Texas Parks and Wildlife Commission
Aug. 25, 2004Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
BE IT REMEMBERED, that heretofore on the 25th day of August, 2004, 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:
THE TEXAS PARKS AND WILDLIFE COMMISSION:
- Joseph B.C. Fitzsimons, San Antonio, Texas, Chairman
- J. Robert Brown, El Paso, Texas
- Ned S. Holmes, Houston, Texas
- Alvin L. Henry, Houston, Texas
- Peter M. Holt, San Antonio, Texas
- Philip Montgomery, Dallas Texas
- John D. Parker, Lufkin, Texas
- Donato D. Ramos, Laredo, Texas
- Mark E. Watson, Jr., San Antonio, Texas
THE TEXAS PARKS AND WILDLIFE DEPARTMENT:
Robert L. Cook, Executive
Director, and other personnel
of the Texas Parks and Wildlife
P R O C E E D I N G S
COMMISSIONER FITZSIMONS: Morning. The meeting is called to order.
Before proceeding with any business, Mr. Cook has a statement to make.
MR. COOK: Thank you, sir.
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 Law. I would like this action to be noted in the official record of this meeting.
COMMISSIONER FITZSIMONS: Thank you, Mr. Cook.
Again, today, out of our regular order, with the Finance Committee.
Commissioner Holmes, please call your Committee to order.
COMMISSIONER HOLMES: Call the Finance Committee to order.
We have some minutes to approve.
COMMISSIONER MONTGOMERY: So move.
COMMISSIONER HENRY: Second that.
COMMISSIONER HOLMES: All in favor?
(A chorus of ayes.)
COMMISSIONER HOLMES: Opposed? Chairman's Charges.
MR. COOK: Thank you, Mr. Chairman.
I've got a few notes that I'd like to cover with you quickly in regards to our Finance Committee Charges. Our Legislative Appropriation Request, LAR, which is a big item for us prior to each session, was completed on time and was distributed to oversight and leadership offices on August 20, 2004. Mary Fields will provide an update of the LAR during her presentation.
The Legislative Budget Board and the Governor's Office will sponsor a public hearing regarding our LAR where we will provide an overview of the request and the public is invited to comment on the request. That hearing date is tentatively scheduled for the morning of September 10.
Our Business Practices Improvement Plan, as mentioned at the last Commission meeting, the internal — our internal auditor has conducted a follow-up audit of the items in the Business Practice Improvement Plan. His report has been finalized with management responses and is being shared with the Legislative Budget Board.
The Legislative Budget Board has selected some of the issues with the Business Practices Improvement Plan that they would like to follow up on. Staff will cooperate with LBB as they conduct their review, and Mary will again provide you an update on the status of that plan during her presentation.
On Sunday, August 15, we began selling our FY '05 hunting and fishing licenses and all such things. Several changes in the license fees surrounding the Freshwater Fisheries Stamp, changes in license types ‘‘ to sell a day-plus license instead of temporary licenses, and including the kind of annualized fishing license and things like that make for a little bit more complicated system this year. Quite a few changes that we had to — had to be incorporated into the program, and there have been some problems. Overall, I think 99 percent of our customers so far, 98 percent of our customers so far, are going away very quickly and very smoothly with a brand new hunting license, but we are having some difficulties and we are working with MCI.
Our staff, I think, is doing a great job and I think MCI has really poured a lot of resources into this. This is a normal occurrence this year. It's one of the reasons we start selling licenses a couple, three weeks early, so we can get a lot of those bugs worked out.
Significantly also, I think it's important to note that we have initiated our Internet sale of hunting and fishing licenses. That is up and working. We have had some real bumps in that one, but we'll get them worked out.
COMMISSIONER BROWN: Bob, do you know what percentage of sales are Internet, and also, as far as call-in telephone types, stuff like that, what —
MR. COOK: I don't know the numbers right off. I can tell you that states that have had Internet sales for several years, as I recall, they're looking at somewhere in that 10 to 15 percent range once it kind of gets to rolling.
COMMISSIONER BROWN: Right.
MR. COOK: And then it doesn't seem like the — that number increases significantly as the years go by. I guess I would have thought that three, four, five years into it you might get up to 30, 40 percent sales.
COMMISSIONER BROWN: Right.
MR. COOK: I mean, that would be nice, but we're not hearing that. So we're gearing it around that level. I think it's a — you know, I think it's a real convenience that some people will use and, you know, some people like me kind of don't trust that magic box. But we are online and rolling so we're looking forward to seeing how that goes.
Our Freshwater Fisheries Stamp has started. The overall license sales mark the implementation of the new Freshwater Fishing Stamp. Stamp sales are expected to generate possibly $4.5 million this — in FY '05. The revenue from the stamp sales, as you know, will be used to construct the new East Texas Fish Hatchery and to update and renovate our freshwater fish hatchery system statewide. We will provide you an update on the site selection process for that East Texas hatchery later in the Committee meeting.
And I believe that's all, Mr. Chairman.
COMMISSIONER HOLMES: Thank you very much.
Mary, is Steve going to participate in this one as well?
MS. FIELDS: He's welcome to join me at the table if he'd like.
COMMISSIONER HOLMES: He's listed here.
MS. FIELDS: He's going to bring the end of the presentation.
Well, good morning, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer.
I've set several agenda items to speak with you about today. I've got a lot of financial information for you. We're going to start off with the 2004 financial update. This information actually — I'm going to give you a revenue and budget status and a brief status of our Business Improvement Plan. The financial data that I'm going to discuss today will be as of June 30.
With our State park revenues, you can see our gross receipts are up 6.2 percent, or $1.35 million, from the previous year. This includes our entrance fees, miscellaneous revenue, facility fees — all of that is included in this gross receipts total. So we're looking good there.
Our boat revenue — we're also up in all of these categories. That is primarily due to fee increases. We're up 28.1 percent, or $3.4 million, for boat revenue. This has been tracking fairly consistently throughout the year, so we're at $15.4 million right now in our boat revenue. We're very pleased with the overall status of that account.
Our license sales revenue, we;re also up in this category overall by 18.2 percent, or $11.9 million, in all the various categories. We're at $77.6 million total for license sales revenue. Tracking along with that in our licenses sold, we are actually running very even with where we were last year at this point in time at three million in the number of total licenses sold. Our hunting licenses are up 2.8 percent. Fishing is down by 2.6 percent, and our total combo sales are down by 2.9 percent.
We are keeping a close watch on some of these. Overall, you know, we had looked at a possible 4 percent decrease, due to the fee increases. So — and where we're at right now we're still pretty happy with it even though we're showing a little bit of a decline. So overall, we're happy with the revenue and where we're at.
In looking at our collections, our revenue collections for Fund 9, our Game, Fish and Water Safety, we've actually collected 92.4 percent of our revenue estimate that we have with the Comptroller's Office. We're 83 percent through the year as of June. So again, we're tracking well with our — those funds in Game, Fish and Water Safety. State Park fund — you can see we're at 90.5 percent. Local Park funds is tracking well, and our other category, which has several specific funds, they're — some of those are actually well over what our original estimate was.
This is important to note: not just that our revenues are looking good. Our fund balances — right now our fund balance in Fund 9, our Game, Fish and Water Safety, is at $50.5 million. State Park fund balance is at $11.5 million as of the end of June. Our balances are very healthy. Revenues are coming in as we anticipate. We shouldn't have any problems moving into our '05 budget year with sufficient funds.
When you're looking at our budget versus expense as of June, all of the categories are tracking fairly well. You can see, again, we're 83 percent through the year. Our salaries and other are pretty well close where we would expect them to be.
The benefits is — there's a little more benefits laid aside there. That has to do with our midyear adjustments. We did adjust our salaries and utilized some of our lapse. When we did that, we did not adjust our benefits category, so you're seeing a little extra funding there for right now. Again, that — those benefits, we transfer funds to the Employees Retirement System. Those funds are actually appropriated at that agency.
Operating — we're actually we're at 30 percent still remaining. I think we'll see that spent throughout the summer with higher utility bills and that sort of thing.
Capital projects — we've talked about that. We'll see those balances carry forward into '05.
