Jan. 27-28, 2010 Commission Meeting Agenda
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Texas Parks and Wildlife Commission
Finance Committee

Jan. 27, 2010

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

BE IT REMEMBERED, that heretofore on the 27th day of January, 2010, 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 FRIEDKIN: Good morning everyone. This meeting is called to order January 27, 2010, at 9:07. Before proceeding with any general business I believe we have a statement to make.

MR. SMITH: I do. 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 Government Code, referred to as the Open Meetings Act. I would like for this note to be officially noted in the record of the meeting. So, thank you.

COMMISSIONER FRIEDKIN: Thank you, Mr. Smith. We'll begin with the Finance Committee. Chairman Falcon?

COMMISSIONER FALCON: Thank you, Mr. Chairman. The first order of business is the approval of the previous committee minutes which have already been distributed. Do I hear a motion for approval?

COMMISSIONER BIVINS: So moved.

COMMISSIONER FALCON: Commissioner Bivins.

COMMISSIONER DUGGINS: Second.

COMMISSIONER FALCON: Thank you, Commissioner. Okay. All those in favor say aye.

(A chorus of ayes.)


COMMISSIONER FALCON: Opposed?

(No response.)

COMMISSIONER FALCON: Okay. Before proceeding with the next item, Mr. Chairman, I would like to inform the Commission that Committee Item Number 4, Department of Information Resources Data Center Services Contract Update has been withdrawn.

Committee Item Number 1, update on Texas Parks and Wildlife Department progress in implementing the Land and Water Resources Conservation Recreation Plan.

Mr. Smith, please.

MR. SMITH: Thank you, Mr. Chairman. As we discussed at the last meeting we are going to end up changing kind of the formatting of these updates on the Land and Water bullets. And, you know, Scott is going to be giving you a presentation a little later today on the status of our division operating plans that you all asked us to prepare. And so Scott's got a good update on that front.

We're going to start tailoring these land and water updates to comport with that plan as we move forward. We're still very much in our formative stages, so we're not ready to kind of roll out that new format yet.

So I want to highlight a couple of key issues though that I want to make sure that you all are apprised of. I think many of you remember with the Sunset legislation that the Agency went through there were a number of changes that were asked of the Agency by the Legislature, one of which impacted our Internal Affairs Division. I think you all are well versed in that, extremely competent and talented staff led by Grahame Jones and ably staffed by Joe Carter and Jeff Gillingwaters.

But two of the changes that were made as a function of that legislation were that the internal affairs staff would report directly to the executive director and that there would be a report provided to the Commission at each meeting on the status of their investigations. And so what we're going to propose to do is kind of submit a written report on — kind of the cases that the IA team has looked at and completed to kind of give you a sense of that. And, as you know, they handle criminal investigations and criminal allegations against colleagues inside the Agency as well as matter of policy violations in some cases. And then we'll have a once a year update to the Commission from Grahame on the status of that. So there's a report that I'll get from Grahame and we'll distribute that to you all, and I just wanted to let you know that that's forthcoming as a function of the changes with the Sunset legislation.

Also, I think you all are advertent to the fact now that the Governor and Lieutenant Governor and Speaker have sent out a directive to all state agencies and institutions of higher learning, save and except a very, very small handful that have asked us to put together a plan to reduce spending over the current biennium by 5 percent.

And they've asked us to have that submitted to the Legislative Budget Board and the Governor's Office by the 15th of February. They've asked us to look at both our general revenue and our general revenue dedicated sources of funding, so essentially most all of the sources of funding in the Agency, save and except a little bit of funding that we are getting through Recovery and Investment Act, which is really nominal in the whole scheme of things.

To put it in perspective, a 5 percent cut, what does that mean to the Agency over the biennium? It's about a $25- to $26 million diminution in spending, so it's appreciable. We are proposing to use kind of the same process that we used last year when we were asked to reduce spending by 2-1/2 percent. The senior leadership team is putting together substantive ideas now that we will consider. We will review that as a management team. We will have recommendations on that. And then we will bring those back to Chairman Holt and you, Chairman Falcon, as chair of the Finance Committee, to talk about those before we formally submit those in February.

The Governor's letter specifically asks that we make sure that we take all effort not to cut or pare back any kind of core services that the Agency provides. And so we'll try to use those parameters to the extent we can. You know, they're not suggesting we need to take a 5 percent cut across all elements of the Agency, although that would certainly be a possibility. I think we're going to look at this more strategically in terms of what we recommend.

The other part of it — and I'd be remiss if I didn't say this — I think we should unquestionably expect further directions with respect to reductions in spending, particularly as we look at preparing budgets for the next biennium. And so we absolutely need to take that into account as we're contemplating this. So we'll keep you apprised of that, but I wanted to let you know of a major area of focus for us right now from a finance and administrative perspective.

The other thing that I wanted to mention, very soon we should be getting instructions from the Legislative Budget Board about the preparation of the Natural Agenda. As you all know, that's the Legislature's perception of our kind of strategic plan that leads up to the submission of our Legislative Appropriations Request. And so we use that document — I mean, we'll cross-walk it with the Land and Water Plan that you all approved in November.

