COMMONWEALTH OF

HOUSE OF REPRESENTATIVES

GAME AND FISHERIES COMMITTEE

205 RYAN OFFICE BUILDING

HARRISBURG, PENNSYLVANIA

APRIL 7, 2016

10:05 A.M.

PRESENTATION ON

HUNTING AND FISHING LICENSE FEES

BEFORE:

HONORABLE KEITH GILLESPIE, MAJORITY CHAIRMAN HONORABLE , MINORITY CHAIRMAN HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE HONORABLE DAVID MALONEY, SR. HONORABLE BRETT MILLER HONORABLE HONORABLE FRANK FARINA HONORABLE PATRICK HARKINS HONORABLE 2

1 COMMITTEE STAFF PRESENT:

2 REPUBLICAN CAUCUS:

3 GREG RAFFENSPERGER, EXECUTIVE DIRECTOR CHERYL GRUBER, LEGISLATIVE ADMINISTRATIVE ASSISTANT II 4 DAVID KOZAK, RESEARCH ANALYST

5 DEMOCRATIC CAUCUS:

6 STEVEN MCMULLEN, EXECUTIVE DIRECTOR

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3 * * * PAGE 4 RICH PALMER...... 5 5 DEPUTY DIRECTOR OF FIELD OPERATIONS PA GAME COMMISSION 6 JOHN ARWAY...... 54 7 EXECUTIVE DIRECTOR PA FISH AND BOAT COMMISSION 8

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2 MAJORITY CHAIRMAN GILLESPIE: Good

3 morning, everybody. I'm Keith Gillespie,

4 Republican Chair of the House Game and Fisheries

5 Committee. I'm going to call this meeting to

6 order.

7 Pinch-hitting for Democratic Chair Ted

8 Harhai is Representative Gerald Mullery. Any

9 opening comments, sir?

10 MINORITY CHAIRMAN MULLERY: Thank you.

11 No, Mr. Chairman.

12 MAJORITY CHAIRMAN GILLESPIE: Okay.

13 Starting at my left with Representative Jozwiak,

14 if we could have the members introduce

15 themselves.

16 (INTRODUCTION OF COMMITTEE MEMBERS.)

17 MAJORITY CHAIRMAN GILLESPIE: Okay.

18 Just as a general announcement, this being a

19 session week, typically, Thursdays are days

20 where a lot of after-session hearings are held;

21 so there will be members coming and going

22 throughout.

23 The matter today is the hearing on the

24 issue of the hunting and fishing license fees,

25 and we have a couple of testifiers today. The 5

1 first is Rich Palmer, Deputy Director of Field

2 Operations with the Pennsylvania Game

3 Commission.

4 Mr. Palmer, if you're ready, you can go

5 ahead and give your testimony.

6 MR. PALMER: Good morning, Mr. Chairman.

7 Good morning, Vice Chairman Mullery, and members

8 of the Committee. Thank you for the opportunity

9 for us to present our testimony and our business

10 case on the need for a license increase and why

11 we believe that Senate Bill 1166 would be the

12 best method to take care of our revenue needs.

13 First slide, please, Josh. The Game

14 Commission's funding structure is based upon the

15 North American model of wildlife conservation,

16 in that hunting license fees are the primary

17 source of revenue for the wildlife agencies.

18 In Pennsylvania, we receive no General

19 Fund taxes; so our hunting license fees account

20 for the largest source of the Agency's revenue.

21 There's not been a license increase for more

22 than 17 years. 1999 was the last year we

23 received a revenue increase.

24 Next slide, please. This year's

25 revenues were approximately $110 million. This 6

1 year's expenditures are projected to be about

2 $114 million. That leaves a deficit of almost

3 $4 million. Some of the reasons behind that are

4 obviously general inflation over a 17-year

5 period.

6 And what I would use as an example of

7 that, was in 1998, when the legislation was

8 going through for the increase, the national

9 average gas price was just over a dollar. By

10 2014, it was over $3.

11 The level of fuel prices drives most of

12 the other prices, and so the inflation's been

13 fairly significant during that time frame and

14 impacted all of our other costs.