So that's kind of where we stand as of the budget versus expense.
Our summary of adjustments, the last time I reported to you was as of March, the end of March, and during that time we've had $4.6 million worth of adjustments. We've adjusted our federal grants and — our federal and our grants by $2.7 million.
There were a couple of grants that actually were fairly sizable, and I've been talking without referring to my notes. If you'll excuse me a minute, I need to look at those to tell you exactly what a couple of those might be. Actually, in the Federal we had a $1.465 million Landowner Incentive Program Grant increase, and there was a $755,000 Section VI grant for the Black-capped Vireo and the Barton Springs Edwards Aquifer.
In the donations category, we had a $910,000 donation for the Texas Clipper Reef and a donation for exotic species, so those are some of the larger adjustments. There were numerous adjustments that are included, but I just wanted to highlight a couple of the larger ones.
And thank y'all for giving me a minute to find those actual adjustments.
Okay. Moving on to the Business Improvement Plan, as Bob mentioned, we are — that plan has been reviewed by our internal auditor and it is now going to be reviewed by the Legislative Budget Board. We are pleased to say that we continue to make progress on this plan. At this point we've got 86 percent of the plan complete. There's 10 percent that are about 70 percent complete, or at least 70 percent complete, and then we've got 4 percent that are below 60 percent complete, and those are those automated issues that are just going to take a few years to take care of. So we expect to see those items remain on the list for awhile, but we are making some good progress on this plan.
Moving on to the Operating and Capital Budget. Today I'd like to just give you a brief overview of the budget process, talk about the financing of the budget, let you take a few different views of the budget via summary, recap our FTEs, and then just close with a few key points about our budget.
As far as the process goes, we did start with 100 percent of our 2004 base. When we gave budgets to the various divisions to look at, we expected the divisions to justify each and every program that they had and prioritize it within the dollar amount that we allocated to them — the budget amount. The divisions were — could only request additional funding if it brought — or additional budget, rather, if it brought additional funding and authorities, such as federal or donations. Because we gave them 100 percent, they couldn't ask for more money, so the only money they could bring in was additional funding and authority.
We did go ahead this year and budget 100 percent of the appropriated fee increase. Last year we held a 15 percent reserve, you may recall. This year we went ahead and budgeted all of it. We — our revenues are looking good. We feel like we're safe with our balances and everything to go ahead and budget the full estimated fee increase of $15.7 million.
We also this year budgeted an estimated salary lapse of 2.9 percent. That will be required to meet budget demand. Salary lapse accumulates when positions are not filled, so we will accumulate this need throughout the year with our unfunded positions.
In financing the operating budget, we do start with the General Appropriations Act. That's what the Legislature funded us with, and then we move ahead to come down to our budget. This year we were authorized $210.8 million in the General Appropriations bill. That's — you may see GAA throughout this presentation. That's the bill that I'm talking about.
We also have our limits on capital budget items. Those are, you know, land acquisition or construction, vehicles — those types of items are limited within the bill, and we will follow those limits.
Just a couple other highlights and reminders. While there wasn't a lot of change between the '04 and the '05 budget, y'all need to recall that we took some pretty significant biennial reductions that we incurred in '04, and they continue to hit us in '05. This slide gives you an overview of the reductions and their impact to our '05 budget. We had requested bonds and so, you know, we had $17.9 million of bonds that we did not receive. The Local Park Grant program was reduced by $7.7 million, Minor Repairs, $1.5 million, and you can see the others. The good news on the slide is at the bottom of the page, and that is our additions for '05. I've mentioned the fee increase rider, but we also have our new Freshwater Fishing Stamp that has gone into effect in 2005. We estimate those revenues to be $4.26 million, and that amount is included in our budget.
In cross-walking from the Act to our budget, we do make adjustments. You have to recall that we're establishing these numbers a couple of years ahead of time, and when they go in the bill they're — some of these funds are estimates. Obviously, the General Revenue doesn't change, but some of these appropriated receipts, federal funds, those sorts of things, our estimate will change. And what this slide represents is those changes.
I do want to highlight the benefits category because that is a pretty large amount. And as a reminder, I spoke a little bit about it earlier. That amount is actually — we estimate our benefits. That's appropriated to the Employees Retirement System. We are expected to transfer funds to that system, so this just brings that transfer into the mix for our operating budget. We also brought in our estimated construction balances. Now, those are those balances we just talked about out of the '04 budget. You see them here — what our estimate is coming into '05. So that brings our total budget to $279.2 million.
This is just a summary of our method of finance. I'll just highlight a couple. Our Game, Fish and Water Safety Fund 9 is a good portion at 34 percent of our budget. Federal funds at 20 percent — another good piece of the budget. We'll see that number grow throughout the year. Our Account 64 is at about 16 percent, and you can see some of the other items. General Revenue is at 12.5. Other General Revenue Dedicated is at 5.1 percent. So that pretty much covers how the budget is financed.
I'll give you a couple, three looks at how we actually slice the budget up, and we'll start out with the budget by strategy. And this is how the Legislature, and our senators, and oversight and leadership offices, and representatives — how they talk about our budget.
And again, I'm not going to really go over this. You can see, I believe, in a handout that you were provided. You have this detail by strategy. The thing I will mention is I spoke with Commissioner Holmes, and he asked about this, and there is a 25 percent transferability between these strategies throughout the year. I mean, we can transfer budget between these strategies if we deem it appropriate as the year progresses. But you can see — you know, our state parks at 18.1 percent, and if you were to combine Public Hunting and Fishing and the Managed Fish and Wildlife, you're looking at — let's see; roughly — I've lost my spot here, but roughly 20 percent.
And that, you know, is for our resources and wildlife and that sort of thing.
In operating and capital budget by object of expense, this is just a different way to view the budget. When you look at our salaries, and other, and our benefits, we're looking at about 50 percent of our budget goes towards our people, you know, one of our most valuable contributors to what we do here at this Agency.
Operating is at about 25 percent. We do have capital at 18 percent, to Steve's dismay. He'd like to see that percentage larger, I'm sure, but that's where we stand as far as the budget at this point.
Divisional budgets — again, I provided this information in a package that you've received, but I do think it's important just to put this up on the screen for everyone in the room. This is how the budget ended up breaking up, and there are a couple of slides. This is the first set, and then the second half. Obviously, the budget is driven a lot by the number of FTEs in each of the divisions, and for example, State Parks has roughly a third of our employees, and you can see they're running, you know, at about 30 percent of our budget. If you were to add in the construction that relates to parks, it would bring it up to about a third of the budget. So just a view, different view of the budget there.
In recapping our FTEs, we do have 3,061 FTEs budgeted. Our cap within the bill is at 3,038.5. We do budget a little bit higher than the cap; again, because we don't have all of our positions filled at one time. So this is where we ended up with FTEs funded.
And then to just close the discussion on the operating budget, just to, you know, again, those biennial reductions continue to impact us. We have had increased fuel prices and maintenance expenses for our aging vehicles that we've had to absorb in our operations. We didn't get more money, so we had to absorb them from other places. We've already touched on the fee increase, and the salary lapse — I don't know that I've given you the dollar amount. That was $3.2 million at 2.9 percent. And then again, the Freshwater Fishing Stamp.
In closing, we did have one additional item hit us at the end of July, and this occurred after our budget workshop. Article 9, Section 1204 — what that is is a rider relating to sales of real estate within the State. And there was an estimate of $97 million for the State that they were looking for, $97 million of GR, basically, from the sale of real estate. They did allocate that among the various agencies that have real estate. Our piece of that allocation ended up being $5.2 million. Believe me, when I got the call or heard about it on July 29, I believe, I about had heart failure. But we did pull together an approach, and I believe it's a very sound approach to deal with this reduction that occurred over the '04-'05 biennium. But really, you know, getting it at this point, it pretty much hits '05.
We had $2.2 million of old lapse, salary — or not — excuse me; not salary lapse — lapse in the Local Parks Fund that was — it was from actually proceeds from the Cigarette Sales Tax from back like in 1997- '98, that was intended for construction. And those balances were out there and were going to be subject to lapse. They allowed us to apply that $2.2 million of funds toward this GR reduction.
