank Engine, the Polar Express, the Little Engine that Could. Those are some of the things that they will bring in, their ‑‑ American Heritage told me that their Thomas the Tank Engine events in North Carolina and in Durango this past year brought in over 20,000 riders at each location for just that event. Well, that is more than a third of our annual ridership, for one event. So when they can contract with people like that, that we have had a difficult time accomplishing as a state, when they can do that as a private business and bring all those riders in, it gives them the advantage, and those ridership numbers ‑‑ so that they have got the extra income to cover that fixed cost that they have got. So those are some of the things that they can do. And there are a lot of other things, you all are aware, that as a private business that we can do, that as a state, you can't, that make it increased efficiency. So we really view it as a stimulus to our economy.

One last thing that we are expecting of the private operator is that they work closely with the Texas Film Commission. We have been as well. There have been films made out there. Right now, their budget is not enough. They don't have enough staff really, to handle the films being done as it currently exists. And we feel, the Texas Film Commission feels that is a huge boost to the state economy if we are able to continue to use the Texas State Railroad for filming purposes. They think we will lose about two films a year. The average film now is about $50 million something in expenditures. They think without the State Railroad, we will lose that many films a year to the State of Texas. And just as a note, they say that it is not that we are going to have two films filmed out there, they said, their explanation was, if there is a film that is being filmed somewhere in the state that even has a ten-second clip at a railroad, they have got to find a railroad somewhere. This is it. This is what we will use. And so if we don't have that railroad available to them, they are just going to move to another state that has one. And that is what happens. So it is not that they will film that many there, but they will film more there if we are able to.

Behind, on Tab 3, behind my letter, on the front, just a description of what it is, is the study that was done by Boswell and Crompton. This is a follow-up study to the one that the Legislature, I guess, had commissioned them to do a couple of years before. It has got newer numbers in it. We had this done so that the Legislature could see what happens as the numbers have risen. How much more impact there is. And if you extend this on out, there is about double the impact, with about a 50 percent increase in ridership. If you extend that on out, then you can see that there is a much greater economic impact by doing that, by having the increased ridership from the local, private partnership. And then the last page is that letter from the Texas Film Commission explaining some of what they think is going on. That is under Tab 4. Tab 5 is the appendices. The first one is Stone Consulting. That is the group that we have hired. There is a consulting group, an engineering firm that deals with tourist railroads. That is their primary business ‑‑ is in the business of consulting to tourist railroads. They deal with states and other public agencies, primarily in working to get tourist railroads back on their feet, well, mostly private groups, now. And that Tab 1 is that firm. Appendix Tab 2 is the engineer that we are working with, Randy Gustafson. Under Tab S-3 is a marketing sketch that American Heritage prepared. This was just a sample one they prepared for us, of things that they think they might do if they were to get the railroad from us. You can flip through that and see with branding and promotions, and special events, and how they would do some of the things they would do. You can pretty quickly see that they think things through, and do have a plan for making it successful. That is pretty much where we are and what we have done. What questions do you have? Yes, sir?

COMMISSIONER BROWN: On an annual basis, what is your operating budget, just to help me understand? What does it cost you on an annual basis just to operate the railroad? And what kind of shortfall are we currently ‑‑ do you currently experience?

MR. DABNEY: We have reduced the budget. And in '07 it is $1.8 million and we are bringing in a little over a million right now in revenue. We have actually had a very good year this year. Our gift shop is the biggest ‑‑ the railroad gift shop is the biggest one in the system, now. Doing extremely well.

COMMISSIONER PARKER: So you are saying the shortfall is $800,000, about?

MR. DABNEY: Of the existing budget, which is not the budget we need to run the railroad.

COMMISSIONER BROWN: What is the budget that we need to run the railroad?

MR. DABNEY: I can get you those figures, but if you figure the total amount of repair costs and operating dollars that it needs to be increased, it needs to be between $5 and $6 million a year.

COMMISSIONER RAMOS: In other words, Walt, the capital expenditure to bring it up through is how much more than that?

MR. DABNEY: As Steve mentioned earlier, if you went in and just fixed it, you are talking about approximately $30 million to go in and do the capital. If the capital work was out of the way, if we had the railroad in good shape, we could maintain it and operate it, especially if we could do advertising and that kind of thing, and increase the ridership, I think we could get it up a lot closer than it is now, but you could still be ‑‑ you would be operating it at somewhere between $3 and $4 million and you might get a couple of million or so in revenue, at least the way it is going now. We have not been able to advertise. We have not had a single dollar to advertise this railroad, which is a liability for us, a disadvantage to us.

MR. COOK: If you look at the numbers, Mr. Brown, going back to your question, look at the numbers over the last three to five years, you know again, as Walt said, we have had very little maintenance money, major maintenance money. We have done what we could with our Prop 8 money and those kinds of things, but in operating, and fuel, and personnel, and those kinds of daily issues that we deal with, you are looking at a difference between operating as Walt says, between operating and revenues of about $1.2 million, $1.1 million, $1.3 million where we have been the last several years. The last four or five years. You know, the maintenance, the wall that we are up against here is, we put in our Legislative Appropriation Request of approximately $4 million per year for many years. But of course, this request is just for the two years, a little over $4 million a year to start to initiate these major repairs, which is replacement of the rails, replacement of the crossties, engine repairs, as you can see in Steve's document. There is a number of the engines that need a considerable amount of work. And you know, I want to thank Steve and the group of folks. I see Dale Brown, and Charles Hassel from Rusk. We have worked with these folks for many years and really very closely. Walt and Scott have worked with these folks. They are trying to help. They are trying to get an option out there, as directed by the Legislature, get an option to determine if that option is viable. That is what we are looking at and I think that is an important step.

COMMISSIONER FITZSIMONS: Peter.

COMMISSIONER HOLT: Yes, sir.

COMMISSIONER FITZSIMONS: Mr. Presley, first of all, I want to thank you for taking on this job. I remember visiting with former Senator Todd Staples on this, and I know he has been a big help and an encouragement to you. You know, a lot of people talk, and your group actually started to work, so I want to first thank you for that. Let me ask you a couple of questions about how this operates in other states. I will just use American Heritage as an example, because it sounds like they have done this. And I always like to find somebody in the private sector who actually knows how to do what it is we are trying to get done. In the other states, in Colorado and in North Carolina, does American Heritage work under the same template that you described, where there would be a quasi-state agency that oversees them, or some sort of railroad district, or how does that work?

MR. PRESLEY: No. They own the railroad outright. So they are responsible in those instances for all operations of everything and it must be profitable with no subsidies whatsoever. That is why we feel that that model would work with us. The advantage that we have is that we can make sure that they comply with what needs may occur, as far as the state or local governments needs, to make sure that it is kept in good shape, that they don't just come in and gut the thing and sell assets off ‑‑ if we have a downturn in the economy, and things like that. And we will have provisions in there that don't allow them to do that so that whereas, if it is purely a private business and things go south on them because of events beyond their control, even, then in Colorado or North Carolina, they would be able to just close it.

COMMISSIONER FITZSIMONS: It essentially would be a concession or a long-term lease or how would it ‑‑

MR. PRESLEY: That is in the RFQ, we have requested their proposals to their plan of how they would propose to do this. What our overall plan is, is that we just ‑‑ we don't feel like, number one, nobody is going to get the rails and the right-of-way. That has got to ‑‑ in our opinion, that has to stay in State hands. That is the most valuable part of the asset. We feel like we can't ‑‑ that it is not good for us to give that up, so that needs to stay with the State, under all conditions. The rest of the assets, we would like to have under the control of the Operating Agency. But actually, we don't want to give anything away. But what we are really looking at, is that they have got this huge expenditure that needs to be done on improvements and all. And that $30 million basically is a today dollar figure, not a figure that includes any kind of inflation factors. So you know, it is probably bigger than that. And then, we are looking at that, thinking we don't know what the Legislature is going to do. If the Legislature comes in and says, okay, we will fully fund all your requests, then we may not ‑‑ they may end up owning nothing, and they are leasing everything. On the other hand, if the Legislature comes in and says, well, we are going to only fund this little bit over here, then we may be in the position where the only way we can get a qualified operator is to trade some assets to them, that they can have to offset some of the expenditures that they are going to have to pay on the capital improvement side that the state won't pay. And that is kind of what it boils down to. Our preference is for the group to, under most conditions, for the group to only lease assets and the assets to stay in public hands the whole time. We thought about it though and there are a bunch of cars and equipment that the State now owns that they don't use on a regular basis. And is basically falling into a greater state of disrepair because there is not enough money in the budget to put a building over it to protect it, for example. And one of the things, one of the advantages of them owning some of the rolling stock is, that we can, if they own it, we can require that they not allow it to deteriorate. Which now, we don't have the ability to do with state ownership. And so a lot of the rolling stock continues to deteriorate. So it gives us a way, if they own it, to protect it. So the answer to the question is, we don't know yet which way it will go, because it will depend on the legislative funding.

COMMISSIONER HOLT: You had indicated that you had this on a fast track, and you are trying to just get something done by the end of February. Did I see that in your presentation?

MR. PRESLEY: Yes, sir. We issued the RFQ January the 12th, I think it was. We are going ‑‑ the RFQs are due back to us February 12th. And we are going to select, we are going to announce selection February 23. That will, it has a lot of qualifications. It is kind of a cross between an RFQ and an RFP. So they have got to have a lot more detail in there than a normal RFQ did. But, and at that point then, we will begin negotiations with them, and hope to have those completed by mid-March. All of the details of a contract ‑‑ we hope to have a contract in place, with dollars that they would require, when and how, and how the whole thing would be administered by mid-March. And that is when we are really going to need, if we get through that stage, we don't know if we'll really know by that point where the Legislature is going to be. We hope to really have the Department help us in that process, to make sure that whatever protections are needed in there are there. I mean, we have got the consulting group to protect us, and we have got attorneys to protect us, and our economic development corporation people are all working on it. But we still want the Department in that, when we get to that part of the negotiations, to make sure that things are run smoothly, that if a transition is required, that that be done smoothly, and all of that. So at that point, we really feel it would be important to get as much help as we can from the Department.