But it really sets the stage for what we will be asking of the Legislature from an LAR perspective in the next biennium. And so we have not gotten formal instructions on that yet, but we expect that to come probably in February — maybe a little delayed as a function of the focus on the 5 percent cut that they're asking all the agencies to look at now. But we'll obviously be keeping you apprised of that — of the development of that plan and we'll be talking with you about that further as we go forward.

Last but not least, again, the little bit of funding that we got from the Recovery and Reinvestment Act infrastructure is using, largely with state parks, to invest in some electric vehicles and hybrid vehicles in state parks as a way to help save fuel consumption in that regard. And so they've got kind of a new model of electric truck that they're going to be rolling out in some parks and we'll see how that works and see how functional it is on the grounds. So we're excited about that development.

So, with that, Mr. Chairman, I think that concludes my report unless there's any questions that you have of me.

COMMISSIONER FALCON: Commissioner Duggins?

COMMISSIONER DUGGINS: Is this the internal affairs report in the yellow —

MR. SMITH: Yes. It's a summary report.

COMMISSIONER DUGGINS: My first question. And then the second question, on the cut — spending cut that we're — that the department is currently evaluating, would the cuts — could the cuts include cuts in spending for the Harte Ranch?

MR. SMITH: Yes, they could. That could be an option that we look at, and candidly will probably look at that. You know, we have very, very strong support for that throughout the state. I happen to think that that's a very, very effective program that we have in terms of investing dollars and local communities in helping to develop sites. But as we look at, you know, the range of options there that probably will be at some level something that we'll need to consider. So it is an option for us to think about.

COMMISSIONER FALCON: Anybody else? Carter, thank you so much. I know that this — it's been difficult and we've had moving targets with the different weather events that we've had and revenues have changed, and it's just been difficult to predict. And I want to thank you and the senior staff for rolling up your sleeves and starting to work hard to get this ready for the state leadership. Thank you very much.

MR. SMITH: Thank you for your support.

COMMISSIONER FALCON: The next item is one that's close to my heart because after 30 years of medical practice I still use stick figures to explain anatomy. And so I really appreciate anybody that can [indiscernible] that's up here.

Mr. Wood, where are you? You have your presentation please. This is on the proposed Stamp and Print Artwork Program. And, Ms. Stiles, thank you very much for being here.

MS. STILES: Good morning. My name is Frances Stiles; I'm with the Administrative Resources Division. Under the terms of the contract for the Print Artwork Program each year Mr. Wood comes and provides the artwork for your review. Once that is taken into consideration and approval is made we turn those into a series of prints as well as collector's stamps of which Mr. Wood also markets, and the agency sells the stamps.

And this year Mr. Wood is here to go ahead and present the artwork that we have.

MR. WOOD: Commissioner Falcon, when you started out and you said in 30 years I have — I thought you were going to say, I have a complete collection of these duck stamps in my office and you just totally dashed my hopes that, you know, you were a full matching number collector.

For those of you who don't know we've had the contract with the state since 1981 for what then was only the waterfowl stamp and what we now call the migratory stamp. In 1981 that stamp was the largest signed and numbered limited edition print ever published anywhere. And we paid the state of Texas that year $700,000 — over $700,000 in royalty — in stamp income from the stamps we bought to put with the prints.

Things have changed. But over the course of that 29 years we've paid the state $7,160,000. That's the good news. The bad news is this year we're going to pay you $35,000 and, you know, it's just been a slow attrition over those 30 years. We didn't realize that would be the result of ‑‑ you know, I was hardly thinking within — I was worried more about how I was going to ship 16,500 prints than what the future lay.

But, anyway, it's something that — when we started doing this I was 39 years old. I'll be 70 my next birthday. You know, that's sort of perhaps marginally inspirational but seriously depressing when you think about it. Everyone else has gone on to better things and I'm still presenting the duck stamp.

During that period of time we've had four executive directors, six governors, eight chairman, you know, hundreds I guess commissioners, and I'm still presenting the duck stamp. Anyway, it's a great privilege to do that and the Department's been absolutely fabulous to work with ‑‑ no one better than Frances Stiles.

This year's duck stamps — or the migratory stamp is the wigeon there in the middle. It's done by Peter Mathios. Peter is the 2009 Ducks Unlimited artist of the year. It's the first year we've used him. He won the first — he won his first duck stamp in 2006, winning the Michigan duck stamp, which, coincidentally, is the first duck stamp Collectors Covey ever published in 19-. The Michigan duck stamp is the first duck stamp we ever published in 1977. He's three times been accepted into Birds in Art at the Leigh Yawkey Woodson Museum in Wausau, Wisconsin, which is sort of the Super Bowl of bird art. And it's very difficult to get non-game artists to do it because there's — last year we sold — this is good news — this is positive. Last year we sold 31 non-game stamps. This year we sold 34, so who can say we're not making progress.

I try to bully someone into doing a non-game stamp, and with Peter's case I said, You can do the duck stamp if you'll do the non-game and he did cedar waxwings on the right. And that's my contribution to the hundreds of cedar waxwings I shot as a little boy with a BB gun up in a chinaberry tree. I hope the statutes have run on that, but it's been well over 50 years ago.