We also went in and reviewed our projects, our land acquisition and projects, the construction projects, and reduced our Connally bonds by $2.56 million. We ended up retiring those bonds, applied them against the debt service, which freed up General Revenue. We worked with the Public Finance Authority on that — for a total of $2.56 million. And then the balance of $482,000 we ended up taking from the Local Parks area.
So that's how we ended up addressing the surprise $5.2 million at the end of last month. You will see that that lowers our base for '04-'05, which impacts '06-'07, and that's kind of a good segueway into — excuse me; I went the wrong way — into our Legislative Appropriations Request and our update.
COMMISSIONER HOLMES: Miss, before you go into the LAR for '06-'07, you might just pause and see if there are any questions.
COMMISSIONER FITZSIMONS: Well, I want to thank you for the work you did. If I remember that Section XII call ‘‘ also Bob.
COMMISSIONER HOLMES: Gee, I'll bet. Were other agencies as surprised? I mean, help me understand why we kind of didn't see it coming.
MS. FIELDS: It had been out there and we had asked questions about it throughout the year. We had been led to believe at one point that it would not impact us. But it had been on our radar screen.
Mr. Cook, please.
MR. COOK: Let me speak to that, Commissioner, if you would, please. We knew it was there. We had talked to the folks downtown a number of times through the year about it. The real issue here is that by statute, any time we sell land, whether it is State park land, particularly State park land, those revenues cannot go back into the General Revenue tank. It's against the law.
The law says that those revenues must be used to acquire, build, and/or develop other State parks. For instance, in our wildlife management areas, another completely different fund, a lot of times those funds are tied to Pitman-Robertson funds that those properties were either bought with and/or funded by, and there's no ability to — and we brought that up back during the session when this thing was coming down.
We thought, wait a minute, guys. Now, let me make sure y'all understand that us selling land, it's the statute which supersedes the Appropriations Act. The statute says that any sale we make must go back into acquisition of State parks, et cetera.
COMMISSIONER FITZSIMONS: The Section 9 issue is really driven towards agencies with surplus land —
MR. COOK: Right, and —
COMMISSIONER FITZSIMONS: — routinely are disposing of surplus lands that don't have the restrictions we have.
MR. COOK: As you may recall, for example, we made a significant effort in the — at the beginning of the last session, prior to the last session and during the last session, to sell a piece of property that we have not had in use. And even if we had sold that, that revenue, that $6 million, $7 million that we would have, I think, received from the sale of that property could not have gone back — by law, could not have gone back in the General Revenue.
So we knew it was there. We talked to them. We'd asked about it, and all of a sudden it came down to, we want $5.2 million. And fortunately, the people we were working with understood — some of the key people that we were working with understood our situation and offered these, really, some alternative ways to come up with appropriation funding levels that would fill our part.
Now, I should tell you that the word that we have heard is that that may not be the end of that. We may get additional requests for such. So it's fairly —
COMMISSIONER FITZSIMONS: And it requires some difficult cuts, and once again, we go back to the well of the Local Parks Grants, because that's what the General Revenue is, and we keep going back to that well and hitting away at it.
COMMISSIONER HOLMES: Hitting away at it.
COMMISSIONER FITZSIMONS: And this is an appropriate segueway maybe to introduce a friend I see just came into the audience, Todd Kercheval, who —
Todd, will you stand up?
Todd's the Committee Clerk for the House Cultural and Recreation Resources Committee and has been a big help to us and to staff in working these things out — working for Chairman Hildebran.
Todd, welcome. Thanks.
MR. KERCHEVAL: Thank you. I'm glad to be here.
COMMISSIONER HOLMES: I assume we thought about going into '06-'07 but, I mean, is there any way to get that changed relative ‘‘ or do you think there is going to be more demands in the new — coming out of the new Legislature starting in January?
MR. COOK: I would hate to anticipate.
COMMISSIONER HOLT: Oh, I know you do, but other than —
MR. COOK: For the record.
COMMISSIONER HOLT: — maybe just going to ask if — is there any way that we can try to get an understanding about Texas Parks and Wildlife versus other agencies?
MR. COOK: We're absolutely going to continue to work on it. Yes, sir.
COMMISSIONER HOLT: Okay.
COMMISSIONER FITZSIMONS: I think Commissioner Holt makes an important point for all the Commissioners to understand that our — we're supposed to be in the business of managing these lands, and as Bob points out, a lot of them are separated between parks and wildlife.
On the wildlife side, that's absolutely dedicated. Same in parks. So that's not a normal place for us to be raising funds from selling surplus property, like GLO, or TxDOT, or others. So one size doesn't fit all, and I think that's the message we have to —
COMMISSIONER HOLMES: Try to get delivered.
MR. COOK: Mr. Chairman, I think also — and I appreciate your pausing here, because several of you came in July and we went through this budget presentation and talked to the individual division directors.
We appreciated your — you know, and we tried to, you know, keep y'all in the loop as we were going along there, of decisions we were having to make, and it's really valuable and helpful to us to get your input and to hear from you, you know, kind of your thoughts and reaction. It helps us move along, and we try to whatever, you know, your guidance is, we try to absolutely apply that and keep it in mind.
Mary, I'd like to make one little request here before we leave this particular set. Would you go back, if you can, to that pie chart, because this is — you know, when they talk about where the rubber meets the road. When we get a request to — or a directive to reduce our budget, our GR, which is typically — that's the direction; that's the funds that they're looking for that can be used or the funds that we're short on, and you look at that. You look at that chart of those millions of dollars that we deal with. The actual GR makes up a rather small proportion of that set of funding that we can deal with. We can't give back Federal funds. And oftentimes, those Federal funds are dependent upon matching funds from either 9 or 64 or, you know, whatever it may be.
So anytime, depending on, again, the appropriations needs, and I realize the — I absolutely fully realize the difficulty of balancing these budgets on the basis of a statewide — it's difficult. But when we do get those directions, you can see — I thought, a while ago, when I saw that chart that I wanted to come back to it to be sure that y'all see and realize where those cuts are going to come from.
COMMISSIONER HOLMES: And that GR number has continued to come down.
COMMISSIONER FITZSIMONS: That is correct.
COMMISSIONER HOLMES: From last year to this year, it's about a $10 million number.
COMMISSIONER MONTGOMERY: Does the Account 64 percentage up there only include revenues generated by the parks, or is that also GR allocated to the parks?
MS. FIELDS: I believe that also includes the GR that's allocated to the parks.
COMMISSIONER MONTGOMERY: I was thinking it was that big, so the GR is really a little bigger?
MS. FIELDS: Yes. It does ‘‘ it includes the tax ‘‘
COMMISSIONER MONTGOMERY: And how much — what's the split between revenue and GR up there? At any point, tell me the $44.2 million.
MR. COOK: I think revenues is about 25, 24.
COMMISSIONER MONTGOMERY: So is the total GR then — what is the total GR if 20 of it is GR in there —
COMMISSIONER HOLMES: We looked at it this morning. It was $15 million —
MS. FIELDS: It's 15 — $50 million?
COMMISSIONER HOLMES: Yes. Okay. It was about another $15 million that gets the total GR to 50.
COMMISSIONER HOLT: Since Phil brought —
COMMISSIONER MONTGOMERY: And then the 10 would come off that 50 that you're talking about going into '05?
COMMISSIONER HOLMES: Yes, it was 63.9.
COMMISSIONER HOLT: Oh, okay. So the drop is 15 —
COMMISSIONER HOLMES: If you take the total.
COMMISSIONER MONTGOMERY: It was 49 plus another 26, so that's really about 70, if I read that right.
COMMISSIONER HOLMES: I think it — the number that I remember that we looked at this morning, Mary, it was — we added 15 to the 34.8. We got to — it was a little over —
MS. FIELDS: A little over 50.
COMMISSIONER HOLMES: — over 50. It was 50.2.
COMMISSIONER HOLT: A year ago it had been — or for '04 it had been —
COMMISSIONER HOLMES: Yes. Been about $10 million more.
COMMISSIONER FITZSIMONS: To follow up on Commissioner Montgomery's point about the amount of GR that's included in the Park Account 64, is that just the Sporting Goods Sales Tax portion?