COMMISSIONER HOLT: Yes, sir. John.

COMMISSIONER PARKER: Mr. Presley, thank you for coming down.

MR. PRESLEY: Yes, sir. Sure.

COMMISSIONER PARKER: I would like, what I am trying to get fixed in my head is that we have what we have been told, we have $130 million asset with the Texas State Railroad. Now can you tell me in your opening statement, can you tell me who "they" was? Who said they would not fund the Texas State Railroad?

MR. PRESLEY: Yes, sir. I certainly can. The ‑‑ and to clarify, I think it was not that they would not ‑‑ that they did not say we will not fund it. What I thought I said, and what I meant to say was, that the funding would be unlikely from the Legislature. That they did not feel that there would be adequate support in the Legislature to fund this long term. Okay.

COMMISSIONER PARKER: Okay. Now you are still using the pronoun, they.

MR. PRESLEY: I would be happy to clarify that. That came from the representatives of the Speaker's office, Don Green, and of the Lieutenant Governor's Office, Blaine Brunson, in conversations that we had with them, and in conversations that we had with Todd Kercheval, Representative Hilderbran's aide. It also came from Senator Staples. And it came from Representative Byron Cook.

COMMISSIONER PARKER: Okay.

MR. PRESLEY: And then we have a letter from Director Cook, dated March 3rd or something like that, that says, it is the last tab. It says ‑‑ no, it is not the last tab; it is the next to last tab. It says, it is recommended that January 1, TSR of 2007, TSR be transferred to another entity for operation and management. If this transfer does not take place by January 1st, 2007, TPWD will begin operating TSR as a static historical display at the Rusk State Park in Palestine State Park. And you can correct me if I am wrong, but I think that was written in response to the fact that there wasn't any other way to do it, because there was no funding. And either you all figure out a way to save it, or it is closed, because we don't have the money to do it.

MR. COOK: That is correct.

MR. PRESLEY: So that is the basis under which we felt there was no funding available. All those politicians told us that, and the Department told us that.

COMMISSIONER PARKER: Okay. One other item here, has the issue of the right-of-ways been fairly investigated, each one of those?

MR. PRESLEY: Yes, sir. Our attorney has, and has talked with others. And we have a specialist municipal attorney that deals in municipal law exclusively, or his firm does. And he has looked into and felt that it would be fine to put it under the auspices of the Authority. But we still feel like that it needs to stay with Texas Parks and Wildlife, regardless. If it stays with Texas Parks and Wildlife, there is no issue, because they continue to own it. You own it now, and there is not an issue. If you continue to own it, there still won't be an issue.

COMMISSIONER PARKER: And going back to the asset, the $130 million. Is there any ‑‑ will there be any safeguards as to what you mentioned about older historic cars, if somebody wanted to trade them off and so forth and so on.

MR. PRESLEY: Yes, sir. There absolutely will be. On the older cars, if we are required to transfer or feel that it is in the best interests of the railroad to transfer any rolling stock assets over to a private operator, several provisions would be in there to protect us. The first would be, and we have already talked to them about these provisions, and American Heritage is who we have talked to the most. They have been the most active in this and they have agreed to these. The first would be that they would be required to keep everything up, maintain them. They would only achieve title to this over an extended period of time, of six to eight years. They would not receive any assets up front. They would earn them out as they met performance goals on ridership increases and activities toward maintaining and keeping up the railroad, the rails, the ties, and all of that. So if they don't meet those maintenance and attendanceship requirements, they don't get the ownership. So it is stretched out over a long period of time. They also ‑‑

COMMISSIONER PARKER: What happens after six to eight years?

MR. PRESLEY: At any time in there, we also have told them we will have buy-back privileges at the lowest offered price to anyone, and that all the assets that they have, any rolling stock cannot leave the railroad ever, except for temporary purposes, temporary use. And we will have some time limits in there, and/or things like that, with the exception that the Authority would have the ability to amend that, if necessary. If we could trade a non-working engine that we had, or two non-working engines for a good working engine somewhere, then it might be in the best interest of the railroad to do that. Then we would want to have that ability to do that, but that would fall to the governmental entity that would make that decision, not the private operator. So even if they own it, they have to keep it there, and they have to keep it up.

COMMISSIONER PARKER: You mentioned Senator Staples as Agricultural Commissioner, Staples now. And we have a new Commissioner, Senator Nichols.

MR. PRESLEY: Yes.

COMMISSIONER PARKER: What has Senator Nichols said about this process?

MR. PRESLEY: We met with Senator Nichols last Friday for 2 2 hours. We met with Senator Nichols the previous Friday for three hours, bringing him up to speed on what needs to be done. What he told me was, he told Charles Hassel and I, Charles is the Vice-President of our group, and will have some things to say in a minute, but he told us that he feels the best way to proceed with this, if I understand him correctly, and I am having to quote what someone else says, so it is secondhand now. So please, if I have a little inaccuracy, I apologize. But my understanding of what he told me was, that he felt that the best way to proceed with this was to move forward with two tracks. One is full funding, just like it is, for the Legislature to go forward and get a commitment out of them to spend what everybody estimates to be $40 to $50 million over the next ten years, and then ongoing expenses after that. Or that if they are not going to commit to that, then let's save it by putting the $12 million in new money in that we need now. And so he said, we need to proceed with both simultaneously, because for the time, if we get ‑‑ by the time we would get the lack of commitment out of the legislative body for the larger sum, if we just start this process at the same time, it will be too late. We have to go ahead and introduce the bill, the bills and get the process working on both methods at the same time. And then the Legislature makes their decision on which method they choose to follow. And that is what he has told us that he wants to do.

COMMISSIONER PARKER: So you are saying that we go to the Legislature and say, we would like to have our exceptional item ‑‑

MR. PRESLEY: The LAR. Yes, sir.

COMMISSIONER PARKER: Of the LAR.

MR. PRESLEY: Yes, $11.8 million.

COMMISSIONER PARKER: Eleven point eight million, and if you don't give the exceptional item to the Texas Parks and Wildlife, then we want you to hand over $11.8 million to the new operator.

MR. PRESLEY: No. It would not be to the new operator. It would be to the Authority.

COMMISSIONER PARKER: To the Authority.

MR. PRESLEY: That is correct. And the Authority would be responsible for doling it out to them a little bit at a time, as they spent the money first, and were reimbursed for appropriate expenses under the contract. So they don't get any money without having spent money.

COMMISSIONER PARKER: So the $11.8 million that you would ask to go to the Authority would only be every time that $11.8 million is reduced, pay to the order of the new train operator? Nobody else?

MR. PRESLEY: Yes, sir. I would presume that would be the way it would work. I really haven't thought through that exact question. But any of the monies that would come in, they are going to have to prove up ‑‑ most of that money that would come to us, actually, the original estimate for our group was $11.6 million. It is a one time expenditure of the Legislature and they are done. If they do it, if they do the LARs, they are spending $11.8 million this biennium, that much again next biennium and five bienniums in a row. That is why we felt like when faced with that, if we are going to spend that amount of money, five times in a row, or we can spend it once, we just felt like the Legislature is going to say that is not even a question. But we ‑‑ so how they won't get they money. No one will get money without having it been a justified expense under the contract and the contract is going to be open and visible and ready for anybody to examine before the Legislature even votes. So if they don't like it, or if this Department doesn't like it, or anything, then we can change it, or see that we just can't arrive at a good agreement. So there won't be anything hidden about it. It will be open to everybody to help be constructive and make that railroad better.

COMMISSIONER PARKER: So it is only the $11.8 million exceptional item of the LAR that you are asking for? You are not asking for any other annual increments?

MR. PRESLEY: At this time, we are not. It would be really nice if we could get some additional funding. If we could get that extra half-million dollars that is in the budget already, out of Parks and Wildlife to do ‑‑ to ensure ourselves some long-term capital improvements, or to set up a fund for emergencies and things like that, that would be really wonderful. But I doubt that Director Cook would like to give us that half-million dollars a year. I think he probably has other places to spend it. We would be happy to ask for it, if you are encouraging me to.

MR. HASSEL: Chairman Fitzsimons, if I could just clarify one thing.

COMMISSIONER HOLT: Reintroduce yourself, would you.

MR. HASSEL: I am Charles Hassel. I am the Vice-President of the Agency.

COMMISSIONER HOLT: Thank you.

MR. HASSEL: We have been working closely with Senator Nichols, Representative Hobson and Representative Cook on legislation that we'll need and have to be passed if we go this route. If the Legislature does not fully fund the railroad for the State to continue to operate it. We have proposed legislation that we have been working on. We are having a town hall meeting in Jacksonville, and Cherokee County this Friday to make this public to the public, and answer any questions. Immediately after the town hall meeting, sometime next week we will be posting a notice. It is my understanding that a 30-day notice has to be posted in the papers before the bill is filed. And then the bill will be filed. It has to be filed, as I understand, before March 9th and that is why we are proceeding this way. In the event that the Legislature does not fully fund the train for the State to operate it. And we also believe that if it became a static park, then it would make it even more difficult for us to find a private entity to take it over after it is already closed. We need ‑‑ the train is in good operating condition. The companies that have come to look at it have been very impressed with the condition of the properties, the trains, et cetera. And if it becomes a static park, then it would be difficult for someone to come in and take it over.

COMMISSIONER HOLT: Commissioner Brown.

COMMISSIONER BROWN: Have you, as a group of counties, have you looked at forming some type of regional bonding authority that maybe could help you underwrite part of the costs?