The saltwater stamp is obviously trout by Ronnie Wells from Salado, Texas. Ronnie's a sculptor and painter. He was 2007 Ducks Unlimited artist of the year. His magnificent bronze of mallards is in front of the Ducks Unlimited headquarters in Memphis, Tennessee. Really, Ronnie's probably more of a sculptor — more famous for being a sculptor, although he's done the CCA conservation stamps, and it's the first time we've used Ronnie. Some of you all may know his son, Ethan Wells, from Rockport, who is the best fishing guide I've ever fished with — really a neat, neat young man.

The freshwater stamp is, of course, a largemouth bass by David Drinkard. And, you know, David Drinkard is a continuing presence in Texas art. He's done several other projects for us for the Parks and Wildlife stamps and prints — the 2007 saltwater stamp of a snook, 1998 saltwater of the trout, the '96 non-game of a cardinal, and the '94 — what was then the turkey stamp, now the upland stamp of a Rio Grande turkey.

And, last, is the turkey — the upland stamp that I received day before yesterday. The artist waited, of course, until the last minute, as I would have done, and didn't quite get the job done. And it doesn't pass my approval so I certainly don't expect it — you know, to present it to you all and let you all approve it. He is in the process right now of repainting this same design but taking a little more — putting a little more effort into it. And I apologize for not having all the images.

Bruce Miller has done our duck stamp — he's won the federal duck stamp, he's been the Ducks Unlimited artist of the year. I mean, this guy's credentials is probably better than anyone in this little array of artists, but he just didn't quite get there this time. He dropped back on family problems, which ended all the discussions of why it wasn't here. And so hope you'll bear with me until we can get a new image. And if it'd be all right — if I just could send it to Carter and get his approval then we can move forward with getting the stamps made and printing the prints.

MR. SMITH: And we had an issue kind of like this last year having to do with the lesser prairie chicken. And what we had to do is —

MR. WOOD: Yes, I'd say we had an issue.

MR. SMITH: And so when Frances brings the recommendation forward tomorrow I think what she'll ask for is permission for you all to delegate authority for me to work with Bubba on approving the final turkey stamp given that, you know, what he's just told us. So that's probably what you'll expect tomorrow. And I assume that would be an appropriate way to handle that?

COMMISSIONER BIVINS: Can we get the image electronically once it's finalized?

MR. WOOD: Sure. If you all will give me your emails I could send you a lot of information I want you to have. Dan, this is an inside joke. You'll learn to hate me like the rest of these guys. Anyway, sure.

COMMISSIONER MORIAN: I have one question.

MR. WOOD: Yes, sir.

COMMISSIONER MORIAN: How many migratory prints do you expect to sell this year?

MR. WOOD: One for sure — to you, for sure. And I'm going to get one, so that's two. See, we're already [indiscernible].

COMMISSIONER MORIAN: What's the number down to?

MR. WOOD: The number — here I can take you.

COMMISSIONER MORIAN: Last year, what was the number?

MR. WOOD: The number last year was 735, down from 802. The year before that — see, you all may not be this interested in that. But in — I think it was 1996 the Department went to automated licenses and stopped requiring the stamp to be physically done on the license. And that was really — I mean, it was still declining revenue stream for sure — dramatically declining. But that really was, you know, dramatic in what it did. And people use that as an excuse to quit.

That's why we try to get the best art that we can get every year to try and not make that decision easy. Say, Hey, I really like this wood duck or whatever the subject matter happens to be to keep them — most of the people that are buying the ducks — these stamp prints now are collecting matching numbered collections.

And — but 735 — I'm sure that's still the biggest duck stamp print program in the country. The print industry is on — you know, is back on its heels and, you know, it's still — we're going send you a check this year for $35,922. That's — you know, it's nothing — we certainly wish we were where we were at — I'll be glad to keep it.

COMMISSIONER BIVINS: It seems to me that there was a period when the whole stamp concept got out of hand. I mean, every —

MR. WOOD: Oh, it did.

COMMISSIONER BIVINS: — entity was —

MR. WOOD: Right.

COMMISSIONER BIVINS: — the Texas quail stamp.

MR. WOOD: Right.

COMMISSIONER BIVINS: And it diluted the market. It seemed that —

MR. WOOD: And the Texas duck stamp is the most guilty of that of all. At the time the Texas duck stamp was done in '81 there was maybe 15 states that had a duck stamp program. And when we came along and did 16,500 because, you know, there were 16, 17 million people in Texas at the time, 80 percent of the waterfowl in Central Flyway winter in Texas — you know, it was just, you know, just a tsunami of great fortune, you know, making — let us do 16,500. And they start seeing — the other states started seeing these numbers and they wanted to get in on the action. And — yet, they didn't have the foresight as this Commission did to open it up to nationwide artists. There's not a state in the Union that has the artistic talent to support a program.

And Louisiana could have been a fabulous duck stamp because of their long duck stamp heritage. And at the last minute they limited it to only Louisiana artists, which clearly was politically, obviously, an easy thing to do. But as a result their program's just nothing, you know, I mean so — and while ours appears to be nothing compared to what it used to be it's, you know, still $36,000, you know.