MS. FIELDS: Yes, sir.
COMMISSIONER FITZSIMONS: So from a —
MS. FIELDS: And there were $16 million of that, so — and some of it does get transferred to some other accounts.
COMMISSIONER HOLT: That's what I was going to ask you. Is there General Revenue going into other accounts up there or —
MS. FIELDS: There's $15.5, I believe, going into 64. And Drew, correct me if I'm wrong.
And then in Fund 9, we do get some Boat Motor and Sales Tax of about $5.5 million is what I'm recalling.
COMMISSIONER HOLT: That you explained.
COMMISSIONER FITZSIMONS: Yes, but still, when you look at that, when you account for the GR that's allocated into those other accounts, it's still directly tied to the users.
COMMISSIONER HOLT: Yes. Right.
COMMISSIONER FITZSIMONS: And that's important, I think, from a tax and public policy standpoint for us to stand by ‘‘ is that it's not in the general till there. And whether it's a boat tax, or revenue paid by boat users, or sporting goods sales tax, it's user benefit. It's tied to the user.
COMMISSIONER HOLMES: Right.
COMMISSIONER FITZSIMONS: Thank you, Mary.
MS. FIELDS: You're welcome. You ready to move on to the LAR?
COMMISSIONER HOLT: Okay, I just want to — so the $34.8 showing up there in General Revenue is really the only thing we're drawing out of the general fund that's not user-related — the sales and Sports Good Sales Tax.
COMMISSIONER FITZSIMONS: I think that's correct. Is that right?
MS. FIELDS: That's a correct assumption.
COMMISSIONER HOLT: That would be another way to look at it?
MS. FIELDS: Yes, sir.
COMMISSIONER HOLT: Okay. That helps me understand.
COMMISSIONER MONTGOMERY: One more question. The GR dedicated — is that dedicated — revenue source dedicated or the expenditure debt? What's it referring to?
COMMISSIONER HOLMES: That's revenue.
COMMISSIONER MONTGOMERY: And what are those, just —
MS. FIELDS: In the —
COMMISSIONER MONTGOMERY: — the dedicated revenue?
MS. FIELDS: The dedicated revenues? There's about — are you looking at the other GR or —
COMMISSIONER MONTGOMERY: Other GR. Yes.
MS. FIELDS: Okay. There's like — I'm wanting to say 12 other dedicated accounts. Those are the smaller dedications for the various stamps that we have, Lifetime License Endowment, those sort of accounts. There's several of them.
COMMISSIONER MONTGOMERY: And they come from user fees —
COMMISSIONER FITZSIMONS: They're all user fees. That's right.
MS. FIELDS: Some of them are endorsement, yes. It's stamps.
COMMISSIONER MONTGOMERY: They're all user fees?
COMMISSIONER FITZSIMONS: To my knowledge — I hate to say all of them. I'd need to look at the list, but the majority of them, I would say, is that's true.
Any other questions? Y'all are getting into a little more detail today.
COMMISSIONER FITZSIMONS: They had their Wheaties this morning, Mary.
COMMISSIONER HOLMES: It was fortunate that we talked about all those items this morning.
MS. FIELDS: I welcome the questions.
COMMISSIONER FITZSIMONS: Got everybody's attention —
MS. FIELDS: Okay. Moving into the request, today what I'd like to do is just talk a little bit about how we established that base. We touched on a couple of things, but I want to give you a little fuller picture on that and then talk about the General Revenue and General Revenue-Dedicated reductions that were actually made to achieve that base, the impact of those reductions on the agency, and then I'll highlight our proposed exceptional items in priority order, give you a view of our revenue estimates and fund balances for Fund 9 and 64, as we move into the session, and then just an overview of the overall request.
In establishing the base budget, we do get pretty detailed instructions from the Legislative Budget Board and the Governor's Office of Budget and Planning. The instructions were over 80 pages. And we also get pretty clear directive on how we establish this base. And what we were required to do is to estimate our fiscal year 2004 budget, just the expenditures through the close of the fiscal year. We took our fiscal year 2005 budget less that real estate rider reduction that we just talked about, the $5.2 million, and then when you looked at those two years together, we looked at our General Revenue and General Revenue-Dedicated. Out of those revenue categories within the budget, we reduced that amount by 5 percent. And then we look at other funding sources and do estimates there on our Federal or appropriated receipts and some of the various other funding sources. And with that, we establish our base. In looking at the General Revenue and General Revenue-Dedicated reductions, we ended up with a total of $21.2 million.
Now, $16 million of it was related to the 5 percent reduction, and then the $5.2 we talked about. So you have a total of $21.2 million. We applied those reductions over the biennium. As you can see, $15.2 million to Local Park Grants. We made operating budget reductions within the various divisions of $5.1 million. That impacted the divisions — the impact to the divisions varied from about .6 percent of their budget and it ranged up to 1.9 percent of each one of the division's budgets — that $5.1 million. We also had between $900,000 and $1 million of appropriation authority for the Artificial Reef Fund. And we are going to utilize that General Revenue-Dedicated authority here and opt for using donation appropriation authority to fund Artificial Reef. So the total General Revenue Dedicated reduction, again, is $21.2 million.
Let's talk a little bit about the impacts of those reductions. Obviously, we've substantially reduced the amount of our Local Park Grants, as Commissioner Fitzsimons had highlighted earlier. We eliminated 27 FTEs in State Parks, we reduced our game warden cadet class, eliminated 5-1/2 administrative FTEs throughout those various divisions, reduced operating expenses by about $385,000, and eliminated 12-1/2 FTEs out of the resource divisions.
COMMISSIONER HOLT: Can you help with — in resource divisions, what would that — what kind of individuals would that be? I mean, what's their designation?
MS. FIELDS: The breakdown — there were three or four out of each of the Inland and Coastal Fisheries Divisions. I believe there was a couple, one or two, out of Infrastructure. And I don't have that detail with me but —
COMMISSIONER HOLT: Well, I know off the top of your head, but I mean, is it more administrative tech or is it people out in the field?
MS. FIELDS: Some of them were actual technologists, and biologists, and that sort. They were not all administrative in nature.
So we kind of talked about the impact of the reductions. I guess the good news is is we can ask for exceptional items above our base and hope to receive some of these exceptional items as we work with the Legislature in the upcoming session.
And we do have 17 exceptional items, so I'm going to cover these at a pretty high level of detail since there's so many of them. They are in priority order.
Number one is to receive an additional appropriation authority of G.O. Bonds for $25.8 million. And you'll see later there's another request relating to bonds, and Steve will be covering these exceptional item requests in a little bit more detail during his presentation.
We're restoring the operational part of that GR reduction, that 5 percent reduction we talked about. The operating part in the divisions was $5.1 million, and that's what that second request is. We have State Park Operations and Small Repairs of $4 million per year. A million of that was going toward repairs and $3 million toward operations. In the Capital Appropriation for replacement vehicles and transportation items and equipment, we had $11.2 million set aside for vehicles and $2.9 million set aside in that item for equipment. I believe we had about 212 vehicles that we were looking to fund in this item. The next one really is just — we anticipate earning this Freshwater Fish Stamp revenue, but we need to get the authority to spend it. So we did get some authority, as y'all know, in '05 as reflected in the budget.
This is the remaining balance. We anticipate earning about $4-1/2 million per year, so this is the required authority to get that in. An employee pay raise of about $5 million per year — that represents, I believe, a 4.8 percent roughly, 4.8 percent increase for staff.
Additional authority to fully fund our game warden salaries, operating and other costs, again, at $5.2 million. Appropriation authority and funding for Information Resources — this was one of those areas that was hit pretty hard in '04-'05, and we really need additional funding for our PCs and hardware and software within the Agency.
Capital project-related salaries, number nine ‘‘ we currently, within Steve's Infrastructure Division, we fund some of those salaries with bond proceeds. We'd like to utilize those bond proceeds on the construction projects, so we're asking for some General Revenue to fund those salaries.