MR. PRESLEY: No, we have not. We talked to the Rural Rail Transportation District, there is one that serves several counties, but not Anderson County. I am not sure if Cherokee County is in it or not. They said they would talk with us, and we briefly discussed some issues early in the process, and through ‑‑ the Rural Rail Transportation Districts really are not designed to do what we are proposing to do. That possibility always exists. I am sure, I am not ‑‑ I just don't know how we would do that. We really, the state, we just haven't approached it that way, honestly. I would also like to introduce the group, if I could have the group from Palestine and Rusk stand to show you that we do, there actually are people interested in it. And then we have some legislative people behind, from Representative ‑‑ if you all would please stand, from Representative Cook's office, Stephen Albright from Senator Nichols' office, and then Kelly Strickland from the Department of Agriculture, now. It was Senator Staples. And Kelly has been in on this since the very beginning and really has done a vast amount of work in getting this done. She and Senator Staples' office helped us with a fundraiser. Actually, they did the fundraiser for us, and raised about $100,000 for us to be able to afford to pay the consultants, pay the attorneys, get the help, get the legislation written, and all of that. And we think some of you all ‑‑ I know some of you are contributors as well, and we thank you very much for that, for helping us with this. Thank you.

COMMISSIONER HOLT: Thank you very much. Any other questions from the Commissioners?

MR. BROWN: Could I say something?

MR. PRESLEY: This is Dale Brown. He is our City Manager, and is the Secretary of the Operating Agency as well.

MR. BROWN: To speak about the bonding. The problem is, that Cherokee County and Anderson County have a total population of less than 100,000 and that is counting probably 10,000 convicts, something like that, inmates in the various prisons.

MR. PRESLEY: It is about 18,000. We have five prisons in our county, and Cherokee County has one. So there are six prison populations.

MR. BROWN: The two biggest employers in Anderson County are the prison system, and two Wal-Mart Distribution Centers, none of which pay high rates of pay. They are not wealthy counties, and there is probably no way those two counties can support a large bond issue. That is why bringing in, this is being used as an economic device, to help not only those two counties, but even the surrounding counties. Because there is just no way. For instance, there has been discussion about using hotel-motel tax. Palestine probably gets 90 percent of the hotel-motel tax within the two counties, something like that. That is a total of $300,000 a year. So our revenue sources are just too limited to deal with this.

MR. PRESLEY: And in fact, we spend the majority of our ‑‑ the advertising that is done for the Texas State Railroad, the majority of it is done by the Convention and Visitors Bureau in Palestine right now, already. Thank you for that answer. I am glad that you are in our group. You have got some good answers for us. Other questions?

COMMISSIONER BROWN: Thank you all for coming. We appreciate it.

MR. PRESLEY: Thank you very much. You are welcome to keep the notebooks. If you have other questions, you are welcome to call us. Contact us. I would be happy to give you my cell phone number, if anyone would like to take it, 903/731-3007. You can call me any time day or night. I am a pharmacist. I don't mind it. I am used to it.

COMMISSIONER MONTGOMERY: It is now in the public record.

(Simultaneous discussion.)

MR. PRESLEY: I get so many calls all the time, it is okay. I don't mind. Thank you all again.

COMMISSIONER HOLT: Thank you, Steve. Committee Item 3, Financial Review. Ms. Mary Fields.

MS. FIELDS: Good morning, Commissioners. For the record, I am Mary Fields, Chief Financial Officer, and I am here to provide the Financial Review. The focus of the presentation today will be to provide a year end close and revenue and budget status for fiscal year 2006, and to give you an overview of the first quarter of fiscal year 2007 budget and revenue status.

So we will start out with the 2006 year-end close. Starting off with state park receipts as of the end of that fiscal year, we were up at $33.95 million. We are up 5.5 percent, or $1.75 million over the prior year's collections. In reviewing the categories of park receipts shown there on the bar chart, all of the categories were up. Most notably was the entrance fees and the park passes.

In looking at the boat revenue, as of the end of fiscal year 2006, we ended at $20.7 million. This was slightly down from the prior year, as you can see, at 1.5 percent or $316,000. The boat registrations were down by a couple of percent, the revenue there. Titles were slightly up at just .2 percent, and sales tax was down by 1.8 percent. We do continue to transfer 15 percent of the registration and titling revenue to Fund 64, and for the year, that amounted to $2.7 million.

The license sales revenue, moving into that category, it was also down a little bit, from the prior year, at $85.9 million. It was down 1.4 percent or $1.3 million. As you can see on the various categories there on the slide, the other category was slightly up, hunting was up 2.3 percent, fishing was down 3.9 percent, and combo sales were down 1.7 percent. We did add a little further detail to this slide, that I wanted to just talk about briefly here. As you can see, we have got the dark and light green for hunting, and the dark and light blue for fishing. We went ahead and split the non-resident hunting fees versus the resident hunting fees, and then we also did it for the fishing categories. What is interesting here, and what you will see on the next slide is, in the hunting category, 60 percent of that hunting revenue is coming from the non-resident category. And you know, on the next slide, you will see it represents about 15 percent of the total number of licenses sold.

COMMISSIONER HOLT: Mary, I am sorry to interrupt you. I was just going to suggest, on the fishing, you might explain the boat registrations too, you think a lot of it had to do with weather, et cetera. Because that seems to be where we are down the most.

MS. FIELDS: That is correct. Gas prices, you know, were higher and we did have some drought conditions, so that did impact fishing, and that did impact the boats, which were down.

So looking in, just at the items sold, again, we were at 2.69 million, or down 1.5 percent. This correlates pretty closely to the revenue decline that I just talked about. And this is another slight change we made here, which we discussed the last time I covered a financial review. We did go ahead and exclude the active duty military licenses. Those had been included in the count before, but they don't bring revenue with them. Those are issued for free. So when you take that out, the numbers correlate a little bit better. Just for your ‑‑

COMMISSIONER MONTGOMERY: Mary, how many of those are there?

MS. FIELDS: I was just fixing to ‑‑ you are right on track. We issued 38,140 of those to the active duty military.

COMMISSIONER MONTGOMERY: When we use this data to track trends of number of people hunting, are we adding those back in, or do you maintain them somewhere else?

MS. FIELDS: We do maintain them, but for presentation purposes, what was happening is that the numbers sold looked higher, but it didn't correlate with the revenue. So when we talked about this last time, I said, I will take it out for comparative purposes, but I will note that number each time.

COMMISSIONER FITZSIMONS: But that 38,000 is all combo hunting and fishing?

MS. FIELDS: It is super combo licenses issued to active duty military.

COMMISSIONER FITZSIMONS: Okay.

MS. FIELDS: And you know, if we had charged for that, the revenue would have been roughly $2.4 million.

COMMISSIONER FITZSIMONS: Better than 1 percent of the total. That total is 2.6. Yes.

MS. FIELDS: And when we talk about ‑‑ it is growing. And we will talk about that when I get to '07. We have seen some growth in that category.

COMMISSIONER FITZSIMONS: And the fishing without a license in state parks, do we have any idea what the impact is on that, on fishing license sales?

MS. FIELDS: Fishing license sales?

COMMISSIONER FITZSIMONS: No. The fishing in state parks without a license, do you know what impact that has?

MS. FIELDS: I don't have specific numbers on that, but our sense is that it is not really impacting the fishing revenues substantially.

COMMISSIONER FITZSIMONS: It is not that those people weren't going to buy a license, it is that they weren't going to fish.

COMMISSIONER HOLT: In '07, our first quarter, it is going back up. So the trend is ‑‑

COMMISSIONER FITZSIMONS: Right. Okay.

COMMISSIONER HOLT: Another thing on the military that I just found this morning is, is that there is not any real way we can tell active duty versus retired or reservist or whatever. And you can't ‑‑ the military won't give you that information. So essentially, anybody that is flashing anything that shows military, we are giving them a license. So you could have a lot of retired, for example. My guess is, that is what you are getting.

(Simultaneous discussion.)

MS. FIELDS: The other number of licenses sold? We have over 200 licenses that we sell. So those are various permits and alligator, that was one of them. I don't know if we ‑‑

COMMISSIONER FRIEDKIN: In the aggregate, they are a lot, but individually, they are small.

MS. FIELDS: They are, yes. I mean, as far as total revenue, they are not a large amount, but there is a large number sold.

COMMISSIONER FRIEDKIN: But their numbers are up.

MS. FIELDS: Their numbers are up, and the revenue was up slightly there. And I looked at it. There is just so many of them, it is just such a spread and variation among those licenses.

COMMISSIONER RAMOS: Mr. Chairman.

COMMISSIONER HOLT: Yes, sir, Donato.

COMMISSIONER RAMOS: With regards to the non-resident fishing, is that going up or down?

MS. FIELDS: The non-resident fishing? It is running pretty close. It is closely correlated to the revenue. It is about 10 percent.

COMMISSIONER RAMOS: This year, as compared to the year before. I am just wondering if our Texas fisheries are attracting non-residents to the State. I am trying to see if there is a trend.

COMMISSIONER FRIEDKIN: It looks about the same, doesn't it?

MS. FIELDS: It is very close to the same, and ‑‑

COMMISSIONER RAMOS: What slide is that on? It seems to be ‑‑

MS. FIELDS: We were just discussing the various categories on the numbers sold. If I am recalling it, it was about eleven to twelve percent and it is still roughly eleven to twelve percent. It is very closely correlated.

COMMISSIONER RAMOS: Right. But not in the same proportion as the non-resident hunting. Obviously, it is ‑‑

MS. FIELDS: Well, and also, that license is not as high. The non-resident hunting license sells for $300, the general non-resident hunting. The non-resident fishing licenses, Gene, what is it? Fifty? So that is part of what you are seeing is just the price differential.

COMMISSIONER RAMOS: Okay. But from a volume standpoint, would the percentages be comparable, or you don't know? In other words, what I am trying to quantify is, how many people are coming from out of state generally to fish in Texas, maybe, as compared to hunters from out of state, hunting in Texas. See if there is any correlation, freshwater.

COMMISSIONER FRIEDKIN: You want to see maybe a five-year trend or something?

COMMISSIONER RAMOS: Yes. Something like that.

(Simultaneous discussion.)

COMMISSIONER RAMOS: That is one reason I am asking that question.