COMMISSIONER HUGHES: Martin, I have a complete set of the saltwater stamp and the duck stamp.

MR. WOOD: I knew I liked you the minute I met you this morning.

COMMISSIONER HUGHES: If you know somebody that needs one let me know.

MR. WOOD: Now, wait a minute. Wait a minute. We're not — we need to get more, not less, you know. You know, I've had a couple of calls like that in the last year of people wanting to sell their duck stamp print collections. I guess the lesson is they're a lot easier to buy than they are to sell.

COMMISSIONER HUGHES: When you get in it's kind of hard to get off.

MR. WOOD: Yes, exactly. And that's why we try to have the art as pretty as we can to make it harder for you to, you know, get off the horse. But thank you for your support.

COMMISSIONER FALCON: Any further discussion or questions by the Commission?

Ms. Stiles, Mr. Wood, thank you so much.

MR. WOOD: Thank you, guys. Appreciate your service to the state. It's a thankless job, as I remind you all from time to time.

COMMISSIONER FALCON: Committee Item Number 3, Financial Overview. Mr. Mike Jensen, would you please come up to make your presentation?

MR. JENSEN: Good morning, Chairman, Commissioners, my name is Mike Jensen. I'm the division director for the Administrative Resources Division. And this morning our staff has helped me prepare the summary to go over the prior fiscal year closeout and then to give you a status update of the current fiscal year budget.

So we'll go ahead and start with a revenue synopsis of fiscal year 2009. We'll look at the state parks receipts first. Overall, receipts were up almost 1 percent — nearly $300,000 — when we compare fiscal year '09 against fiscal year '08. But during this period we have to also recall that we had the hurricane, so Galveston Island and Sea Rim were out of operation for most of fiscal year '09. So if I actually pulled those figures out of both years we'd be looking at receipts being 3.9 percent and it would be 1.45 million. Galveston Island has a significant amount of revenue that it contributes to the state parks system.

Overall, if we look at the facilities comparing they're down about half a percent — about 77,000. Entrance fees — they're up about 2.6 percent — 286,000. Concessions are down 11 percent, which is approximately 578,000. Park passes are up 4.2 percent, and the money for that is approximately 231,000. And donations are up significantly — and that accounts for about $560,000.

We go to boat revenue — and Frances was here earlier. I'd like to thank her for helping me with these figures, as well as with the parks figures. We had staff who really helped me present this information to you.

Boat revenue last year — I think in August we talked about this ‑‑ we started the fiscal year 2009 in fairly poor condition. There just aren't many sales of boats right now or during last fiscal year. In fact, last November when we were looking at boat fees and boat sales tax and the revenue to the Department those were very much in the red. Last November they were 15 percent in the hole — 32 percent in the hole for taxes.

But we did wind up the year down only 3.2 percent. I think at the beginning of August when we last met and went over this we were down about 3.8 percent. So we're behind fiscal year 2008 by about $680,000.

If we do it item by item, registration is up by 1.4 percent — 1.5 percent — that's $204,000. If we look at titling, titling is actually down by 5 percent, which is about $208,000 in the hole behind the prior fiscal year. And the sales tax is really hurting; it was behind by almost 24 percent, which is $675,000 in the hole.

License sales revenue — if we compare this — we'll just start from the bottom combination working up to the top of other. Combination license revenue is down slightly — 186,000 — and that's a drop of about .6 percent. Non-resident fishing licenses are actually up by 1.5 percent — 61,000. Resident fishing is down almost a percent — 235,000 in the hole. Non-resident hunting was down by 14 percent, which is down by 353,000. And resident hunting was down by 1.7 percent — and that's about 281,000.

And the reason that this revenue appears to be up by 3.8 percent is the "other" category. We had the fee change and we had a huge spike in lifetime license sales at the end of the license year and the beginning of this license year as well. And so that "other" category is disproportionately making up that 3.6 million. So if we were to actually take the license sales out of these figures and look at it and just look at the Fund 9 contribution to license sales there's — the lifetime license goes into an endowment fund and those proceeds. All the other licenses go into Fund 9. So if we pull the endowment fees then there's a decrease in Fund 9 revenue attributed to licenses by 1.14 million. And that percentage would be a decrease, comparing between fiscal years, as a 1.18 percent.

And when we go into the current year I'm going to compare you from the current year to fiscal year '09 and I'm also going to compare you to fiscal year '08 because '08 is actually the benchmark that was used for the fee increase, and that will give you a better picture of how tight things are, specifically with Fund 9.

COMMISSIONER DUGGINS: You said only non-resident fishing was up; the rest were all down?

MR. JENSEN: Yes, sir, that's correct.

MR. SMITH: Other than the lifetime license.

MR. JENSEN: Other than the lifetime license, yeah.

COMMISSIONER DUGGINS: I'm talking about Fund 9.

MR. JENSEN: Yes, and we're having a similar trend this year, but we haven't gotten into the peak of fishing season. But we'll get to that when we get to those slides. Hopefully we'll have a good fishing season this year and our revenue will go up to what we're hoping.