This next item was the additional Prop 8 bonds, which Steve will talk about. Restoring those Local Park Programs, the grant program, at $24.7 million — now, that item actually represents some of the reduction that was incurred in '04-'05, and then this additional GR reduction for '06-'07. It was requested — the next item number, Number 12, also relates to those Local Park Grants. We probably would have combined those and just asked for one, but we were asked specifically to keep that item separate, so that's just that additional $5.2 related to the real estate rider for Local Parks.
Number 13 is additional authority for more replacement vehicles and other transportation items. And then I'll just close by saying the last four exceptional items that you see up there, we did not cover those in detail in the workshop last time, and I don't plan on covering them in a lot of detail here. What these basically do — we are already receiving this revenue. What these items do is request authority so that we can spend the revenue that we're receiving.
And when — in closing that out, we have a total exceptional item request for $148.1 million. When you look at — I guess the good news is looking at our revenue estimates for Fund 9 and Fund 64,of which some of these balances could possibly be used to fund some of those exceptional items, you can see the growth in the funds as the years progress. So we are estimating $47.9 million in Fund 9 by the end of '07. For Fund 64, State Parks, again, as we review where we're at in estimating our revenue and our expenditures, we're estimating $26 million by the end of '07 in that fund.
In closing, then, our total request, our base request, is at $406.9 million and our exceptional items, again, are up there on the screen, for a total request of $555 million.
I will note that, as we discussed in prior meetings, we are using the new budget structure as approved in the Strategic Plan. We went from roughly ten strategies to roughly 30 strategies. I just want you to see what the impact of that is. Our LAR this year, as a result, is 422 pages because we detailed the request by the 30 strategies that are in there, which actually will provide additional information to the legislators and oversight offices as they determine where the funding goes. But we're real proud of this document. Proud that we were able to get it out on time, especially with some of the curve balls, and just glad to have it complete and submitted.
That concludes my presentation on LAR. Are there any questions there before I move into the policies? If not, I'll go ahead and just quickly cover those policy resolutions.
The Budget Policy — again, I believe you have a page and a half of the actual policy in a handout that you'll be receiving. But basically, just a couple of key points from that policy. Within it the Commission is authorizing the Executive Director to approve and execute, or execute on his behalf, necessary expenditures, budget adjustments, and transfers. Any budget adjustments that exceed $250,000, excluding the Federal grants and the bonds, will require prior approval from Chairman Fitzsimons and Chairman Holmes. And as y'all are well aware, I continue to report all of the budget adjustments to you at each Commission meeting.
In the Investment Policy, it's required by statute that the governing body review this policy annually. There have been no changes to the policy since last year. Basically, it requires all of the Texas Parks and Wildlife funds to be deposited in the Treasury, with the exception of these four funds that I have highlighted on the screen. Actually, all of them are in the Treasury with the exception of the Operation Game Thief Fund right now. There's also, within that policy, a discussion about bank accounts and having them properly collateralized at the $100,000 FDIC. You know, that sort of stuff is in the policy, as well as training requirements for our investment officers, and quarterly and other reporting requirements are also in there.
And that's just a high level review of those policies.
COMMISSIONER MONTGOMERY: Sure. The Treasury manages the funds for everything except numbers you gave today?
MS. FIELDS: Yes, but —
COMMISSIONER MONTGOMERY: And how is that managed?
MS. FIELDS: That is actually — it's a separate account that is managed, and I may have to defer to our Investment Officer on that. But it's in a separate bank account, isn't it, Brenda?
MS. DILLE: Yes, it is.
MS. FIELDS: Okay.
COMMISSIONER MONTGOMERY: Is it just held as a demand account, or money market account, or is there actually an investment program there or —
MS. FIELDS: It's in CDs, according to Brenda.
And if there are no further questions, that concludes my presentation and I will hand it over to Steve.
MR. WHISTON: Thank you, Mary.
Good morning, Mr. Chairman, Commissioners. For the record, my name is Steve Whiston. I'm the Director of the Infrastructure Division.
My portion of the presentation this morning is going to be relatively brief and I intend to just give you an end-of-year summary of our FY '04 capital program.
MR. COOK: I'll take this opportunity during the pause to say Ms. Fields has done an incredible job and her folks. This last — oh, I don't know; 60 days — has been an interesting time, and Mary's, you know, and her staff have all taken hold of this thing, which is very, very complex.
Comparatively speaking to most State agencies, our budget process involving all those different accounts, different funds, which we are accountable for — we must keep separate and keep up with — is quite complex. Mary's done a great job of helping me understand and learn the process, working with Drew and all the staff, and I sincerely appreciate it very much.
COMMISSIONER HOLMES: Yes. Recess for five minutes.
MR. WHISTON: I apologize. Let me —
COMMISSIONER HOLMES: That's okay. Have you got it? Go ahead and pull it up but we'll recess for five minutes.
(Whereupon, a short recess was taken.)
COMMISSIONER HOLMES: Let's reconvene the meeting of the Finance Committee.
MR. WHISTON: All right. Thank you, sir.
Again, sorry for the miscue. Sounded like that was well timed. Let me begin this morning by providing you end of month, end of fiscal year, summary of our revenue bond program.
And you know, we will have completed, as the slide indicates, we will have completed in our revenue bond program 404 of the 424 projects that were funded from the $60 million in revenue bonds that were provided the Department beginning in FY '98. At the close of this year, we will have expended $63.04 million of the total $64.4 million in total proceeds. That includes the accrued interest earnings that we received over the life of those bonds. I'm pleased to report that we fully anticipate to — excuse me; to expend the balance of our revenue bond program funding and close these bonds by December or the end of this calendar year — December '04.
The next slide summarizes our end-of-year state of our General Obligation, or Prop 8 bonds. We received $36.68 million about 18 months ago, and to date we have expended and encumbered, of that amount, a little over 16 — almost $16 million of that $36.7. Of the 101 projects that make up that program, we've completed, as the pie chart indicates, we've completed 29. Twenty-nine additional projects are well into construction. Seven are currently being bid, and another 34 projects are in design. Again, I'm happy to report that we are making steady progress toward the completion of the G.O. bond program.
Commissioners, if you recall, we've been successful in past fiscal years in expending a total of around $18 to $20 million per year in capital program dollars. Last year, in FY '03, we set a goal for ourselves to spend $20 million. We ended the year last August with a total expenditure of $21.9 million.
For FY '04 we raised the bar a little bit and set a goal for ourselves of $22 million. I'm happy to report that of the 245 projects that we started this fiscal year that are valued at a little over $72 million, that we will close the year having expended $22.7 million, so each year we're able to creep up a little bit more and make a little bit more progress in our ability to spend down and implement projects provided for us by the bonds.
As Mary indicated, I'd like to conclude my brief presentation with a short explanation of the two capital program exceptional item requests that Mary referred to earlier in our LAR. Our total need of Prop 8 funds for '06-'07 is $46,455,000.
That fund is split into two priorities, as Mary indicated. Our Priority 1 request, which includes slightly over $18 million, for scheduled, major repairs — repairs to our facilities statewide — to be spent over the biennium. It also includes $750,000 of Prop 8 funds that will be requested for the completion of the renovation of the Admiral Nimitz Hotel. It also includes a second installment of Prop 8 funds for the Battleship Texas, the Levi Jordan Plantation, and the San Jacinto Battleground projects. These funds will generally allow us to complete the survey and testing, the engineering, and to complete the design, to produce the construction drawings, and to do some preliminary on-site construction to get these projects started.
The balance of funds, the actual bulk of construction money for those three remaining projects, make up our Priority 10 request. For the total $20,658,000 of Priority 10 represents the actual construction portion, the major part of the construction portion of those projects. Certainly, it is our hope and desire to receive favorable approval of both those priorities, but we've structured it in a way so that we feel like we can adequately continue to make progress toward the implementation of our bonds.
That really concludes my presentation, and it's brief, but I'll be happy to answer any questions.
MR. COOK: Let me say in my words what I think might help you understand a little bit. In our legislative exceptional item request, Legislative Appropriations Request, where we're asking for additional revenues beyond the base numbers we've been given, this entire repair bonding program right now, as you know, is at zero.
We were not funded any additional funds for the biennium that we're in, so we're wrapping up that initial funding that was granted to us. And we're, as you saw, closing down on those projects.