MS. FIELDS: To give you some perspective, there was, in looking at all of the licenses sold, the number of fishing in all the categories was a little over a million; 95,000 of them were non-resident. And the year before it was 93,000 out of over a million.

COMMISSIONER RAMOS: In what, hunting or fishing?

MS. FIELDS: In fishing.

COMMISSIONER FRIEDKIN: A little less than 9 percent.

COMMISSIONER RAMOS: Okay. So then if we take those same numbers, what is the percentage for hunting, non-resident hunting?

MS. FIELDS: Okay. And those percentages that I just mentioned, those numbers we are looking at 9.5 percent in '05 and 12 percent in '06. For hunting, we are looking at, in '06, a little over 75,000 sold out of 509,000. So it is roughly 15 percent.

COMMISSIONER RAMOS: Oh, a little higher, yes. For hunting, and then fishing.

MS. FIELDS: That is right.

COMMISSIONER HOLT: I think this gets to marketing, obviously. Bringing non-residents in is bringing real big bucks in, too.

COMMISSIONER RAMOS: That is right. And our fisheries in Texas are so great that perhaps we could increase our non-resident fishing fees and promote it a little more. That is where I am coming from. I think we have a great opportunity in our fisheries in Texas to generate more revenues, bring in more people.

MS. FIELDS: Certainly something to consider.

COMMISSIONER PARKER: Donato, I agree with you wholeheartedly. And I would like to ‑‑ I am going to hold something up. I don't have enough copies of it for everybody to see, but I am going to ask ‑‑ Gene McCarty did a marvelous job for me. I asked him, and this was a gargantuan work, and he did it last year. I asked him to give us, give me, a license sales history for the last 20 years. And Gene and his detail, I mean to tell you, he detailed it out. And it was a gargantuan job. The picture is that we are running flat with a little tilt, this being just a slight tilt now. But we are running flat. And you can't ‑‑ and the only way we can, you know, increase our goods and services when you are running flat and figuring inflation, is to increase your price. So we have been living off of price increases, and we haven't been selling any more goods. And I would think that sometime in the near future, Peter, I would like to have all of this information given to everybody. And I would like to see if we could set out a particular group of people to do a study on this because what I am seeing is frightening. Because the only way we can get more dollars to offer more services is to raise our fees. And even Stanley Malthus found out that that always did not work.

COMMISSIONER RAMOS: John, are you talking about hunting fees or fishing fees?

COMMISSIONER PARKER: This is everything. Everything. This includes, let me get to the second page here, everything that we sell. Jackrabbit permits, or whatever it is. We don't have that permit, but I mean, every single license and permit that we sell is in this and I really think that we need to take a look at it.

COMMISSIONER FRIEDKIN: Just to add something to that. I agree with you John. But I think there is another component as well, and that is the programs that are currently being developed by the staff. And they are doing ‑‑ Phil and I have been involved in some of them, as other Commissioners have, and certainly as you have. And I think they are doing a marvelous job of putting some programs together that we'll be hearing more about in the next few meetings, that will contribute a lot toward increasing recreational and outdoor hunting opportunities. So I think that is ‑‑ I think it will be important to focus on what we have in the pipeline and under development as well.

COMMISSIONER HOLT: Yes. And I think going to Commissioner Parker's point too though, is I think that you know, do we need to focus on marketing? And you have got two issues. Of course, obviously in-state is the biggest single thing we should do at Texas Parks and Wildlife. But also, what is interesting is non-residential really caught my eye. Because you are talking about real dollars coming in from non-residents.

COMMISSIONER FRIEDKIN: A big opportunity.

COMMISSIONER HOLT: Yes. A way to keep reaching out and telling the world what a great place this is, in the State of Texas to hunt and fish.

COMMISSIONER PARKER: But the biggest challenge that we have, Peter, is within our metropolitan centers, getting those young people out and into outdoor experiences.

(Simultaneous discussion.)

COMMISSIONER HOLT: This is what Donato has been talking about ever since I have been involved ‑‑

COMMISSIONER FITZSIMONS: The best way to do that is to have a parks system where they can get some experience. Because I don't believe that people just wake up one day and decide they are going to go hunt or they are going to go fish. They have to have some background in the outdoors. So I think it is just where you integrate the need for a parks system that is now in our studies, is that close to the urban areas? So it becomes part of people's everyday lifestyle, probably a lot. But you know, back to Dan's point. I think it is really interesting. A bright spot. If you look at the number of acres under management, under wildlife management plans, you look at the hunting days available, if you look at the fishing species available, if you look at the saltwater, the growth in saltwater angling, there are some bright spots that show some real growth that we need to concentrate on. And I think Dan is right. If we are ‑‑ it takes time to ramp up. But we are definitely providing more opportunity.

COMMISSIONER PARKER: And Dan had some excellent ideas, moving along with that, especially in the hunting end of it.

COMMISSIONER FITZSIMONS: Do you have the saltwater numbers broken out, with the saltwater stamps? At one time, they were showing us some numbers, of the number of new saltwater anglers over the year, it was a pretty impressive number. Do you remember that?

COMMISSIONER HOLT: A jump in percentage increase.

COMMISSIONER FITZSIMONS: Yes. And so if that is growing and we are flat, then where are we losing?

COMMISSIONER HOLT: Yes.

MS. FIELDS: There are numerous saltwater packages, like three or four together. And then there is three or four freshwater. And I would be happy to pull those numbers for you and provide them to you next ‑‑

COMMISSIONER FITZSIMONS: Well, I am just ‑‑ it just doesn't seem consistent with what I had heard before, and the growth of saltwater angling. If it is growing ‑‑ where is McKinney? I can't remember what presentation that was, that showed us the number of new saltwater anglers every year. Well, if that is increased at a significant rate, and we are flat, where are we losing?

MS. FIELDS: If you look at just like ‑‑ for some comparability, if you look at just the resident freshwater versus the resident saltwater, we sold 378,000 freshwater and 86,000 saltwater. And then the all-water was 116,000.

COMMISSIONER FITZSIMONS: It is hard to break out. A lot of people get all-water.

COMMISSIONER HOLT: How about the year before?

COMMISSIONER FITZSIMONS: Yes.

MS. FIELDS: The year before, there was some decline between this year and last year. We were at 104,550 for the saltwater, so it went from 104,550 down to 86,000. We had the hurricanes on the coast, and some other things that happened last year.

COMMISSIONER HOLT: So our fishing overall went down.

MS. FIELDS: And when I report on '07, you will see that these numbers are climbing again.

COMMISSIONER RAMOS: What did the inland freshwater do?

MS. FIELDS: What was the comparison on freshwater? I am sorry.

COMMISSIONER RAMOS: Yes. Was there a decline?

MS. FIELDS: There was a decline also in that category. So we had 424,000 in '05 and 378,000 in '06.

COMMISSIONER HOLT: And what was your all-water?

MS. FIELDS: The all-water, 116,000 this year, 153,000 last year. So all of the categories were down. And I am just looking at the main ‑‑ the one that sold the most. There are other categories.

COMMISSIONER MONTGOMERY: Since we are having a pricing discussion, I would think that whenever we get around to really looking at pricing, we really ought to think about the price elasticity of some of these license sales to John's point, as you are dealing with a declining market, you can raise prices on the people who are the heavy users, but you quickly lose the marginal user. If we are trying to encourage the marginal user, that is exactly what we don't want to do. We have to live out of this, but our goal is really a public policy goal; it is not a profit maximization goal. And I think particularly now out-of-state users, you really want to think about it because they, from a business development standpoint, for the State of Texas, spend more money here than the in-state guys.

COMMISSIONER FITZSIMONS: Sure.

COMMISSIONER MONTGOMERY: We might want to think about lowering those to encourage them to come. We could raise them and get the premium hunters. It will affect the marginal hunters, who are driving over from other states, and where the marginal cost really matters. So we ought to give that some thought at some time, when we think about this.

COMMISSIONER PARKER: But if you want it, you have got to holler it. Better stand on top of the mountain and holler it.

COMMISSIONER MONTGOMERY: Well, as with the military license sales for no money, when you drop the price, people show up and start buying more.

COMMISSIONER RAMOS: That is right.

COMMISSIONER MONTGOMERY: So, I think there are people out there watching those prices.

COMMISSIONER RAMOS: There are other benefits to the State other than just the license fees.

COMMISSIONER MONTGOMERY: Oh, I am all for this.

(Simultaneous discussion.)

COMMISSIONER MONTGOMERY: You do what Commissioner Parker is saying. You push the price as high as you can and maximize profit. We are not trying to maximize profit.

COMMISSIONER RAMOS: Well, for every one fisherman that comes into the state, or hunter, and he has a great experience, he goes back, and the first thing he is going to do is, he is going to brag to his neighbor and his friends. So then now we have got two more coming in.

COMMISSIONER MONTGOMERY: I agree.

COMMISSIONER RAMOS: And so it is an investment. A long-term investment.

COMMISSIONER HOLT: Commissioner Brown?

COMMISSIONER BROWN: As far as on the pricing issue, do we know, how are we price-wise, compared to Louisiana, Florida, some of the other states?

MS. FIELDS: I personally don't know. Kim, do you have any ‑‑ we may have to pull that information for you. I know we have done some comparisons. I don't have that data with me. I don't know if Kim knows anything off the top of her head.

MS. DUDISH: I would rather not try to guess.

MS. FIELDS: Guess. Yes. Well, we will pull that data.

COMMISSIONER MONTGOMERY: Governments are pretty good about taxing people who don't vote in their jurisdiction. You get high prices when you go out-of-state. Hotel-motel tax and others.

(Simultaneous discussion.)

MR. COOK: I am cautious about entering into this one, but I will.

COMMISSIONER FITZSIMONS: Last chance not to.