15 Some of the other reasons are

16 completely, for the most part, outside of the

17 PGC's control. Healthcare and workers'

18 compensation costs have sky-rocketed in recent

19 years.

20 As an example, the fiscal year costs

21 from '14-'15 projected through '16-'17, which is

22 only a few fiscal years, is over $8 million in

23 total benefit costs. These are negotiated at

24 the Commonwealth level. And so really the only

25 control we have over there, those costs, is 7

1 controlling the number of personnel that we

2 have. The same thing is true of the mandated

3 retirement contributions. We have to comply

4 with Commonwealth directives and mandates on how

5 we have to contribute to SERS, the State

6 Employees' Retirement System.

7 Some of the other reasons are mandated

8 participation in projects by the Commonwealth

9 Office of Administration. For example, when the

10 Commonwealth decides it's going to switch to a

11 new computer system because we are using that

12 system, we have to update our system in

13 accordance with Commonwealth mandates.

14 Very often, those are unforeseen

15 expenses that were not budgeted for in a

16 particular fiscal year. Next slide, Josh. To

17 give you an example of how dramatic these

18 personnel expenses really are, fiscal year '97

19 and '98, just prior to the last license

20 increase, we had 731 full-time employees and our

21 personnel expenses were $40.4 million.

22 This year, our projected personnel

23 expenses are over $82 million, even though we

24 have less employees. Full-time employees work

25 714, but we have taken self-imposed cost savings 8

1 to cut our complement to a current 686 full-time

2 employees. Josh, next slide, please. Another

3 comparison here is, we requested $115 million on

4 our budget request. We had $110 million

5 approved, because we had $110 million in

6 projected revenues. Our projected expenditures

7 were 114 million.

8 What this represents is a projected

9 deficit this fiscal year of $4 million that we

10 have implemented cost-cutting measures to

11 attempt to make up the deficit; but we're still

12 struggling to do that.

13 As far as our personnel versus

14 operational expenses, out of our approved budget

15 at $110 million, $82 million are personnel

16 expenses. The budget remaining for operations

17 is $28 million.

18 Last year, the operational budget was

19 $35 million; and this year we have tried to keep

20 that operational budget flat. Unfortunately,

21 with the increase of personnel expenses and only

22 $28 million remaining for operations, that

23 leaves us a deficit in our operational budget of

24 $7 million dollars. So that's having some

25 significant impacts on our operations. 9

1 Right now, we have a major project of

2 program cuts. We've eliminated entire programs

3 from the Game Commission permanently. A number

4 of projects that were in the pipeline have been

5 eliminated. Some examples of those are,

6 essentially, seed and fertilizer budgets for

7 food plots on the game lands; so that either

8 needs to be scaled back or cut.

9 We may be unable to fully fund gypsy

10 moth spraying to save large tracts of oat stands

11 that produce a valuable food source for

12 wildlife. We're unable to fully fund herbicide

13 treatments for timber operations that may have

14 negative impacts to the habitat regenerated on

15 them, and it may impact hunter access and force

16 us to close facilities into the future if it's

17 not rectified.

18 Currently, we're reducing dispatch hours

19 and the WCOs available overtime budgets to

20 respond to calls that are also being cut. Some

21 other examples, our Bobwhite Quail Restoration

22 Project has been placed on hold; pheasant

23 reintroduction and wild pheasant habitat

24 restoration area research has been scaled back.

25 By 2019, one of the things that we've 10

1 done, is we've had to cancel -- we had a WCO

2 class that we're preparing to put in March of

3 2017 that would have graduated in March of 2018.

4 Since we've had to cancel that WCO

5 class, the soonest we would be able to graduate

6 a WCO class would be March of 2019. By that

7 time, we are projecting 40 WCO vacancies. When

8 wildlife conservation districts scattered across

9 the state are 136, 40 of those districts not

10 being filled represents a 30-percent loss of

11 manpower.

12 If this situation is extended another

13 year, we will not be able to fill those

14 vacancies with one class. Our academy has

15 limited capacity to push through those officers.

16 And probably the worst part of this that is very

17 frustrating is that we are rapidly approaching

18 the time frame where we will not be able to

19 maximize federal PR grant funds.