By the end of FY '05, by this time next year, those projects will be completed. If we're going to have money to do any of these things, it would have to be granted under our exceptional item request via the Legislature and, you know, whether or not those funds will be available or not, of course, remains to be seen.
And again, tough decisions to be made. We put the priority there in Priority Number 1 right at the top, just repairs; just the ongoing maintenance repair and upkeep program of our existing facilities. Places like Garner, places like Landmark Inn, places — you know, the things that just on a daily basis we have to — and I want to tell you that this process that Steve went through, even going back to that $60 million in our Critical Repair Program back from '97-'98, every year our Infrastructure staff sits down with the leadership from each division that maintains facilities, whether or not that's a fish hatchery or an office at — you know, in some location that we own, or a wildlife management area, a State park, whatever it is — and go through and look at, you know, Well, what are your needs? Have they changed? You know, a year has passed. Has something jumped to the top because of some problem? So we don't just sit down and do that one time and say, okay, here's how we're going to spend $60 million.
Now, we do that at the start of the project. We'd say, here's how we think we're going to spend this $60. But each year we go back, look at what's been completed, look at what has developed, what has changed, reprioritize. So it's been a really, really effective process, and again, I think as you go to our sites and see how we've used that money, we have really received high marks from leadership down at the Capitol, and our users, and everywhere, for the way we've used that money.
But that $18 million, that's what that is. It's just keeping what we have in good shape. The other funding there for Nimitz kind of wraps up a project. The $2.8 million on the Battleship — that's some — I guess I'll call it, Steve, almost preparation work to really get to do the big job that's got to be done in a timing sequence basis. You can't just take that rascal to drydock and put it in. We're going to have to do some things to get it there. And the other is more or less prep work to do the bigger job; to get some of the ground work laid, get some of the stuff underneath the ground laid out and ready for the big project at San Jacinto.
So that's kind of how we've laid this thing out in our priorities. You know, if we get anything of Number 1 priority there, you know, I'm going to be pulling heavily for that basic repair package. That's just keeping up with what we got. If we have to put the others on hold, we have to put the others on hold. They're great projects. That Battleship project, last time I asked, the Battleship is still listing.
COMMISSIONER BROWN: Bob, what's the ultimate consequence? Do we have a number —
MR. COOK: On the Battleship?
COMMISSIONER BROWN: — on the Battleship?
MR. COOK: $20 million.
COMMISSIONER BROWN: So it's $20 million —
MR. COOK: Won't miss it far.
COMMISSIONER BROWN: — and the likelihood ‘‘
MR. WHISTON: That's close. Yes, sir. We — as you recall, as a result of our reasoning that we provided you in April, we're engaged in a engineering study now that is looking at the feasibility of this drydock on-site, and they're going to be providing us — and it's my hope that we'll be able to come back in November to you with a more accurate projection of what that cost is going to be and how —
MR. COOK: The question becomes there, I think, gentlemen, one of do we spend 12, 13, 14 now and then spend 14, 15, 16 of the same kind of dollars again in ten or 12 years; or do we spend maybe 16 to 20 now and defer future expenditures to keep that Battleship dramatically over, say, a 50 — if you're looking at a 50-year period of how's the best way to handle that ship and it's a big one.
San Jacinto — we're doing some interesting work and not really ready to report to you at this point in time, but we've got some information coming in on San Jacinto that's going to — we're going to have to make some decisions there also — additional costs.
COMMISSIONER HOLMES: Commissioner Brown, you had a —
COMMISSIONER BROWN: No, I — just with the, you know, the shortfall State budgets and all that, I mean, what is the likelihood that we're going to get that funding to get this project done, and how hard do we need to really go out and wart the Legislature trying to get funding for the Battleship?
MR. COOK: Well, it is rusting at the waterline.
COMMISSIONER BROWN: It almost seems pretty critical.
MR. COOK: Yes. Bilge pumps going almost constantly.
MR. WHISTON: Twenty-four hours a day.
MR. COOK: It is going to roll over, I fear — it is going to list and roll over if we do not do something very quickly.
COMMISSIONER BROWN: Right.
MR. COOK: We're scheduled — we're about two years behind schedule now. And you know, probably one of the reasons we're looking at this, doing this thing in place is because we're probably at a point — and if we're not at a point now, we will be again on the next cycle — where towing that ship across the Gulf will be impossible to a drydock. It's thought to be an impossibility.
COMMISSIONER BROWN: It will be in your ship channel. Sunk.
MR. COOK: Artificial reef —
COMMISSIONER BROWN: In the ship channel.
MR. COOK: Artificial reef in the ship channel.
COMMISSIONER HOLT: Yes, that's kind of a problem.
MR. COOK: We're not going there. But, you know, it is — I think the thing that we've got to do, sir, is just be sure that leadership understands our situation and that we're not just, you know, crying wolf and — you know, it's a decision.
I mean, a site like the Battleship, Nimitz, San Jacinto — I mean, those are sites that are important to the State, important to the people in the State, and we'll do everything we can. But at some point there's going to have to be some real decisions made about what the future is there.
COMMISSIONER HOLT: And not to carry it too long, but remember one of the things we talked about is to come up with some different ideas relative to what you do with it once you repair it —
MR. COOK: Correct.
COMMISSIONER HOLT: — or what level. For example, take the water out. Leave it as dry —
MR. COOK: Correct.
COMMISSIONER HOLT: Okay. So we're looking at some — okay.
MR. COOK: That's what we're really talking about.
COMMISSIONER HOLMES: There — just so the Commissioner is aware of it, there is some opposition to that program —
COMMISSIONER HOLT: Well, I can understand that. We've got to face reality here.
COMMISSIONER HOLMES: — from the Battleship people in Houston.
MR. COOK: Just tell them to write a check.
COMMISSIONER HOLT: Yes, exactly, if they want to donate the money.
MR. COOK: And then donate it again ten years from now and you keep it in saltwater. I mean, this is a continual issue.
COMMISSIONER HOLT: And I assume it gets worse and worse as the years go on.
MR. COOK: But that is exactly what we're talking about, Commissioner Holt, is basically drydocking it in place —
COMMISSIONER HOLT: Yes, and then essentially leaving it in drydock.
MR. COOK: — away from that corrosive water where that, you know, it is going to have a much, much longer life in that situation — supported in that situation versus where it is now.
COMMISSIONER PARKER: Other historical ships —
COMMISSIONER HOLMES: Have gone that route.
COMMISSIONER HOLT: Have gone that route, haven't they? You're talking about in Oregon maybe or Washington State?
MR. WHISTON: New Jersey, Indianapolis, and Alabama.
COMMISSIONER PARKER: And it gives them a 100-year life as opposed to a ten —
COMMISSIONER HOLT: So the beauty of it there's some precedent out there relative to opposition that's saying, you know, here's how they've done it over here and how they've done it there. Yes.
MR. COOK: Well, another thing we're dealing with here is a ship that is — will soon be 100 years old.
COMMISSIONER HOLT: Yes. I always forget how old it is.
MR. COOK: Far beyond what even most of the other ships —
COMMISSIONER HOLT: Correct.
MR. COOK: — that are held as museums are ‘‘ so it's an interesting process, and we'll do our best to make sure that folks understand what we're talking about and what our proposal is.
COMMISSIONER HOLMES: We're at the risk of having the longest-running committee meeting, so Steve, would you continue?
MR. WHISTON: Yes.
COMMISSIONER HOLT: Sorry.
MR. WHISTON: I'd be happy to answer any of the questions.
COMMISSIONER HOLMES: Thank you.
MR. WHISTON: Anything further?
COMMISSIONER HOLMES: Thank you very much. Good job. Tim.
MR. HOGSETT: Good morning, Mr. Chairman, members of the Commission. I'm Tim Hogsett from the Recreation Grants Program in the State Parks Division.
This item will contain proposals for funding for tomorrow's meeting for five grant programs, the first of which is our Outdoor Recreation Grant Program. We receive applications for this program twice a year, and this review includes all the applications, 24 of those, that were received before our January 31, 2004, deadline, requesting a little over $10 million in matching grants. As we always do, we've scored all these projects. We've rank-ordered them by score. That becomes the basis of our staff recommendation, which is in Exhibit A, and we're going to be recommending to you tomorrow funding for the top 12 applications in that list for $5,223,628, and this will be the first funding cycle for fiscal year 2005 funds.