MR. COOK: We're almost on an, I would say, an annual basis, if not a semi-annual basis at least, you know, watch prices in other states. Watch what it is that they are offering. What their season, bag limits, all of those kind of things are. You know, the trend that Mr. Parker spoke to is correct. You know, we are looking at a relatively flat participant base. Our revenues have increased, because we have increased the fee for those licenses. We are pretty ‑‑ you know, I would say to you that, overall, we are very reasonably priced right now, for what we offer in Texas, for the opportunity offered, compared to others. You know, we hear a lot of talk about we are too high, leases are too high, all those kind of things, hunting and fishing in Texas is too expensive. You compare our numbers, those same numbers to other states, we look great. Then you know, that does not mean we should not really market what we have, because it is excellent. We have an excellent product. There is some, as you ‑‑ I think just the philosophy of the thing deserves a lot of discussion and a lot of consideration. Because the quality that we offer in Texas, the quality of the fishing experience, whether it is saltwater or freshwater, the quality of the hunting experience that we offer in Texas is part of what brings those people here. There are a lot of places they can hunt whitetail deer. There is a lot of places they can fish for bass, but we offer a quality, some of that associated with private land ownership and the control of access, and those kind of things, where a person knows they are going to have that really good experience outdoors. So I think there is a lot of those factors that come into play when we consider where we want to be five years from now, ten years from now. And I think it is worth from the standpoint of finance, from the standpoint of everything we do, it is worth a serious look here in the next few, two. I would support that, encourage that. It is worth a serious look at where do we really want to be and how do we want to get there. You know, the military license thing. You know, we support that, we are for it, but the fact of the matter is, it costs us a couple of million bucks. Does it bring people out hunting that otherwise wouldn't go? Yes, probably. I think there is a component of people, particularly people who fish, just and some areas of fishing and some areas of hunting where if we could do a price differentiation based on how intense you are, how serious you are about this, that is a tough one to do. That is a hard one. When a guy walks up to the counter and goes, hey, I am just one of them occasional, I just go out and catch perch you know, off the bank every once in a while, with a cane pole. It is hard. It is hard to get there. And so you have got to deal with that person getting that license over the counter at Academy and Wal-Mart and the folks that support us in that end, and that person that walks up and says, I want a license to whatever it is. So it is a topic. I watched it very closely for a number of years, because there was a lot of discussion about hunting, and the cost of leases, but you look at the states that are predominantly public hunting lands, where they don't pay a lease where all they have got to do is walk out the door, 75 to 90 percent of the land is public land, and go hunting. There is a much steeper decline in the number of hunters versus where they were 25 or 30 years ago.

COMMISSIONER FITZSIMONS: Well, the actual numbers and then as a percentage of the state population.

(Simultaneous discussion.)

COMMISSIONER PARKER: In those states, there has also been rigid and steady price increases for the licenses.

COMMISSIONER FITZSIMONS: As a little housekeeping matter, shouldn't Peter's point be reflected somewhere, that this really is military, not active duty. Anybody with a military ID is getting a comp.

COMMISSIONER HOLT: It is a comp, yes. It is a comp.

COMMISSIONER FITZSIMONS: That may not have been the intent, but that is the reality.

MS. FIELDS: Okay. Moving ahead, just looking at the funds and revenues selected in relation to our estimates we talked about you know, the comparison to the prior year, but this is the comparison to the estimates. And we did well on all the funds, even with the boat decline that I discussed, we still actually exceeded our estimate in the hunting and fishing license sales, which brought us over the estimate. The State Park Fund at 109.9 percent, there were some royalties and other revenue sources that helped us in that category. Local park funds are at 125.9 percent. Some of that is interest earned; the additional revenue above is interest earnings on that fund. And there is a federal receivable there. The other category is several funds rolled up together, and they all did fairly well, as you can see.

So let's switch gears a little bit, and talk about just the budget, the '06 budget. And these are adjustments that basically took us to what I am calling our year-end close, which was as of the end of November, is when these numbers were run. There were some sizeable adjustments to our budget, as you can see. We reduced the budget by $58.6 million, and there are various categories there. I am going to just mention the top three. Unexpended balances were showing a $39 million decrease. Roughly $30 million of that is construction, related to construction, and that has already been rolled into the 2007 budget. There is a five-year period to work on construction projects, so it is not unusual to see balances roll forward, but we do have some work to do there in getting those balances spent in '07 and I will talk about that more, a little bit, when we talk about that quarter. The unissued bonds and receipts receivable, that $15 million is basically the hatchery bonds. And those revenue bonds, we believe will be approved by the Bond Review Board shortly, and they should be issued, I think, in February. The grants, that is primarily federal grants, at $7.3 million. Several of those grants again, if the funds aren't spent in the current year, we just reinstate them and in the following fiscal year, and we are allowed to carry forward those funds. So our adjusted budget is $263.1 million. And in looking at ‑‑ this slide kind of shows where we ended up and where we still have to go. We did end up utilizing almost all of the adjusted budget. We have got 2.3 percent remaining at $5.9 million. Of that $5.9 million, some of that includes revenues that were calculated at the end of the year, relating to Rider 27. So $4.3 million of the $5.9 million is going to roll into '07. So that really leaves on the table $1.6 million, which is less than 1 percent on the '06, which is ‑‑ that is pretty good. We don't want to go over. We have got a little bit of funds there if something unexpected comes up. So that is kind of how we closed the year. And if there aren't any questions, I will move into '07.

We do have good news, all the way along, all through the receipting process, you all will be happy to hear about all this. So we will start with state park receipts at $8.3 million. We are up 13.1 percent or $958,000 over the last year's collections. All of the categories exceed the previous year. Most notable are the facilities and concession revenue on this bar chart.

COMMISSIONER HOLT: And just to remind Commissioners, this started September 1, so you do have three months in this.

MS. FIELDS: And moving in ‑‑

COMMISSIONER MONTGOMERY: Is this the hurricanes?

COMMISSIONER HOLT: No, this is this year.

COMMISSIONER PARKER: This is money in the bank.

COMMISSIONER MONTGOMERY: No, I understand. This is the previous year. But what is the reason for the significant increase?

COMMISSIONER PARKER: Oh, I understand what you are saying.

COMMISSIONER FITZSIMONS: We didn't have Hurricane Rita.

COMMISSIONER MONTGOMERY: The hurricanes, yes. Right.

MR. COOK: If you look back at it actually, and I am sure Mary will touch on this all too, but the revenues in '07 are very comparable to the revenues in '05. In '06 was where we had such a hit, which was the September, October of 2005.

(Simultaneous discussion.)

MS. FIELDS: Okay. On the boat revenues again, we are up there at $3.3 million, up 8.6 percent or $259,000. And again, all those categories have increased. Registration revenue is up 9.8 percent, titling revenue is up 3.25 percent, and sales tax is up 13 percent. We do continue to do that transfer of 15 percent, and right now that would be $421,000 through November. That will go to State Parks.

COMMISSIONER PARKER: Mary, if we could just go back to state park receipts. In some time in the near future, it doesn't have to be today or tomorrow, could you get us a breakdown of ‑‑ it doesn't necessarily have to be by park, but if it could be by region?

MS. FIELDS: We have that information and we can definitely provide that.

COMMISSIONER PARKER: And if, within a particular region, there is a star, you could name that one.

MS. FIELDS: I do not have that detailed report with me today, but we will take a look at it, and report on it in the next meeting.

COMMISSIONER PARKER: I personally would like to have that, for some of my friends' benefit downtown.

MS. FIELDS: Okay. I would be happy to provide that. And I will cover it in a little more detail on the next review, or just highlight the stars.

COMMISSIONER HOLT: Commissioner, do you need it sooner than that, relative to what we are trying to accomplish with the Legislature, before our next meeting?

MS. FIELDS: We can send you a report.

COMMISSIONER PARKER: Well, yes. Before our next meeting. Yes.

COMMISSIONER HOLT: I think we would like it before the next meeting.

COMMISSIONER PARKER: I have got 181 friends down there.

COMMISSIONER RAMOS: Mr. Chair, could I have a follow-up question to that?

COMMISSIONER HOLT: Sure.

COMMISSIONER RAMOS: And I may have missed this, but can we convert the dollars into people that have actually accessed parks? In other words, can we say there is a trend of more people going into the parks? Do we have that data?

MS. FIELDS: We do have visitation data and we do have trends on that as well.

COMMISSIONER HOLT: You'll like that.

MS. FIELDS: We could provide that by park.

COMMISSIONER RAMOS: Yes. To where we can show that either more people are accessing parks, or they are not, or see if there is any type of a trend over the last three or four years. You know, we have the anomaly with the hurricane season, but I just wondered if we can say that many people are accessing parks more now than they used to, or less.

MS. FIELDS: We will provide that information.

COMMISSIONER HOLT: Mary, why don't you get the count of that to all the Commissioners relative to our business with the Legislature over the next few months, and the questions we're receiving.

MS. FIELDS: I will go get with Walt and we will ship it to you, all of you. Okay. On boat revenue, I think I have pretty much covered that one.

Let's move on to license sales revenue. Again, more good news here. At $59 million, we are up $2.1 million in revenues or 3.7 percent. All the categories were higher than the previous year. You can see basically, we talked a lot about those trends and they are growing.

You can see pretty well the same way here in '07. In reviewing the number of licenses sold, again, the number sold correlates fairly close with the revenues. And you can see the various categories there. Hunting is up, fishing is up, and combo sales are up. And relating to those military supercombos, we are at 21,160, which is a 5.7 percent increase from the prior year at this same time. So it is popular.

In looking at the revenue collections with all the good news I just gave you, we are doing well in referencing back to our estimates. You can see all the various percentages there. We are well over the 25 percent of the fiscal year elapsed and even in just comparing like on the Game Fish and Water Safety where we were last year, we were at about 36 percent and we are at 39 percent here. So it is all correlating fairly well; no surprises.

On our summary of our budget adjustments here, you remember we talked about the $39 million of unexpended balances? Of that $30 million related to construction, and that is already in the $295 million at the top. The remaining $9 million of unexpended balances, you see them moving in this report. The grants, again there were several, there wasn't one notable grant to talk about. There were just numerous grants. But that we are pulling into the budget. So we are at $310.9 million.