20 Most of the Pittman-Robertson federal

21 grant funds that come from US Fish and Wildlife

22 Service are required a grant match, and those

23 vary to varying degrees. Some are 75, 25, some

24 are 50/50, some are a hundred. But we're

25 rapidly approaching the time frame, that 11

1 although there's federal Pittman-Robertson money

2 available, we will not have the match funds to

3 fully maximize that.

4 Quick example of what we're looking at

5 in the future: Our strategic plan runs from

6 2015 to 2020. The fiscal year '15-'16, you see

7 represented here is what we've already

8 discussed. Fiscal year '16-'17, our revenues

9 are projected to drop and begin to stabilize at

10 a much lower level than we've had previously.

11 This is primarily due to the oil, gas,

12 and mineral markets, coal markets, timber

13 markets, and a projected tapering off of the

14 Pittman-Robertson funds that had spiked in the

15 previous few years.

16 During that same time frame, though, you

17 can see our expenditures continue to increase.

18 And much of that increase, it is outside of the

19 PGC's control because they are attached to

20 personnel expenses. The way I can control

21 personnel expenses is to eliminate personnel.

22 That's why I have direct control over it.

23 As you continue out towards the end of

24 our strategic plan, those expenditures continue

25 to increase while revenues decrease and then 12

1 remain relatively flat. But by 2020, we would

2 have a projected deficit of over $35 million if

3 we do not either have a revenue stream increase

4 or make drastic cuts in our programs and

5 services.

6 I realize this slide is a little bit

7 tedious, but what I tried to do with this to

8 fully understand our financial situation, I need

9 to talk a little bit about the history of it.

10 The beginning of the slide represents '98 and

11 '99 where we were in a deficit prior to the

12 increase. We were able to achieve an increase

13 in '99 and put us just above water.

14 At that time, we said this will

15 probably last us 4 to 5 years. And as you move

16 forward into -- that's about what it did last.

17 Can't see it real well. But within a few years,

18 we were back into a deficit situation again.

19 Then in about 2005, between a

20 combination of cost-control measures and really

21 a very fortunate increase in the OGM and timber

22 markets, and this was traditional OGM, this was

23 the traditional coal, traditional oil, we

24 actually did increase revenues. That was just a

25 stroke of luck, when you look right in here 13

1 (indicating) this area.

2 As an example, the timber markets, I

3 believe the year was about 2006, we actually

4 realized $17 million was from timber alone.

5 Last year, we cut the same amount of acreage and

6 the same types of timber, generally. But the

7 market has changed so much, that we only

8 realized 7 million instead of 17 million in

9 revenue.

10 So where we're at -- now, for a few

11 years, we were doing okay, started flattening

12 out again. And then about 2010, we started

13 seeing and realizing the increase in the federal

14 Pittman-Robertson funds. We had a dramatic

15 spike. There was a significant -- we had

16 actually doubled some of the Pittman-Robertson

17 funding we got.

18 Traditionally, we got $7, 8, 9 million

19 a year; and in 2010 it started climbing each

20 year. And that peaked out a couple years ago at

21 about $24 million.

22 So that is really -- when people say

23 what happened to your shale money or what

24 happened to your Pittman-Robertson money, that's

25 what allowed us to continue our general 14

1 operations and continue accomplishing our

2 strategic plan without having a revenue

3 increase.

4 Realistically, we should have had a

5 revenue increase probably around the 2004 time

6 frame or right about the same time when the Fish

7 Commission received one, I believe it was 2006,

8 if we would've been on a normal schedule.

9 What I'd like to point out, though, is

10 that at the far end of this, there's the decline

11 and the projected revenues and there's the

12 increase in the projected expenditures. One of

13 the things that we're going to have to do is

14 look very, very hard at how we fund our wildlife

15 agencies.

16 And what I mean by that is that

17 historically, the license increase cycle has

18 been on a 10- to 12-year basis; it's a difficult

19 accomplishment to achieve because it requires

20 legislative action and a lot of dialogue in

21 order to achieve those.