And I'll be glad to answer any questions on that item if you have any.
COMMISSIONER HENRY: Mr. Chairman.
COMMISSIONER HOLMES: Yes.
COMMISSIONER HENRY: Commissioners, some or all of you probably, like me, received — may have received one or more letters from persons indicating that, thanks for our approving this grant.
I talked with Tim simply to say that we needed to make sure that people understand that our processes is — has not lost its integrity and that this has not been approved until it went before the Commission formally and we took official action on that. Tim, you may want to just explain briefly how the process works in that regard.
MR. HOGSETT: Essentially, for the right of people to know what the recommendations of the staff are going to be in front of you in public hearing, we send letters to each of the applicants, informing them of what the staff recommendation on their particular project's going to be and then inviting them to come to the Thursday meeting for making public testimony.
In this particular case, I think with the excitement of receiving a letter for a project that has been turned down a couple of times previously, that they thought that maybe it meant a little more than it did. So we have since talked with that particular sponsor, and they do understand that what you're — what we're putting before you today and tomorrow, until you vote on it in final form, it's simply nothing other than a staff recommendation.
COMMISSIONER HOLMES: Thank you.
MR. HOGSETT: The next program that we're proposing funding for are Small Community Grants. Small communities are defined as communities with a population of 20,000 or less, and this program makes grants not to exceed $50,000 in matching funds to those kinds of communities.
We receive applications for this program only once annually. And again, these will be fiscal year 2005 funds. We received 26 applications for the January deadline, requesting a little over a million dollars. We've rank-ordered those using the scoring system, and that rank-order can be found in Exhibit A. And we're recommending the top 15 applications out of that listing for $703,495 and recommending those for funding before you tomorrow in the public hearing.
I'll be glad to answer any questions that you have on those.
The next item are Regional Park Grants. Regional Park Grants are a bit different from our other programs in that these are larger grants. They are grants of regional significance. Typically, multijurisdictional, cooperative grants and include either intensive use or conservation kinds of projects. We're handing out a revised item to you from what was originally mailed to you. We are recommending partial funding for one of the projects — actually, the third project — instead of full funding. The reason for that is this is where we're taking the reduction that Ms. Fields was referring to earlier out of the Article 9 — approximately $460,000 reduction that we're required to take out of the program. And so we will be reviewing with you tomorrow five applications that we received on — this is an annual deadline, again — requesting almost $9-1/2 million. We scored — rank-ordered the five projects and are recommending funding for three applications in the amount of $4,425,713 in matching funds.
Again, I'd be glad to answer any questions.
COMMISSIONER HOLMES: Any questions for Tim?
MR. HOGSETT: The next program we're going to be recommending funding for you tomorrow is the National Recreation Trails Grant program. These are Federal pass-through programs that are generated from a portion of the gasoline — Federal Gasoline Tax, and they can be used for either non-motorized or motorized kinds of projects, and they are for, as you would imagine, recreation trails of all kinds. We receive applications for this program once annually. These particular projects are reviewed by staff but also reviewed by a Parks Advisory Board that is required by Federal law for us to be able to be eligible for these funds, and so the actual recommendations are coming to you from the Parks Advisory Board as a result of the presentation of those projects to them by the staff. We received 53 applications, requesting a bit over $4 million in matching funds, and we're recommending 27 projects in the amount of $1,918,000. And again, the State Advisory — Trail Advisory Board uses the three criteria here in their evaluation.
And again, I'll be glad to answer any questions that you have.
MR. COOK: Tim, distinction here on that particular grant program — that is Federal funds. Correct?
MR. HOGSETT: They are strictly Federal funds, pass-through funds. Yes.
MR. COOK: That would not be impacted necessarily in any form or fashion by the State —
MR. HOGSETT: Correct.
MR. COOK: — by appropriations from State to General Revenue or whatever. Just wanted to — you know, there are some of those kind of programs that Tim and shop effectively operate and those funds, you know, are not involved in this — any budget reduction and such at the State level.
MR. HOGSETT: Finally, we're bringing to you — again, these are Federal pass-through funds — Target Range Grants for the construction of target range types of facilities, helpful in our hunter education endeavors. These are from the Wildlife Restoration Act. They are 75 percent matching funds, and we're recommending funding for all six applications that we've received in the total amount of $300,000.
And that concludes my presentation. Again, I'll be happy to answer any questions that you have.
COMMISSIONER HOLMES: Any questions for Tim?
Thank you very much.
MR. HOGSETT: Thank you.
COMMISSIONER HOLMES: This Texas Hatcheries. Gary.
MR. SAUL: Thank you, Mr. Chairman. Commissioners, my name is Gary Saul and I'm the Chief of Fish Hatcheries for Inland Fisheries. And what I'd like to do today is to give you a status of where we are in the site selection for the new East Texas Fish Hatchery. As you know, back in February, we entered into a Memorandum of Understanding with the Foundation. We share similar missions, and the Foundation took on this project to get the best value for the anglers of Texas by searching and soliciting partners for the new East Texas Fish Hatchery site and also to obtain corporate sponsorship for the entire fish hatchery initiative, which is associated with the Freshwater Stamp.
The first thing that was done was a partnership proposal was developed. The criteria, which are extremely important to us in fish hatcheries, where is the land going to be, having sufficient land, and then having enough water and good quality water to raise the fish. The location was determined to be in East Texas, and then we went forward from there to set criteria on land and water. Also, within this proposal was an opportunity for anyone who was interested to work with us to add value to that proposal and provide us with greater opportunities in terms of working with them.
I want to let you know what's been done in terms of the proposal solicitation. In March the Foundation sent a letter to over 300 different groups, which included the river authorities, economic development corporations, cities, counties, and local, State and Federal legislators, and this was a letter that asked for interest to see if people would be interested. In mid-March we had 42 people that responded that then received our Request For Proposals. In April we went to Lufkin, and Commissioner Parker was there with us in Lufkin, and we met with everyone that was interested in terms of going forward with a proposal, and we were there to explain any questions they might have about the proposal and what it is that we were trying to do. And then at the end of May we received from seven different groups proposals for siting the new East Texas Fish Hatchery in their area. To give you an idea, the area that is outlined in yellow is the actual target area that we requested for proposals to be submitted. Six of the seven proposals that came in were from that target area. And we were extremely excited to get seven proposals to come in. These are people that really want to work with us.
So what have we done? Since that time, within one week of the proposals coming into the Foundation, the Foundation directed a team to go and to visit every site that was submitted, and a team did go do that. At the same time, a proposal review process was begun. And the proposal review process is a multi-faceted process, and one aspect of it is, do they meet minimum criteria in terms of can they provide us the amount of land that we need. Can they provide us the water that we need to be able to go forward? So this is a purely hypothetical figure for you. We want you to understand that things that are extremely important to us, the quality of the property, the quality of the water, and the impacts that it's going to have on operating costs once we get onto that site.
The next thing we did, which was only two and a half weeks, I believe, after the proposals were submitted, is the Foundation had what they called clarification meetings. They brought each group back into Athens, Texas, actually — they met at the Texas Freshwater Fishery Center — and visited with each group. And that visit basically was to clarify, to make sure that everybody understood exactly what was in the proposal, and also to bring up some comments or some issues that the staff, as they went around to see the sites, may have identified. And so they may just ask those people to clarify that. So those were held in mid-June. By the first of July, each one of the groups was asked to send to the Foundation an amendment to their proposal which addressed the clarifications that they were asked about in early — or in mid-June.
Six of the seven groups provided amended proposals. One group withdrew. So the current actions, where we are right now and where we are getting very close to completing, is the technical review. Technical review, Parks and Wildlife has served as technical advisers, and we have used people out of the hatcheries group and people out of the Infrastructure Division. We've also used independent engineers to go out and evaluate the sites and help us move forward in a technical review.