And let's look at how we are spending. Again here, with you know, 25 percent of the period through, there is no surprises to me. You can see the salaries and benefits are tracking right where they ought to be. Operating and equipment is slightly beyond and that is just because we pay a lot of our leases and rentals and stuff at the beginning of the year, so again, we are on track. We do have some work to do on capital projects, as you can see. And I know Steve has several projects running, and we will see those balances decline throughout the year. And that concludes ‑‑

COMMISSIONER BROWN: You know, in light of the state of repair of our parks throughout the State, if we, from a budget standpoint, truly factor in what it is going to cost to bring our systems back up to where it is the best park system in the United States, instead of the state that it is currently in, what do we estimate that our total annual budget, what does that do to our budget, to get us to where we need to be? The true funding to stay on top of these projects, and bring them to the next level.

MS. FIELDS: Well, for the state park component, we can refer to kind of what our exceptional item request is for state parks. And that for construction purposes, I believe it includes $25 million of additional funds beyond what we have for those purposes, per year. Plus, as Walt has said, another $4 million in minor repair.

COMMISSIONER HOLT: And also, this is one of the questions I was asking on these capital projects. As you can see, we are behind going into '07. We were somewhat behind you could argue, in '06. In one of the requests that we have gone to the Legislature with, as we are trying to expand these dollars that we receive for the Parks, if I have got it right from Gene and Mary was 20 more people to go into our Infrastructure Department relative to getting on top of this. Because you know we have gotten some questions about you know, do you really have the capability to spend the money as you get it. And I think this is one of the things. I asked Gene that this morning, and he indicated we do have FTEs in the request, up to 20 people. Because if we can get these dollars, then obviously we have got to have somebody to oversee them, and get the bids out, and follow up and get the projects done. Yes, sir.

COMMISSIONER PARKER: Peter, where is Steve? Steve, when the dollar crunch came last year, didn't we have to do away with some of our positions?

MR. WHISTON: Yes, sir. We did.

COMMISSIONER PARKER: Well, see, what this request is, we are not stacking people. And what we have got to tell those people downtown, we are not coming down there and just stacking people on top of people. We are digging ourselves out of the grave.

COMMISSIONER HOLT: Oh, I don't disagree. That is what it is.

COMMISSIONER PARKER: You know, here is where we were. Now we are here.

COMMISSIONER HOLT: That is right.

COMMISSIONER PARKER: All we want to do is to get back to here.

COMMISSIONER HOLT: Well, we want to get back to there, and a little better.

COMMISSIONER PARKER: Yes.

COMMISSIONER FITZSIMONS: A little better yet. It is not enough to just get out of the grave.

COMMISSIONER HOLT: It is not going to get us anywhere.

COMMISSIONER PARKER: You know, when you are in a hole, like Will Rogers said, stop digging.

COMMISSIONER HOLT: Good point. We have got to get this thing turned around, that is for sure.

MR. WHISTON: Over the course of the last two bienniums, our staff has been reduced to, by almost 50 FTEs. Last year was about 20, 23, and it has been a kind of slow decline, based on available funding. And that has just been the predicament and the dilemma that we have been wrestling with. But we do believe that with the 20 or so additional FTEs that is included in our LAR, we will be able to effectively manage this new inflow of money, and keep projects in the pipeline. Keep them moving.

COMMISSIONER PARKER: But we need to remember that when we are talking to our friends down there.

COMMISSIONER HOLT: Good point, Commissioner. No, you are right. We will get asked that question. Why are you trying to add so many.

COMMISSIONER PARKER: Well, you made us lay them off.

COMMISSIONER BROWN: And out of that funding, what percent of that goes into the local parks grant program that we were talking about?

MR. WHISTON: Out of the 25, none of that. There is a separate amount.

COMMISSIONER HOLT: That is correct.

(Simultaneous discussion.)

MS. FIELDS: I believe in our request, we are at $20 million per year to add on for local parks.

COMMISSIONER FITZSIMONS: But that is additional over the existing five, so it is a total of 25.

COMMISSIONER HOLT: Right.

MS. FIELDS: Right.

COMMISSIONER FITZSIMONS: So it is a big percentage that is going right out to local ‑‑

COMMISSIONER HOLT: We don't have to oversee that.

COMMISSIONER FITZSIMONS: Yes. And that is the beauty. Peter, you picked that up off from Ned. The beauty of those is, we don't have the operating costs on those parks. That is money that is going right to the project on the ground, those local areas.

COMMISSIONER BIVINS: It is also one of the things that the public see more readily.

COMMISSIONER FITZSIMONS: Exactly.

COMMISSIONER HOLT: That is correct. And I think also, as you are working with your local folks, wherever you are, make sure to remind them of that, that these dollars are not just to be controlled at the state level, but they will go back into the local municipalities to spend.

COMMISSIONER PARKER: And Peter ‑‑

MR. COOK: There is support from that group of folks ‑‑ you know, you look at it this way, too. If you are talking $25 million of grant money that our folks would farm out to these different requests. That results in $100 million worth of parks each year. You know, $75 to $100 million by the time they put their matching money in it, which is usually two to three to one.

COMMISSIONER HOLT: And really important to these urban areas. And that is where we have got to get more green.

COMMISSIONER PARKER: And you have hit the real nerve right there, of these urban areas, these metropolitan areas. You know it would be good to get into our record right now that during the last election, that four out of the five metropolitan areas in the State of Texas passed by overwhelming majorities, there was only one squeaker, and the rest of them were over 60 percent. They passed $643 million worth of local parks and outdoor areas for those cities. So to our friends downtown, the metropolitan folks have spoken.

COMMISSIONER FITZSIMONS: Good point.

COMMISSIONER HOLT: Any other questions, Commissioner? We had better move this along. There won't be time for anybody else.

COMMISSIONER FITZSIMONS: There is regulations.

(Simultaneous discussion.)

COMMISSIONER HOLT: I understand that. Well, I am the new finance guy. I like all the attention. Mary, thank you.

MS. FIELDS: Thank you.

COMMISSIONER FITZSIMONS: We are not going to give you a gavel yet.

COMMISSIONER HOLT: Item 4, Larry McKinney. License Assessment Review.

MR. MCKINNEY: Thank you, Mr. Chairman. For the record, I am Larry McKinney, Director of Coastal Fisheries. A few months ago, a number of months ago, Mr. Cook gave an assignment to a group of us within the Agency, an assignment for which we are appropriately grateful.

(Simultaneous discussion.)

MR. COOK: They overwhelmed me with their appreciation.

COMMISSIONER FITZSIMONS: What did you do to make Cook mad?

MR. MCKINNEY: I don't know, but I am going to try to get out of that doghouse.

COMMISSIONER FITZSIMONS: Yes.

MR. MCKINNEY: To take a look at our license, review all of our licenses. Which is appropriate to the discussion you have just been having here. And Mr. Cook gave us these charges, to take a look at them. One is to review all of our point-of-sale licenses on the system, to develop some recommendations to make them as simple as possible, and to try to make them more easy for our constituents to use them. And to eliminate those things that were complex in programming and all of that. In reality, this is not a very exciting ‑‑ it is very difficult to make this kind of presentation. Not very exciting. In fact, kind of mind-numbing experience to deal with. But the point ‑‑

COMMISSIONER FITZSIMONS: Those are the easiest things to get passed.

(Simultaneous discussion.)

MR. MCKINNEY: Okay. I will take that to go quick. But what the point is, there is probably nothing else that is more important to what we do in this agency. And just exactly what you were talking about earlier. The point-of-sale area is the place where all of our constituents probably first see us and deal with us, and deal with us year after year. And what we do there, and what we provide is the basis of revenue that Larry was just talking about. You spend all that time. This is the heart of it. So trying to make sure that it is workable for our constituents, as easily as possible, and it does everything we need it to do, it is a big deal. And we have some folks that really know what they are doing, fortunately. Not me included. And we have a large group on this in this assessment team. But this is the core of it right here, these groups here, these folks here. Paul Hammerschmidt has been particularly recognized. He was the secretary of this thing, and kind of put all this information together that you will see in a minute, which I greatly appreciate. But all these folks are really key. And so as I am going and making this presentation, if you see somebody stand up behind me, it is because okay, he is starting to say something stupid. They are going to come up and correct me. So I just told them to stand up and walk up here as quickly as possible, as I try to do what we are going through.

Basically, our catalogue has 164 different individual items. Our workgroup is going to recommend after going through this, to eliminate 61 of those, and modify another 26. And we'll add three new ones that will add some things. Basically, what we are talking about, if we can get everything done, we will reduce that by about 25 percent and hopefully make it a lot easier for everyone to use. And so from that perspective, it was actually an interesting project. And now I know more about that license system than I really ever wanted to know. But again, it is important. What we did now, where we are is, we have taken all those recommendations, and then we have sorted them into three categories: those that require legislative action, those that you as the Commission can do, and Gene McCarty is going to present those next, and will recommend some actions to take on them; and then some that we can just do as an agency, and that we are moving forward on. We have passed this out to you. This is what I was talking about, one of the things that Paul put together for us. This is basically the Bible. It has them all sorted out, just any question you can think of I believe, has been answered here. And we are going to use this as a basis of the presentation.

COMMISSIONER FITZSIMONS: Paul did the work and you put your name on it?

MR. MCKINNEY: Yes. I learned that from my boss. He gets all the credit for the fisheries, and I get the credit ‑‑

COMMISSIONER FITZSIMONS: Okay.

MR. MCKINNEY: But I wanted to make sure they got the recognition. And so let's just get started. I am not going to go through this whole thing. I picked out a few examples, just to illustrate kind of what we are aiming at, and things that I think you might be interested in. For example, this first one here is on field trial permits. There is one that we think we can delete. Basically, we already have a license that allows people to hunt birds with dogs. And that is all this ever did. I am sure there was a purpose for it sometime in the past, but we really can't figure it out. It is redundant. So get rid of it, and another license that can take its place. That is an example of what we are talking about.