COMMISSIONER MORIAN: The assumption — you could make the assumption that some of the people that would have bought the combination bought lifetime. Is that a fair assumption to make?

MR. JENSEN: I think that would be a fair assumption.

Do you agree, Gene?

(Pause.)

MR. JENSEN: He was asking some of the people who may have bought the license bought the combo instead?

COMMISSIONER MORIAN: Bought the lifetime because of the ‑‑

MR. MCCARTY: Well — I'm Gene McCarty, deputy executive director for administration. But that lifetime was sold — the sale was at the end of the year. So I suspect that those people were already holding a license that they'd bought earlier in the year and they bought a lifetime at the end of the year which will carry them forward. So I don't think that that lifetime license peak really had much of an influence on the prior year's license sales.

MR. JENSEN: The biggest impact was probably the hurricane because that was during when people could have been fishing for the first quarter of the fiscal year. And I'm hoping that's part of why it was down and that we're going to have a better year in this current fiscal year when we get to that slide.

MR. SMITH: Gene, do we have any way to track the actual usage of lifetime license holders so is there — do we have any formalized way to do that? Are you aware of anything?

MR. MCCARTY: Not really. I mean, what we — the only thing that we can track is who actually went and picked up their tags for that year or did not. But there's not really any other way to track it.

COMMISSIONER MORIAN: Okay. Thank you.

MR. JENSEN: I'll move on to the next slide which shows budget versus expenditures. I'd like to draw you back to August when we talked about the budget at that point in time. At the end of August we had an operating budget in '09 that was approximately 498 million. That's not represented in this slide because we've had a lot of adjustments since then.

And during that presentation we talked about items that we had planned on you UBing into the current fiscal year and we have since done that. That's why this budget has fallen from 498 million down to a final budget in December of 388.8 million. That's the ending fiscal year '09 budget as of December 31.

And we get to that point — Executive Office had asked the different divisions to be as conservative as they could, particularly with Fund 9-type expenses. So when you look here in salaries and other — and operating equipment and these other categories that add up to $8 million that appears to be a lapse, a lot of that was by design — it was asked by the division directors to do that because last fiscal year cash balances for Fund 9 were very low. So out of this 8 million approximately 5 million of that is attributable to Fund 9 in order to conserve the cash balances that are available for use in this current fiscal year.

Part of the salaries in the other was in the division-wide budget. But of the 5.2 million in operating equipment, I think that was a lot of the request from Carter and the deputy executive directors, Gene, Scott, and Ross, asked the division directors to conserve their operating funds, and they did. And that is helping with the cash balances for Fund 9. And when we get into the current budget, a lot of the decrease from the 498- to 388- has been UB'd into the current fiscal year ‑‑ and we'll get to that in the next slide.

Moving ahead to fiscal year 2010, the current fiscal year, I'm going to show you the similar revenues with state parks. We're going to talk about the boat revenue and the license revenue. And then we'll give you a couple more slides on the status of the budget.

State Parks is still performing fairly well. September was a great month and November was a good month. October — compared to October we were slightly down, as well as December. But year-to-date receipts were up almost 8 percent, which is nearly $742,000.

So if we look at facilities, facilities are up 9-1/2 percent, which is $400,000. Entrance and user fees are up 8.6 percent, which is about 209,000. Activities and concessions are up about 2 percent — 23,000. Park passes are up 4-1/2 percent, about nearly 60,000. Then miscellaneous and donations together are up about $50,000, which is about 18 percent increase, which is pretty good.

COMMISSIONER DUGGINS: When you say donations, what are you referring to?

MR. JENSEN: They have lock boxes in the parks and —

COMMISSIONER DUGGINS: Just cash donations in the parks.

MR. JENSEN: Could be cash donations. It comes in different forms. If somebody even sent a check in with a specific use — we want this to go to this park — it would be deposited as a donation. And anything above $500 you would see on a list; it's approved by this Commission. But a lot of the lock box items are small — small cash donations.

COMMISSIONER BIVINS: That doesn't include the Friends group amounts, does it?

MR. SMITH: You know, Mike, in some parks there are boxes in which folks can make a donation to support the Friends of Palo Duro Canyon State Park. That's a separate revenue stream and we don't count that.

COMMISSIONER BIVINS: Okay.

MR. SMITH: Yeah.

COMMISSIONER BIVINS: I just want to make that clear.

MR. JENSEN: Boat revenue — had the earlier slide where we were comparing '09 to '08 and we could tell that people just are not selling boats. They're still not selling boats. When we get to a comparison the revenue is up 19.3 percent, or 656,000, but when we look at the registration that's up 28 percent — almost 600,000. A lot of that is attributed to a fee increase. Titles are up nearly 8 percent, which is about 67,000. However, sales tax is still down. It's down by about 1 percent — about 4,000 in the red. But we're also comparing this current fiscal year to a very bad fiscal year — the last fiscal year. So that percentage — last fiscal year was about negative 23 percent. So you're adding another point on top of that, so if you compare the two years they're just not moving and selling boats right now. However, on the other hand, the registration and titles are up, which is a good thing because compared to last year those were in the red this time of year.