Simultaneously, a CPA firm has been retained by the Foundation to look at what is — what we call the value added aspects to those proposals. What are the values that can be assigned to what it is that they're being offered. And those will be brought together to the Foundation here very quickly, because before the end of August the Foundation is scheduled to meet again with each of the remaining groups and begin negotiations. So that will happen in August.
In September it is expected that those who wish to continue in the process will provide amended proposals, and then any amended proposal that comes in — and it may just be a letter that, my proposal stands as it is. But any amended proposal that comes in will then again be reviewed very quickly for both technical and value added aspects. And then it is the hope of the Foundation, in collaboration with Parks and Wildlife, to make a recommendation to the Commission in November for your approval to allow us to move forward on a site for the new East Texas Fish Hatchery.
With that, I'll be happy to answer any questions.
COMMISSIONER HOLMES: Any questions for Mr. Saul?
Thank you, sir.
COMMISSIONER MONTGOMERY: Just — you mentioned the sponsorship. What is the schedule for the sponsorship discussion?
MR. SAUL: At this point, what I was wanting to do was go through the site selection on —
COMMISSIONER MONTGOMERY: Right.
MR. SAUL: — the corporate sponsorship aspect. We are also working forward on that. We're working with Lydia's team to do that. The Foundation is also working on — working with a group there, so we are very hopeful to have something there, a straw dog there, to come forward to go on out for the sponsorship opportunities for the entire —
COMMISSIONER MONTGOMERY: Can you go out with that in the fall?
MR. DUROCHER: Yes, we try to take this — excuse me.
For the record, I'm Phil Durocher with Inland Fisheries.
Trying to take this one thing at a time. The big issue right now is to get the site selected, and once we know where that is, we think that's going to assist us in taking the step and going out for the sponsorships.
COMMISSIONER HOLMES: Well, it could drive the sponsorships.
MR. DUROCHER: Absolutely.
COMMISSIONER RAMOS: Phil, what impact will this hatchery have into the future? In other words, will this get us where we need to be or is this just a small step to where we really need to be?
MR. DUROCHER: You know, when we went to the Legislature for a stamp, we had put together a list of projects that — things that we felt we needed — we were going to need to get done in the next ten years to at least keep us where we are in some way, and in some ways move us forward. If we renovate the facilities we have, we're not going to have any more sites. But separate from efficiency, from the efficiency point of view, we're going to be able to produce a lot more fish.
We estimate that at this site we'll probably be producing between four and five million bass a year, and that's going to — that's an increase of three million from what we're doing now. So in terms of whether it gets us where we need to be or not, that's a hard thing to say. We would be extremely satisfied to be able to produce the fish we can produce if we get all our facilities fixed up. I think it's a big step — at least for the next 20, 30 years.
COMMISSIONER HOLMES: Phil.
COMMISSIONER MONTGOMERY: We had had some conversations about the nature of the sponsorship and the ‘‘ our goals and policies there. Is that something we'll discuss in November? What's your thinking on it?
COMMISSIONER HOLMES: I guess it begs the question as, will you be bringing us that proposal on sponsorship in November or is it really the site selection?
MR. DUROCHER: Site selection is what we'll be bringing to you in November. And —
MR. COOK: I think we could start that discussion, you know, before it gets in — even between now and November and get the additional input from the Commission as far as sponsorship —
COMMISSIONER MONTGOMERY: Absolutely.
MR. COOK: — opportunities and, you know, whether we make it in an entire hatchery programwide sponsorship, which is something we're talking about versus just one site and that kind of thing. Get some additional input between then and now and report back to you then.
COMMISSIONER MONTGOMERY: Does the whole programs hatchery — how long do we sell naming rights for? We sell naming rights, and then what are our policy objectives for the use of proceeds were.
MR. COOK: Let's talk about that some in our session in November and get some additional input, tell you kind of where we are, and as soon as we get our site.
COMMISSIONER MONTGOMERY: Yes. I think in fairness to the bidders, we need to give them a clear signal about what our objectives are there.
MR. DUROCHER: Let me just say, Commissioners, as Dr. Saul and the group of guys at Fish Hatcheries and the people in Infrastructure, they've really worked hard at this and they're doing an excellent job in this process. I'm really confident that when the process is over, we're going to have chosen a site that's going to be best for Texas and for the future, so we've been working hard at it.
COMMISSIONER MONTGOMERY: You really wrote a good process. It's impressive.
COMMISSIONER HOLMES: Lots of interest.
COMMISSIONER MONTGOMERY: Yes, that's what's nice.
COMMISSIONER HOLMES: Any further questions?
COMMISSIONER HENRY: I'm just wondering if John is — has any comment he'd like to make about this, since he's been so —
COMMISSIONER MONTGOMERY: You're in the middle of it.
COMMISSIONER HENRY: — heavily involved from the middle.
COMMISSIONER PARKER: The main thing that I can say is that our staff is really making a detailed study of this process. They're even studying below the dirt, every site, you know. There is not one stone that they have not turned over in this process. And I am convinced that we will have the best site for the next fish hatchery, and then after that we'll have another good site for a fish hatchery. I don't think the plans are to just have one fish hatchery. I think it's going to go on.
I know there's some exciting news coming out of this first one. I'm looking forward to it. I don't know what it is yet, but I know it's going to be exciting news.
COMMISSIONER HOLMES: Okay. Thank you very much.
COMMISSIONER HOLMES: We have one other piece of business to come before this committee, and I'd like to call on Vice Chairman Henry to give us a report on the Sheldon campaign.
COMMISSIONER HENRY: Thank you, Mr. Chairman.
Given the abbreviated schedule, we are not reporting from Outreach and Education today, but I did promise the Commission that I would update you at Commission meetings on the Sheldon campaign.
I previously reported to you that we had received a $300,000 grant from the Worthing Foundation. Shortly after the last Commission meeting, we were notified of a $250,000 grant from the Brown Foundation. And only recently, more recently, we were notified of what we were really looking for and hoping for, and that is we received word from a Houston endowment that they will be making a grant of a million dollars to the campaign. And in talking to the endowment people, it was suggested that this will probably not be the last gift that will be made to the Sheldon campaign. In September we will move forward with the other two larger foundations in the Houston community, those being the Fondren Foundation, then the Collin Foundation.
And I just want to go on record to say that we're working with an outstanding committee task force steering this campaign, but I just want to personally thank Commissioner Holmes, who has mostly came on board the Commission and volunteered to be of assistance, and he's one of the busiest guys you'll ever meet. But you call on him and he makes the call and he gets things done. And I want to just say that he's active and we're going to be counting on him for the future as well, but he, along with other members, are just ‘‘ they're right in there, and they are really doing the job.
We're going to go, as Peter will understand, a full court press in September through the end of the year. We're going to be making contacts with 100 other medium-size and small foundations and with the corporate foundations, as well as corporations with high net worth individuals to go with this.
As was reported, I visited with the Secretary of Education last month about this and one of his deputies, and received word from them that they're going to be on board supporting this campaign, only they'll have a limited amount of money to put into it, their support will mean a great deal with regard to future training and other kinds of things that we're interested in.
So that we'll give you, hopefully, even much better report at the November meeting. Just wanted to let you know where we are.
COMMISSIONER HOLMES: Well, Al, you really are the guy that's running this campaign. It's really been — you've done a fantastic job.
COMMISSIONER FITZSIMONS: These commitments are made because of the commitment that Al's made —
COMMISSIONER HOLMES: That's right.
COMMISSIONER FITZSIMONS: — for the past four years for this, and it's impressive. Congratulations.
COMMISSIONER HENRY: Well, got a way to go yet, you know.
COMMISSIONER HOLMES: Yes, but you're rolling.
COMMISSIONER FITZSIMONS: You're on the right path.
COMMISSIONER HOLMES: You're rolling, Al.
Is there any further business?
COMMISSIONER HOLT: You want to keep this going now?
COMMISSIONER HOLMES: I want to pass this —
Let's turn this over to Regulations now.
(Whereupon, the Finance Committee meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Parks and Wildlife Commission
LOCATION: Austin, Texas
DATE: August 25, 2004
I do hereby certify that the foregoing pages, numbers 1 through 68, 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.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731