COMMISSIONER HOLT: Is Gene going to explain, because I was going to ask you what legislative action meant.

MR. MCKINNEY: In order to ‑‑ sure, I'll explain. I am sorry. It is my fault. Basically, either recommendation we would like to do, but because of the wording of the statutes, we will have to go to the Legislature to get a statutory change in order for us to delete this license.

COMMISSIONER HOLT: So this particular one will take legislative action?

MR. MCKINNEY: All the ones that I am going to talk about will require legislative action. Gene is going to talk about the ones that you all can do if you so choose.

COMMISSIONER HOLT: Commission can do. Got you. Okay. Thank you for that.

MR. MCKINNEY: Now let's take a look at these now. There are a set of licenses, the hunting co-op licenses and landowners' fees. In looking at these, these are licenses that originally were intended to help landowners get together cooperatively, and manage their land together and hunt together. But in reality, it hasn't turned out to be that way. This has turned out to be a group of brokers that put these lands together and do the hunting, and landowners probably don't ever see this type of thing. And we are not getting any information out of it. So one of the recommendations was to basically delete these licenses and direct our folks that participate in this into two other areas. We have the ‑‑ they can participate in our Wildlife Management Association program, or get a hunting and lease license. Do the same thing, and we get the data, we learn about it, and that type of thing. So the recommendation was let's ‑‑ we want to simplify it and get rid of a couple of licenses, but move our constituents toward licenses from which we can get information we wish to make management ‑‑

COMMISSIONER FITZSIMONS: That actually moves towards one of our objectives, in our ten-year plan, which is to encourage wildlife co-ops. So you can just send a letter to all of these people and say, no more hunting co-op licenses, start off, go to these other areas.

(Simultaneous discussion.)

MR. MCKINNEY: And let me see. I just had all this ‑‑ this is all in your notebook. I should have pushed this on down to you. That is where the alternatives are.

COMMISSIONER HOLT: Okay.

MR. MCKINNEY: And if we were to do that, then you no longer need this participant fee, which is $5. We can get rid of that. They don't have to pay that anymore, because you don't need the license. That is what would happen as well. Okay. Let's go to another example.

MR. COOK: Anything that sells for five bucks, we need to get rid of.

COMMISSIONER HOLT: You are not making enough money on that.

COMMISSIONER FITZSIMONS: It costs $5.50 to get it to them.

MR. MCKINNEY: Let's take a look at this one. These are the ‑‑ I think you were talking about non-resident licenses and so forth a while ago. There is basically two types of non-resident licenses. There is the non-resident general hunting license, it is $300. That is basically the license you purchase to hunt deer, turkey in the fall, anything at all. Then when you purchase that license, you have to get the endorsements. Archery could be $7; Texas Migratory, $7; and Upland Game Bird, $7. Then your credit ‑‑ so that takes care of folks that are interested in that, but there is another group of licenses, in fact there has been three or four that you have to pick from, if you are coming in the spring, or are not interested in deer. And so our recommendation is let's combine these into just one license, this non-resident special hunting license, which basically, would then allow you to hunt spring turkey, hunt anything else, and also, we would put the price such that you don't have to buy the endorsements to roll into that license type of thing. So it just makes it simple. You have two licenses now, basically as a non-resident. You can get the general one, and go hunt deer and do it when you want to, or if you are not interested in that, and you are coming this spring, here is the other one that you go to. Rather than having that three or four or six. So that would be the thought behind that.

COMMISSIONER RAMOS: Would fishing be a separate license, or could that be part of this program?

MR. MCKINNEY: Well, then we do have to get into combos, which we are going to talk about a little bit later. Supercombos. That is where you begin to look at conjoining those type of things. But we have some recommendations on that as well. And consequently, if you just wanted the short term, the five days, it is the same thing. We roll that all into one. Instead of having three different licenses now, we just have one, and you buy that five-day deal, and you can hunt the spring turkey, or whatever you want to do in that. So you have three options, actually, as a non-resident; general, special, or five day, rather than having six or eight that you might have to try to pick from and decide which one you are looking at. And I hesitated to do this, but this is the one that some people refer to, in-house, call it the Cheney License proposal. Because basically, it deals with making sure that all those endorsements are there. If you buy one license, you are covered. And then of course, if you did that, you can delete all these. Sorry, as a fisherman, I had to throw that one in.

COMMISSIONER FITZSIMONS: Just buy the lifetime license.

(Simultaneous discussion.)

MR. MCKINNEY: Commissioner Ramos, you were talking about the combo license, and those types of things. Well, we took a look at this. And this is, the next two items on here are just things that we haven't really gotten to the point where we want to make a recommendation yet, because of the complexities or the issues that we have to deal with. But I want to give you a couple of examples. And here is one. You talk about the combos. One of the things that we would look at there is, we think we would like to just eliminate this particular combination hunting and fishing packages. If you look at the trends, for example, they have been down. People are moving to the Supercombo. In fact, we would like to move people to that Supercombo. And this is probably what is happening, although it is down. Of course, there is still a little under 100,000 of them sold so before we come up here and eliminate them, we need to make sure that we are not sending them off somewhere else. So there is some issues there that we have got to look at as well.

Okay. Another area, one day for hire fishing licenses. This is something that comes up when we are dealing with the head boats or the party boats, primarily offshore. When these folks come in, they leave the dock early in the morning. Their clients come up and get on the boat. And if they haven't got their license, they have got to try to find some 24-hour place to go get them, or just get on the boat and go fishing. And the party boat guys, it makes a problem for them. We want to try to figure out some way to work with these head boat guys. They take out about 60,000 people a year. We want to make it come up with some way to make it easy for them to sell their license, put them on a boat and go fishing. We can't figure out how to do that with the system. I mean, an easy way would be a paper system or some endorsement-type thing. But there is all kinds of problems with that, as far as keeping track of auditing and those type of things. So we are, these are examples of where we are kind of technically fixed right now, but it is on our list to try to figure out how to do it in a way that we can meet our requirements and that type of thing.

So that is kind of where we are at. And if you have any questions, Kim is back here. Kim Dudish, who is the guru of all this thing. And you were talking about asking as Gene was trying to say a while ago, and I will make that point for Gene. He is going to. He is like me. He puts his name on it, but it is the Kim Dudish and Paul Hammerschmidts of the world that go and do all this work. So she knows this stuff, and if you are going to have some questions, I will get her up here to answer that.

COMMISSIONER FRIEDKIN: They are issued licenses annually, correct?

MR. MCKINNEY: I am sorry?

COMMISSIONER FRIEDKIN: There on the boats. They are issued licenses annually? I mean, so perhaps they would have a booklet or something. And they have got to turn in a log to get reissued the following year.

MR. MCKINNEY: Well, they don't sell licenses.

COMMISSIONER FRIEDKIN: If they did?

MR. MCKINNEY: If they did, well, that was one of the ideas was to ‑‑ one idea for example, was to just sell them a boat license and don't worry about the individuals. Just sell them a license for their boat, and they are done for the year. One of our directions, one of our concerns is to try to make our recommendations as revenue neutral as possible. We didn't want to lose anything for the Department at this stage, unless that was a decision that you all made for some ‑‑ for policy purposes you were talking about. Well, the license that would be required for a party boat would be pretty steep. But maybe there would be a ways to when we are looking at it, maybe there are ways to do it in increments or something like that. So there is ‑‑ we are open to any ideas. We don't have one yet, but we are looking at it.

COMMISSIONER HOLT: Good.

MR. MCKINNEY: Well, I am going through that really quickly. But the booklet is there. Please feel free as you have, to take a look at these ideas. Because these are important. These will affect our business. And any of the folks here, any of us will be glad to go through with any of those things with you at any time. And we tried to lay that out in this catalogue, to give you some ideas of where we are going.

MR. COOK: We are going to be looking for, on some of these, we are going to be ‑‑ we have already made a few contacts. We are going to be talking to legislators and some of them want to help us out on some of these issues. We have already got some ideas. Anyway, I can't say enough, like Doc says, to thank Kim, and Kelly, and Paul and all of the other people in the Divisions. I mean, when you do a change like this, you have got to be sure, well, what is the impact on the resource? What is the impact as far as enforcement? What is the impact ‑‑ are the auditors going to come back two years from now and say, are you guys nuts? You know. And which they do that occasionally anyway.

COMMISSIONER FITZSIMONS: They're going to do that anyway.

MR. COOK: But still, we have to try to make these kinds of systems. I think that I argue it like the Chairman said. Our goal here in this ten-year plan of setting out five or ten years ahead of us constantly where we want to get to, how to get there. Simplify this process. We chatted a little bit the other day. I mean, we did it like the railroad thing. Where we did the kids ride for free. You know, and at first, it was like wait a minute. What is the financial impact of that going to be. Well, the end result is, the financial impact has been wonderful. We got more people paying to take the kids free. And you know, can we do something like that with these head boats? Can we do something that not only helps us out, bottom line, but makes it easier for those folks to bring the family. So we are looking at a lot of different options. Any thoughts you have got, well, don't hesitate to give them to us.

COMMISSIONER RAMOS: One question before, and I am way outside the chart, but I have always felt that if we would have a licensing system comparable to our driver's license, where if I signed up for a Supercombo this year, I would automatically get assigned a number, day one, like the Social Security number. And then we, on an annual basis, or a semi-annual basis, or every two or three years, or whatever, would then automatically bill that person. And it would be a plastic hunting and/or fishing license to where, you then, it is kind of like a drivers' license. We take the initiative and send it to them. And in the absence of their payment, then you lose it. But you have got a permanent ID number. Your number is X number just like your DL. And it is a lot easier for the consumer because again, it is, oh, yes. I just realized it expired, and here is my check. Just a thought.

MR. MCKINNEY: That is the marketing-type things that we need to be looking at.

COMMISSIONER RAMOS: Nobody else may be doing it, but it would make it simpler. The only problem with that would be, and you could have ‑‑ maybe only for Supercombo people. The people that we know are really dedicated, that we continue to just be part of the system. So that is all.