22 But this current period of time, the

23 17-year period of time that we've gone without a

24 license increase is the second longest period of

25 time in agency history. The only other time in 15

1 agency history we've gone longer without a

2 license increase was during the Great Depression

3 and World War II. What Senate Bill 1166 does is

4 it allows the Agency to set its own fees, to

5 where instead of having to go through these long

6 periods without a license increase, which then

7 necessitates a fairly large increase because

8 it's been so long to catch up with inflation,

9 what Senate Bill 1166 would allow us to do is

10 make smaller increases more frequently that

11 would be better tolerated and better supported

12 by sportsmen.

13 That completes my testimony. I'd be

14 happy to try to answer any questions, if I

15 could.

16 MAJORITY CHAIRMAN GILLESPIE: Thank you,

17 Mr. Palmer. We have been joined by

18 Representative Emrick, and I understand

19 Representative Everett has a question.

20 REPRESENTATIVE EVERETT: Yes. Thank

21 you.

22 Rich, you kind of covered it; but, you

23 know, I'm up in shale country and folks ask me

24 regularly why you need a fee increase when

25 you're making all this money off the Marcellus 16

1 Natural Gas. I think I understand the answer to

2 the question already, but I'd like you to have

3 the opportunity to just address that directly

4 and --

5 MR. PALMER: Sure. There's a couple of

6 issues associated with that. One is a lot of

7 what was available for lease on game lands that

8 we actually had control over -- like, the first

9 thing to understand is not all of the gas that

10 is under game lands is owned by the Game

11 Commission.

12 A lot of that when we had received that

13 land, there was OGM reservations on. So most of

14 the leases that we can lease on game lands have

15 already occurred. They occurred during the

16 peak. And I'm sure you're aware, that activity

17 has leveled off significantly.

18 I think the example that I use just in

19 laymen's terms to illustrate it, was back in

20 about 2010, that time frame, there was 116

21 drilling rigs in Pennsylvania. Today there's 19

22 or less.

23 The market has dropped significantly,

24 and all market indicators from the market

25 sources themselves projected to stay fairly low. 17

1 I believe at the peak, they were looking at $14

2 or so in MCF. Some of the last projections I

3 saw are only around a dollar. So a lot of those

4 producers, even though we do have some royalties

5 coming, we usually receive a large upfront

6 payment and then we would take a royalty off of

7 what they produce; but unfortunately, a lot of

8 that production has been halted. They're just

9 not extracting it, because the market price

10 isn't high enough.

11 And at least in the projections that we

12 have for the foreseeable future, there's not any

13 projections of a major increase again.

14 REPRESENTATIVE EVERETT: Thank you.

15 MAJORITY CHAIRMAN GILLESPIE: Thank you,

16 Representative Everett. Representative Emrick.

17 REPRESENTATIVE EMRICK: Thank you, Mr.

18 Chairman. Just a couple quick questions. I

19 have the digest from the packet from the annual

20 report.

21 MR. PALMER: Yes.

22 REPRESENTATIVE EMRICK: Just looking at

23 the licenses and tags that now exist, it's been

24 17 years since you've had your last license

25 increase, correct? 18

1 MR. PALMER: Correct.

2 REPRESENTATIVE EMRICK: Do you guys have

3 a list of the dates that each of these tags were

4 implemented or new license requirements were

5 implemented?

6 MR. PALMER: We do. I don't have it

7 immediately available, but I can provide that to

8 you.

9 REPRESENTATIVE EMRICK: Okay. That

10 would be great, because I think that would be

11 good for the Committee. Because if many of

12 these new tags and other things were implemented

13 in the last 17 years, obviously, you may not

14 have gotten a basic license increase; but the

15 Game Commission, obviously, could have been

16 generating tons of new revenues through the sale

17 of doe tags and archery tags and the many --

18 there's nearly four dozen items listed here,

19 besides the basic hunting license itself.

20 So if we can get a list of the dates

21 that those were implemented, I think that would

22 be helpful.

23 MR. PALMER: We can do that. A couple

24 that I do know off the top of my head, there was

25 not an elk season in 1999. That only kicked in 19

1 in about 2003. So that would've been one of the

2 new licenses; although, those are fairly limited

3 in revenue generation because it's a very

4 limited lottery drawing.