License sales revenue — as of December 31 for the current fiscal year the revenue was up by 6.3 percent or 4.2 million. But it's the same thing that I'd mentioned before when we compared '09 and '08 — most of the increase is attributable to the "other" category. And the "other" is comprised primarily almost 100 percent of lifetime license sales. So here's the situation again where lifetime license sales is making up the greater portion of that 4.2 million. So if I exclude the lifetime license sales out of these four figures and we just look at Fund 9 impact to license sales, Fund 9 revenue is up by about 4.6 percent, or approximately 3 million. So Fund 9 is 3 million of that 4.2. The remainder is lifetime license sales.

COMMISSIONER HUGHES: Mike, why would lifetime license sales be up this year? There was a fee increase in September 1, wasn't there?

MR. JENSEN: There was. And there's —

COMMISSIONER HUGHES: But people continue to buy lifetime licenses.

MR. JENSEN: We had a huge spike and — I mean, hundreds and hundreds of envelopes came in. So some of it's a timing issue when they get deposited into the State Treasury.

COMMISSIONER HUGHES: Oh, they're actually bought last year under the ‑‑

MR. JENSEN: Yes, sir.

COMMISSIONER HUGHES: — 2009 fee structure, but it just was put in the budget — or in the — showing up this year.

MR. JENSEN: Most of them had to be processed manually, so you have a stack of hundreds here and you work them through. You might be a week or two into the fiscal year. And they did get deposited in — it's a small anomaly, but that's — we talked with Tom Newton and that's what is attributing to most of that.

If we look at the total licenses sold between '10 and '09 it's approximately up 1.6 percent. Total hunting's up 2.1 percent. Total fishing's up 1.8. And the total combo is about breaking even. But as I mentioned earlier, this is not a really good comparison. A better benchmark is for us to compare to '08. So we're going to go ahead and do that both for revenue and then we'll do that for the count of licenses sold.

When we look at the revenue comparing '10 to '08 we're still up, but barely, by about a half a point — 263,000. However, if we look at the other category, which is lifetime license sales and we pull those out — we look at the impact of just Fund 9, Fund 9 revenue is actually down by about 570,000 comparing '10 to '08. And that's almost a 1 percentage point difference between the two years.

If I go through combination license revenue that's up by 3.4 percent. Non-resident fishing is down 2.4 percent. Resident fishing is down 11.5 percent. Non-resident hunting is down nearly 8 percent. Resident hunting is up 3 percent. The biggest item here is really the resident fishing licenses. We're hoping we're going to have a good season this year because that's where we're really down right now with respect to revenue as well as with the count of the licenses sold.

MR. SMITH: Mike or Gene, do you — I'm sorry, Commissioner. Go ahead.

COMMISSIONER DUGGINS: Oh, I just was going to ask why 11 percent drop in resident fishing? Do you have any idea what that's attributable to?

MR. MCCARTY: We're beginning to see an interesting shift in buying patterns with fishing. People used to buy their fishing license early. You know, they bought it when they bought their hunting license or whatever. They bought it in the early years — early part of the year. Right now we're seeing people buying — a buying pattern in fishing — at least we saw it last year and I'm hoping that we'll see it this year where they're deferring their purchase until they absolutely have to have it.

And so we're seeing a stronger spring spike in fishing license sales than we've seen in prior years — in previous years. And I'm assuming it's just attributable to the economy and people making decisions on where they spend their money and deferring those expenses as far as they possibly can until they absolutely have to have it.

COMMISSIONER DUGGINS: So you're saying instead of looking at December, if you look to February or March it wouldn't be anything close to a drop; in fact, it may be increase.

MR. MCCARTY: That's correct. That's what we're hoping for.

MR. SMITH: Certainly saw that after the Hurricane Ike year. Gene, it probably also would be instructive to say a few words about what's happening with the sale of, like senior licenses and senior super combos and that increase because that's having an impact on us and will continue to have an increased impact on us.

MR. MCCARTY: Yeah. Well, as we all probably can attest the population's getting older. And we're seeing a greater and greater shift from our traditional just — our basic license to, say, our basic super combo to the senior super combo from our basic fishing license to the senior license. And that's been growing several percentage points a year, and we expect that probably to begin to, you know, almost increase exponentially over time just as this population gets older and unfortunately we may not be replacing those people in the license stream as quickly as they're moving from a full-cost license to a discounted senior license. So that's also having an impact to our revenue.

COMMISSIONER HUGHES: Carter, sometime during the year do we look at this on like a ten-year running average ‑‑ all the different licenses? Not revenue so much but number of licenses and —

MR. SMITH: Yeah, we can absolutely put that together. And we've done that in the past where we've got a ten-year horizon.

MR. MCCARTY: We've got a 20-year schedule that we've looked at over time. And I think the last one I sent to the Commission was probably about a year ago — maybe 18 months ago. I'll send another one out just so you can get a picture of over a longer period of time, you know, what licenses are out there — or at least what the sales are. It's — you have to kind of look at it very closely because we've changed license structure so many times over that 20-year period of time; you've got to know where to add and where to — what licenses are kind of equivalent to other licenses over time. But it's a really nice document.