MR. MCKINNEY: Well, we are doing a number of things right here. Just very quickly, leading back to your previous discussion, you were talking about flatness of sales, which it has been. But I give talks on this pretty regularly, and I'll dig this data up for you, overall from national comparisons, and this is for fishing altogether, saltwater and freshwater that when we have done comparisons, a comparison done between the big three, California, Florida and Texas over this period of time that they did, it is probably two years ago, license sales were down 1/2 to 2 percent in Florida and California and they were up 2.8 in Texas. So in some places, we bucked the trend. So we are doing some things right, but we could sure do better if we could make it simpler. And that is the goal. And I think Gene will follow up with more detail.

COMMISSIONER HOLT: Any other questions, Commissioners? Larry, thank you. Okay. Committee Item 5, License Fee and Structure Changes, permission to publish. Gene.

MR. MCCARTY: Mr. Chairman, Commissioners, for the record, my name is Gene McCarty. I am Deputy Executive Director for Administration. And while we are on the record, I do have one of these documents, which is the license trend, the 20-year license trend for every one of you. And I would like to clarify that again, Kim Dudish needs her name on this document. Her and her staff did a great job of putting that together. We have ten years of data, electronically. It is getting to 20 years of data that goes back beyond our electronic license system that really creates a crunch of getting data updated into the existing system, which the request kind of drove us to do. So now we do have 20 years of data electronically.

COMMISSIONER HOLT: That one is fancier than the one you gave me.

MR. MCCARTY: Well, I am going to give you a fancy one. The item before you is a request to publish several proposed changes to the hunting and fishing license structure, as outlined by Dr. McKinney. The Department's license review team has developed a number of recommendations to simplify and streamline the license structure. The following require Commission action, and we are requesting permission to publish.

First, we would propose to combine the resident commercial fishing license with the non-resident commercial fishing license. This would reduce the license count by one. Do away with one license. We have a very few number of non-resident commercial fishing boats. It has a very minor revenue impact of approximately, we lose about $1,200 in the deal, but it is well worth it, in terms of just reducing license count and simplifying things.

Secondly, we would recommend to combine the freshwater, the resident freshwater fishing guide license with the non-resident fishing guide license. We don't necessarily get any significant data from separating those two. Both licenses are priced the same, so this would just reduce their license county by one.

Thirdly, we would recommend re-naming the resident and non-resident saltwater fishing guide license. This particular license is actually an all-water license. If you buy this license, you can fish in any waters, or you can guide in any waters of the State. So it is actually an all-water license. This does not change the count, but it does clarify the intent of the license.

This one is going to end up with adding a license, but it is going to give us some very valuable data, in terms of one of the things that we are all interested in, and that is youth. We would propose to split the special resident hunting license into resident senior hunting license and a youth hunting license. Right now, if you are over 65 or under 17, you buy this special resident hunting license. This would allow us to be able to distinguish between those two groups.

We would recommend to delete the resident July/August fishing package. This license was created a number of years ago when we did some changes. Quit rolling your eyes. To take the place of a 14-day fishing license that we had. It really ‑‑ it was an effort to try to provide an added benefit for the customer. It just really has not worked out. We don't have a large constituency for that license. Eliminating that license would reduce our license count by three.

COMMISSIONER HOLT: Some of you didn't favor it at one time, or did favor it.

COMMISSIONER MONTGOMERY: We had a lot of conversation about that.

MR. MCCARTY: We can't find ‑‑

(Simultaneous discussion.)

COMMISSIONER FITZSIMONS: No one is taking credit?

MR. MCCARTY: Next, we would recommend to combine the resident day plus and the repurchase of license, and just create a single one-day fishing license. If you want to go fishing for one day, you buy a one-day fishing license. If you want to go buy it for the second day, you buy another one-day fishing license. We would exempt everybody from the requirements of having the stamp, and just simply sell the license. This comes under what you were talking about earlier, Commissioner Montgomery, in terms of just trying to make the entry into this outdoor activity as simple as possible. You don't have to know whether you are fishing in freshwater, saltwater or all-water, et cetera. You don't have to worry about repurchase and all of that. So it is just a mechanism to simplify things.

COMMISSIONER HOLT: They still have to have the freshwater stamp added?

MR. MCCARTY: No. We would exempt it. They would be exempt. If you were buying a one-day license, you would be exempted from the stamp. You just pay your price for the one-day license. We would recommend a price of $10 for this license, one-day fishing.

COMMISSIONER BROWN: How many of those were we selling?

MR. MCCARTY: We had been selling about 102,000 licenses, plus about 9,000 to 10,000 of second-day licenses. However, the way our license system works, of that 102,000 that represents actually 1.4 days. So you can multiply that up. We are going to be talking about 150,000 licenses there. And if we simplify it, our expectation and hopes is that it will, that license will grow.

COMMISSIONER BROWN: Is that when you line it up with what ‑‑

MR. MCCARTY: There, Mexico, Colorado are $8 a day; Florida, I believe, is $15 a day; California is $12; that is, if my memory is correct.

We would recommend to do the same thing with the non-resident license. Basically, if you want a one-day fishing license, buy a one-day fishing license. A one-day fishing license would be exempted from the requirements of the stamp, and we would price that at $15. Again, these are designed to be basically revenue neutral.

On both of these, in both of these, you would reduce your license count by six. And lastly, we would recommend to begin to charge a fee for the bonus red drum tag, simply for the purposes of recovering administrative costs. And we issue about 5,400 of those bonus tags a year. If you were keeping count on the license count, this whole package would reduce the license count by ten.

COMMISSIONER BIVINS: Do you have a number for administrative savings?

MR. MCCARTY: Administrative savings?

COMMISSIONER BIVINS: How much money does it save us, as far as ‑‑

MR. MCCARTY: No, I don't. We would have to go in and look at what we are paying on each transaction. We pay a transaction fee, and we also pay a vendor fee. We would have to go in. I don't have that, but I can get that for you. And that is all that I have. If you have any questions?

COMMISSIONER HOLT: Any questions or any discussion?

(No response.)

COMMISSIONER HOLT: All right. I guess, then, I will authorize staff to publish this item in the Texas Register for the required public comment period. Thank you, Gene.

MR. MCCARTY: Thank you.

COMMISSIONER HOLT: With that, Committee Item 6, Repeal of Fee for Proof of Ownership of Boats and Motors. Frances Stiles, Ms. Frances Stiles.

MS. STILES: Good morning. For the record, my name is Francis Stiles. I am with the Administrative Resources Division and the manager of the Boat Titling and Registration Section.

I am here to request permission to publish a rule change concerning boat information. Your Parks and Wildlife Code, all boat ownership information is currently public information. Under the Texas Administrative Code, we currently charge a $2 fee and a $10 fee for boat ownership information. The $2 fee is current ownership information, and the $10 fee is for historic ownership information. So what is this? This is a request to publish the removal of the $2 ownership fee from the Texas Administrative Code.

In January of 2006, Parks and Wildlife implemented the first phase of a new automated boat system. Due to the improved functionality of the new system, the ownership report process has been streamlined. We are requesting to remove the $2 fee from the current ownership information for vessels or outboard motors, in order to proceed with the implementation of the internet ownership reports, and registration renewals online.

For your information, I have prepared this slide. This gives you an example of what information we provide when someone asks for ownership information. On the left-hand side, it will tell you either vessel or outboard motor information. It gives you a description of the asset, whether the asset is titled or non-titled, and whether there is registration on this asset. At the bottom, if a lien was on this asset, the lienholder would be displayed. This is a Texas Parks and Wildlife boat, so there is no lienholder on this.

On the right side, you would see owner information, which is the current owner of record. If there were additional co-owners, those are also listed. So this is information that we have been providing, and currently provide right now. And this is the type of information that would be available online.

So why do we need to do this? Three reasons. One, to improve our services to the public and to constituent groups by offering it on the internet. Currently, the Parks and Wildlife licenses a little bit more than 1,000 marine dealerships. Those folks are open during the evening, on the weekends. Having this information available to them online would help them determine true ownership when they were looking at trade-ins.

Towing services are required to notify current owners within five days of towing an asset. Storage companies, if they need to file a storage lien, they are also required to get asset information. And additionally, for the general public, the person that wants to go out and buy a used boat from somebody, could now have access to know if that deal is really too good to pass up or not. It would tell them who really owns that boat.

Additionally, the cost of collecting the information or collecting and accounting for the revenue, as far as credit card charges and reconciling and refunds, would reduce the amount of revenue that we currently receive to almost an insignificant level. And last, would be to keep up with the industry standards. Right now, and for at least the last three years that I know of, and probably before that, any vessel that is federally titled through the Coast Guard, that information, the ownership information is available on the internet. We have used that since we started registering those documented vessels. The Coast Guard has a website that provides ownership information, and the NOAA, National Oceanographic and Atmospheric Association, also provides that information. And we have been accessing that. Additionally, TxDOT is planning for a reroute of their system, and planning to have some form of ‑‑ information available online as well.

So what is needed is permission to publish this requested change in the Texas Register.

COMMISSIONER HOLT: Good. Any questions?

(No response.)

COMMISSIONER HOLT: Okay. Thank you. I will authorize staff to publish this item in the Texas Register for the required public comment period.

MS. STILES: Thank you.

COMMISSIONER HOLT: Thank you. Sure. Mr. Cook, is there any other business to be brought before us?

MR. COOK: I don't believe so, sir.

COMMISSIONER HOLT: Any other questions? Discussion? (No response.)

COMMISSIONER HOLT: Okay. With that, I am going to pass that gavel over to Commissioner Ramos.

COMMISSIONER RAMOS: Yes. It is still here. Thank you.

(Whereupon, the meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission
Finance Committee
LOCATION: Austin, Texas
DATE: January 24, 2007

I do hereby certify that the foregoing pages, numbers 1 through 91, 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.

2/01/07

(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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