5 Some of the other ones that come to mind

6 that are permits versus licenses but they still

7 generate revenue, would be fisher, bobcat, and

8 otter would've all been new licenses during that

9 time frame that come to mind immediately; but

10 I'll get you the exact dates.

11 REPRESENTATIVE EMRICK: Okay. That's

12 good. I appreciate that. And I guess another

13 question I have is, if the Committees were to

14 approve this legislation, the Commission would

15 have the ability to just basically raise the

16 hunting license fee every year, correct?

17 MR. PALMER: Feasibly, yes.

18 REPRESENTATIVE EMRICK: Okay. And so I

19 guess my first question is, what cost control

20 measures are in place to give you basically the

21 opportunity to an open-ended revenue stream

22 that you control, how do we feel comfortable

23 that you're not going to just spend in an

24 unlimited capacity?

25 MR. PALMER: That's actually a great 20

1 question. There's a fairly lengthy answer, but

2 I'll try to condense it for you. A couple of

3 things: The first thing is our hunting license

4 base is important to us, very important.

5 Pennsylvania's the number-one hunting

6 license state in the nation. Although we've

7 experienced declines, we're not experiencing

8 declines that most of the other states are at

9 the national trend level; and it's very

10 important for us to do everything we can to

11 maintain that hunting license base, because that

12 is part of the calculus that US Fish and

13 Wildlife Service uses to calculate how many

14 federal funds that we receive from

15 Pittman-Robertson.

16 So the more general licensed hunters

17 that we have, that actually accounts and is part

18 of the calculus to get us those large portions

19 of federal money. It would not behoof us to

20 make a license increase that would go beyond

21 what the market could bear where we would lose

22 large numbers of license buyers. Because if we

23 did, that also means a loss of that federal

24 funding source as well.

25 So that's the first thing I would say 21

1 that is part of the cost controls. The other

2 part of the control is that in about the last

3 decade, maybe decade and a half, the Legislature

4 placed a new law in Title 34, the Game and

5 Wildlife Code, that is contained in Section 328

6 of Title 34. It requires program accountability

7 of the Agency.

8 We have to report in front of this

9 Committee and the Senate, if they wish to call

10 us, and report annually on our strategic plan.

11 So there's some building control. But part of

12 that accountability process is also a financial

13 accountability. So there is still a review by

14 the Legislature.

15 And, of course, you have input into our

16 strategic plan if you thought we were expanding

17 too much and expending funds that certainly have

18 input to that process.

19 REPRESENTATIVE EMRICK: Okay. I

20 appreciate that. I just -- yeah, I think that's

21 going to be one of the concerns that are going

22 to be raised, obviously, for both yourself and

23 the Fish Commission.

24 MR. PALMER: Sure.

25 REPRESENTATIVE EMRICK: And, you know, I 22

1 think we see some places where people raise

2 taxes every year because they can. And so I

3 just want to make sure that, you know, we're

4 addressing that issue.

5 And I think over the last couple of

6 years, the Game Commission has made some small

7 improvements in attempting to manage the deer

8 population and the Deer Management Program a

9 little bit.

10 I would just get the sense that,

11 especially in the hunting community because of

12 that issue, that giving you this kind of carte

13 blanche authority when I think a lot of hunters

14 may feel the Game Commission has absolutely

15 neglected their opinions in a lot of important

16 areas is something I just think is going to be a

17 concern.

18 And as this moves forward, I think, you

19 know, the Committee is going to have to evaluate

20 that kind of perspective and --

21 MR. PALMER: Sure. If I may respond to

22 that?