COMMISSIONER HUGHES: Being fairly new on the Commission it would be interesting for me to see that document.

MR. JENSEN: We'll get that to you.

COMMISSIONER FALCON: That's a good idea.

MR. JENSEN: I believe I gave you percentages. And just one — before I flip to the next slide — and that percentage on resident's fishing license is actually — we're behind 1.17 million. So it's fairly significant in terms of the revenue amount.

COMMISSIONER DUGGINS: But you're still just talking about one month, aren't you?

MR. JENSEN: We're talking year to date through —

COMMISSIONER DUGGINS: All right.

MR. MCCARTY: We're talking September through December of this year versus September through December of '08. And, remember, '08 is a marker year. It's a banner year. So we're comparing this year against our best year.

MR. JENSEN: So when we compare to '09 it looks favorable, but I wanted you all to see the comparison to '08 because everything that we've done downtown working with you and the Legislature — the fee increase was tied to the '08 figures. So we need to keep looking back to '08.

Total licenses sold comparing '08 to '10 — the total numbers are down by 2.3 percent. The biggest drop is really residential fishing licenses. That drop was 15 percent, and that represents about 54,000 licenses less. And the next drop is non-resident hunting licenses. Those are nearly 3,000 less at this point in time then compared to '08.

This slide here gives you a presentation high level overview of our revenue collections versus our annual revenue estimate. The column that says revenue estimate represents the targets that has been established for us by basically the Legislature. They have a biennial revenue estimate — we call it the BRE. And for Fund 9, which is game, fish, and water safety, the BRE — the revenue estimate that we were given is 169.5 million.

For the state park fund the BRE estimate is 102.4 million. The local park fund is Fund 467; that target we were given is 10.9. And the other category is comprised of a number of different things. It's comprised of appropriated receipts for artificial reef and it also does have a component of lifetime licenses in it.

The revenues that we've collected to-date — game, fish, and water safety 75 million, and state park fund 32.6, local park fund 5.1, and most of that other is we did get a donation to artificial reef account that was — since it's a sizable donation it's Mariner Energy Incorporation, McMoran Oil & Gas, LLC. They made a donation to the Department.

And comments that I have on these — with the BRE that they established for us, they estimated high on their oil and gas royalties and they also estimated high — the Comptroller's Office, not our staff — on interest earnings. So it's going to make it a challenge for Fund 64 because you can see Fund 64 is only at 31.8 percent so far, and then through the year we're about 33 percent finished with the year. So that's going to be tight.

The positive side of the state park Fund 64 is they've been consistently collecting more revenue at the parks. They've been doing a great job last year and this year.

COMMISSIONER DUGGINS: How often are those BREs adjusted — or done? Is it done every two years or is it done every year?

MR. JENSEN: They can actually adjust that on an annual basis. They could adjust it as we go, but they typically do it as part of the appropriation process — part of the two-year cycle.

This slide is summary of budget adjustments. I have a whole lot more in my details but I'll just kind of walk you through this. As I mentioned back in August we had an estimate of what we thought was going to be UB'd. That's why you have 125,000 — I mean, 125 million. That was part of that presentation. Since that time — since we started in September we've added additional federal grants of about 7 million.

The Force account is a mechanism for us to be able to charge back to the programs for the Infrastructure Division when they're working on their hundreds — multiple projects.

Other appropriated receipts is 2 million. Unexpended balances of 111 million — that's principally construction funds that are UB'd forward. It does have some donations, some federal grants, and it does include the 25 million in Battleship that was added to the budget right at the end of August. Unexpended balances — House Bill 4586 — that was a supplemental appropriations bill that we got at the end of the year, pretty much UB'd most of that into the current fiscal year.

Unexpended balances for Riders 3, 14, 17, 18, 22 — that 12 million there has two large components. About 9.3 million, the largest share, is the Eagle Mountain Lake appropriated receipt funding that we have. The next size ‑‑ we have Rider 17 which allows the Department to use federal funds for capital purchases. So we have UB'd approximately 2.3 million from that. So we have an adjusted budget at this time of 491 million, and that is having moved most of everything that could be moved from the last fiscal year into the current fiscal year.

If we look at the current year's budget versus expenditures, through December 31st we have 66.7 percent of the budget year remaining, and we have a total budget remaining of 76.4, so we're tracking well. Salaries is in line.

If you look here the largest adjusted budget items that we have are personnel cost for staff and capital projects for the construction that is going on. And that accounts for the majority of our budget.

COMMISSIONER BIVINS: That was — what's the percentage left?

MR. JENSEN: Which one?

COMMISSIONER BIVINS: Sixty-six, just of our —

MR. MCCARTY: Of the year total?

COMMISSIONER BIVINS: — of the year.

MR. JENSEN: 66.7 percent of the year is remaining.

COMMISSIONER BIVINS: Right. Okay.

MR. JENSEN: Yes, sir. And this last slide that I have, Carter'd already given you an introduction to the instruction that we got from state oversight. We got the directive to reduce our budget by 5 percent. And they're in the process of formalizing some more instructions, but the instructions we've received already said to focus on general revenue and general revenue dedicated.