23 REPRESENTATIVE EMRICK: Right.

24 MR. PALMER: Couple of things: First

25 is, I actually did not get to my last line. So 23

1 what I would point to is that the red line here

2 is actually Pennsylvania. We have the second

3 lowest overall hunting license fees in the

4 nation, and this comparison was done for a

5 resident hunter to hunt antlered deer, spring

6 and fall turkeys, pheasants, small game,

7 including water foul; the duck stamp fee was not

8 included, as well as to hunt on public lands;

9 because in some states you're charged to hunt on

10 wildlife management areas. And this comparison

11 shows with the only state being more inexpensive

12 than Pennsylvania is Hawaii and if you can see

13 what the distribution is of those license fees

14 for resident hunter, we believe that there is

15 some room for movement within there, that the

16 market would bear. And in regards, we realize

17 -- I want to make sure everyone on this

18 Committee understands, we realize how important

19 deer hunting is to Pennsylvania Game Commission,

20 as well as to the state of Pennsylvania. We

21 have a very rich hunting heritage. We realize

22 it's a controversial topic, but we do care about

23 the attitudes and input from our sportsmen; and

24 I think that's been reflected over the past

25 several years with the Board of Commissioners 24

1 reducing the antlerless license allocations

2 significantly, including just as early as this

3 week from the recommending allocation, they

4 reduced it over a 100,000 licenses. So when you

5 combine that with the last several years, you're

6 looking at pretty -- right around 400,000

7 antlerless licenses that they have reduced. So

8 I think that there is some responsiveness that

9 the Board's trying to move to.

10 And what I would like to foreshadow is

11 one of our major initiatives that I would like

12 to move forward with, that some of it has been

13 indicated in our strategic plan and some of it

14 is even evolving as we move forward, if revenue

15 is available, we want to launch a very

16 significant habitat initiative that would be to

17 create very healthy habitat benefit deer; it

18 would benefit small game; it would benefit a

19 whole host of species.

20 And what that goal is, the current goal

21 within our strategic plan is to move to 20,000

22 acres of prescribed fire by 2020. Prescribed

23 fire's a very efficient management tool. What a

24 lot of people don't realize is how much benefit

25 it has to deer. 25

1 It can generate a 400-percent increase

2 in brows in a burned area, up to 300 pounds per

3 acre in some cases; and it's a lot easier to

4 maintain those forests with prescribed fire.

5 The upfront investment was significant

6 to get the equipment, the training, the

7 personnel online to conduct that; but now we're

8 ready to mobilize, so that's part of it. But

9 the other part of it is creating young forests.

10 Young forests have far more food in them for

11 deer and benefit a whole host of other species,

12 including small game, as well.

13 So what we would like to do is move

14 forward, trying to implement a goal of creating

15 a hundred thousand acres of healthy habitat for

16 improvements to both deer hunting and actually

17 all hunting and benefitting a bunch of other

18 species while we're at it.

19 REPRESENTATIVE EMRICK: Right. And I

20 think that would also be an important component

21 to what you're doing, is to -- you know, hunters

22 and outdoorsmen are going to want to see a

23 return on investment.

24 MR. PALMER: Absolutely.

25 REPRESENTATIVE EMRICK: And, you know, 26

1 it's going to have to be fairly tangible. And

2 I'm not sure, you know, projecting out that kind

3 of evidence, 10 or 15 or 20 years may fly; so --

4 but I like what you're saying so far. And I do

5 think that would be very, very important; so

6 thank you, Mr. Chairman.

7 MAJORITY CHAIRMAN GILLESPIE: Thank you,

8 Representative Emrick. Representative Jozwiak.

9 REPRESENTATIVE JOZWIAK: Good morning.

10 Thanks for your testimony. I've got a couple of

11 general questions here. Right now, you're

12 anticipating increasing your licenses by how

13 much?

14 MR. PALMER: If we would -- we put

15 together a fee structure with Senate Bill 1148,

16 which did not move forward. That would have

17 achieved some of our revenue needs, at least in

18 the short-term.

19 If we were to achieve the authority to

20 set our own fees within Senate Bill 1166, I

21 can't commit to a specific fee package, because

22 what that has to go through would require

23 regulatory action by the Board of Commissioners.

24 And what that would look like, is they

25 would do a proposal; it would be published in 27

1 the Pennsylvania Bulletin; there would be a long

2 period of time for public comment on that; and

3 then the commissioners themselves would react to

4 that public comment and make the final decision

5 on what that fee package would look like.

6 So I don't want to come here today and

7 say this is exactly what it would be, because

8 that may change because of the regulatory

9 process.