The initial letter said we could deduct from the calculation our debt financing. So in this slide we're showing you how we came up with what our 5 percent is. We took the GR from both years, we took the GR dedicated from both years, then we deducted from that the debt service that's built in our budget that's tied to the bonds. And then we calculated 5 percent on that remainder.

Since then we were told we could also reduce — we have a $127,000 amount that's tied to master lease purchase ‑‑ the energy efficiency window film that they put on this building. And — but we were also told we had to add 1.27 million for the Schedule C salary increases.

The bottom line — it doesn't really change the 5 percent target that much. The target's still going to be approximately 24.7 million. And all staff are working closely with Carter, Gene, Scott, and Ross to come up with a plan that's going to follow the instruction and maximize the dollars that we do have for the Department.

That's all I have for update on closeout of the prior fiscal year and status of the current fiscal year. If you have any questions I'd be happy to try and answer them.

COMMISSIONER FALCON: Any questions or comments from the Commission?

COMMISSIONER BIVINS: Prior to the last biennium — I don't remember — I should know this, but were we instructed to do any reduction?

MR. SMITH: Prior to the last biennium we were not. In the course of the last biennium we were asked to look at a potential 2-1/2 percent reduction, yeah. Ultimately, that was never acted upon but we submitted a plan for that and the Legislature chose not to act on it.

COMMISSIONER BIVINS: I knew there was that number out there but I couldn't remember if we'd acted on it. So the rumors I hear on the budget for the next biennium are a little concerning. I think if 5 percent is what we're told to reduce that's — concerning what the overall cost is that's pretty reasonable.

MR. SMITH: Well, I think what we should fully anticipate is a 5 percent diminution during, you know, this biennium at least, and then I think what we are contemplating is that when the instructions come out to prepare the Legislative Appropriations Request for the next biennium that there will be an additional decrease on top of that. At what level we're not quite sure. But we have to be planning for that now and fully expecting that. It would be really improvident not to. So I think you're right, Commissioner.

COMMISSIONER FRIEDKIN: Question, Gene. Refresh my memory as well. When we talked about the licensing system updates and that whole process that you went through some time ago, did we look into ways of drilling down on data on usage of licenses as opposed to just gross revenues and, you know, growth and so forth — but actual usage? Do we have ways to get information on that in the system?

MR. MCCARTY: Not necessarily in the system, no, sir. We do a number of different surveys through the year — coastal fisheries, inland fisheries and wildlife, do a number of different surveys in terms of actual usage. We do a super combo survey every year in which we determine which of your tags an individual uses in terms of the whole tag complex within a super combo. But actually the license system itself cannot determine —

COMMISSIONER FRIEDKIN: Doesn't allow for the right ‑‑

MR. MCCARTY: — actual usage. It assumes if you buy it you use it.

COMMISSIONER FRIEDKIN: It might be interesting to explore how we could look at — you know, when — for the issuance of a subsequent year license maybe a small survey or something that's tied to that so we can get a sense of how they were actually used in addition to the surveys that we currently have.

MR. MCCARTY: Asking, Did you actually use your license or your prior year license or something like that?

COMMISSIONER FRIEDKIN: You know, did you — what did you use it on and, you know, just general three or four question type of thing that hopefully we can get a little data on. Do we feel good about the data we're getting on the existing surveys?

MR. MCCARTY: Yes, the surveys that we conduct we feel pretty good about. We've got, of course, the HIP survey out there that we don't feel very good about, but we're making some changes in it to try to get I think some better data from it because —

COMMISSIONER FRIEDKIN: That's good to hear.

MR. MCCARTY: — just because the — you know, it —

COMMISSIONER HUGHES: I may think snipe and [indiscernible] shot.

MR. MCCARTY: Yeah. And the way that's — you know, the way that's kind of executed at the licensed deputy level. I mean, they may or may not ask it even through they're kind of required to. You know, in the heat of battle they may or may not do it or they may just go ahead and check 1111 and move on to not slow down the sales line any.

COMMISSIONER FRIEDKIN: I think it's a little hard to remember that too, you know, for some species toward the end of the year. Okay. Good. Well, might be interesting to explore some of that ‑‑ get back to the Commission with some input.

COMMISSIONER DUGGINS: I agree with you, Dan, on that. And I still think we ought to continue to see if we can come up with a way to get emails and people to register when you buy or license. Or even if we did a random survey by email you could get some information back from a license holder.

MR. MCCARTY: Yes, sir.

COMMISSIONER FRIEDKIN: Great. Thank you. Appreciate it. Thanks.

COMMISSIONER FALCON: Thank you very much. I would like to go back to the previous item, which was Number 2, Proposed Stamp and Print Artwork Program, and place that item on the Thursday Commission meeting agenda for public comment and action.

Item Number 4 has been withdrawn, and that was the Department of Information Resources Data Center Services Contract Update.

And, Mr. Chairman, the work of the Finance Committee is done.

(Whereupon, at 10:00 a.m., 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 27, 2010

I do hereby certify that the foregoing pages, numbers 1 through 42, 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.

2/05/10
(Transcriber) (Date)
On the Record Reporting, Inc.
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