10 But speaking in very general terms, what

11 we would try to do is develop a fee package that

12 would meet our expenditure needs, identify it in

13 our strategic plan; however, at the same time,

14 be within the tolerance of sportsmen so that we

15 did not exceed what the market would bear.

16 REPRESENTATIVE JOZWIAK: Okay. So are

17 you looking at increasing the general costs, or

18 are you looking at increasing all of them; for

19 instance, the furtaker, the bear, the doe

20 license?

21 If you get the fee package, is that all

22 the licenses you would increase?

23 MR. PALMER: That is one potential

24 option, because the problem you have if you

25 place the whole increase on just the general 28

1 license, you might push the tolerance limit too

2 far. If it's distributed throughout the various

3 licenses, then the increases spread out; because

4 a lot of sportsmen don't buy every license there

5 is, but all sportsmen have to buy that general

6 license.

7 REPRESENTATIVE JOZWIAK: So what about

8 out-of-state licenses, how many of those do we

9 sell?

10 MR. PALMER: I don't know if I have

11 those numbers with me.

12 REPRESENTATIVE JOZWIAK: Okay. But is

13 that a significant part of the income,

14 out-of-state hunters?

15 MR. PALMER: That's fairly significant,

16 yes.

17 REPRESENTATIVE JOZWIAK: Okay. So in

18 your reasons for wanting the increases, you

19 listed mandated participation projected by the

20 Office of Administration, 1.8 million. Is that

21 a computer program?

22 MR. PALMER: That's -- the computer

23 program is just an example of one of the things

24 that was mandated. We have to have certain fees

25 that we pay the Attorney General's Office for 29

1 representation, things that are paid between

2 state agencies, Department of General Services,

3 things like that.

4 REPRESENTATIVE JOZWIAK: Okay. Does the

5 Game Commission have maps of Pennsylvania with

6 vegetation growing in different areas for

7 different species?

8 MR. PALMER: We're developing some GIS

9 technology that does that, and we have -- one of

10 the recent editions we put in is a mapping

11 center that is in each of our regional offices

12 and our headquarters, which sportsmen can make

13 maps from; and it does show topography. And to

14 a certain extent, there would be aerial photos,

15 which would show vegetation types.

16 REPRESENTATIVE JOZWIAK: I asked this

17 question over a year ago: Out-of-state hunters,

18 if they have a brochure that says, you go to

19 McKean County to hunt ruffed grouse or you go

20 to, you know, Schuylkill County to hunt deer, we

21 don't have that. Why don't we have that? I

22 mean, that should be available to the public so

23 that outfitters would even bring people here and

24 you would get more money from out-of-state

25 licenses, in my opinion. 30

1 MR. PALMER: Yeah.

2 REPRESENTATIVE JOZWIAK: Is that in the

3 process?

4 MR. PALMER: If someone accesses our

5 website, they can review every single game lands

6 that we have and it'll tell them what species

7 are there. We don't have a brochure; but I

8 agree with you, it'd be a good ide.

9 REPRESENTATIVE JOZWIAK: I'm thinking

10 you should have a CD disk with Pennsylvania on

11 it that says, This is where you go. You can

12 sell it to the outfitters from now on.

13 MR. PALMER: There is some availability

14 for it, especially -- our forestry division put

15 together some information that is available on

16 our website again, with where the cuts are, when

17 the cuts were done, things like that.

18 REPRESENTATIVE JOZWIAK: Yeah, I'd like

19 to see something available in a package for the

20 state.

21 MR. PALMER: Sure.

22 REPRESENTATIVE JOZWIAK: I think that's

23 important for all hunters. And I think that

24 would actually help you increase your out-of-

25 state sales, even your in-state sales. 31

1 So thank you, Mr. Chairman.

2 MAJORITY CHAIRMAN GILLESPIE: Thank you,

3 Representative Jozwiak. Representative Maloney.

4 REPRESENTATIVE MALONEY: Thank you, Mr.

5 Chairman. Thank you, Mr. Palmer. A couple

6 things I thought were interesting in the

7 questions that were already asked, and there's

8 been several things that have been very unclear

9 to me.

10 One comment I will make is that several

11 of the requests that I made or challenges that I

12 made over the years, you're now talking about.

13 So when the former representative brought up the

14 deer management issue, which I really wasn't

15 going to bring up, I want to stick to the

16 subject here today, I thought it was interesting

17 that you're now talking about burning and

18 habitat when, quite frankly, that would've been

19 your mission all along.

20 So I'll actually have to give you kudos

21 for that. The fact that it's taken this long,

22 maybe it's because you're looking for money. I

23 mean, just possible. However, I think for me --

24 and by the way, that's an interesting graph

25 there. I do have several packets in my office 32

1 that are pretty thick that I didn't bring, but I

2 don't believe we're anywhere near Texas with

3 license sales; and I think we might be third, as

4 a matter of fact; so that would be interesting

5 to me.

6 It would also be interesting to me to

7 see how we get our Pittman-Robertson Fund, how

8 much we get, and where we spend it, which more

9 or less brings me into my questions as a

10 business person who has always had to look at,

11 just like we do as Legislators, revenue in,

12 appropriations out.

13 To me, what would be helpful is, not a

14 graph that just says this is what it is, but

15 information that says, This is where we get our

16 money and this is how we spend it.

17 And I think like even in some of the

18 annual publications that were put out like when

19 you show land acquisitions, when you show land

20 acquisitions of like $150,000, I don't see how

21 that's possible when you're buying thousands of

22 acres of land, you're actually mandated to not

23 spend any more than $400 an acre and you

24 evidently are. So, to me, it would be useful if

25 we could see how you're doing that, where the 33

1 moneys are actually going to, and if you are

2 actually doing like some public agencies where

3 they move moneys from accounts to accounts. For

4 instance, if you have a general fund and you

5 move funds from there or never make it there and

6 you put it in some sort of escrow account, how

7 do we even know what that amount is and how

8 you're spending it?

9 And so on the Marcellus Shale-type

10 questioning, I do have some things that have

11 been bothering me about responsibility,

12 transparency, and what have you.

13 But, you know, actually right before I

14 came to Harrisburg, a Legislative Budget and

15 Finance Committee 2010 Resource Audit was done;

16 and when the professor from Penn State analyzed

17 the worth of the sportsmen's land, he put a

18 value just at the 20-percent royalty rate and

19 the bonuses and some of the -- which would be

20 signing bonuses and some of the other royalties

21 that would follow, I mean, this is staggering

22 figures.

23 When we have out of just five contracts

24 a loss of $193 million, I mean, I don't know

25 about you guys, but when I see some of the 34

1 moneys there that are used on a graph on what's

2 the extra expenditures to the Game Commission,

3 and just on five leases, we lost $193 million, I

4 can't make a reasonable or educated decision on

5 revenues and expenditures when by the way here's

6 just the five alone from 2012 to 2013. There's

7 the chart (indicating).

8 It shows a total at just 20-percent

9 royalties. Now I know people who have gotten

10 40, 55-percent royalties. And we're talking

11 about, in this man's words, a billion dollars of

12 revenue loss.

13 Now, I wonder what that would look like

14 on that chart? And for me, to make those

15 decisions and to have that information in front

16 of me as to how I would do that and how I would

17 justify anything, business to me has to be

18 transparent when it's the public's.

19 So if you're buying dogs and if you're

20 buying automatic weapons or if you're buying

21 land for more than $400, to me, I'd like to know

22 that; I'd like to see that.

23 As the other representative said, it

24 would be good to see the revenues, I actually

25 have the licensing chart; I didn't bring that 35

1 with me. So I think to make really reasonable,

2 sincere judgments on this, it would be helpful

3 for all of us to have that.

4 MR. PALMER: Yes. And I'm not familiar

5 with the report you're referencing, but we'll

6 certainly look at that and try to get you a

7 response to that. I'm just not familiar with

8 that particular report.

9 In regards to the $400 an acre, a brief

10 explanation is that in a lot of the land

11 acquisitions that we've done and right now we're

12 at the point now where land acquisitions are

13 really stalled out; we simply can't do it.

14 Unless it's something that's been in the

15 pipeline for many, many years, we've had to walk

16 away from a number of potential land

17 acquisitions, because we don't have the funding.

18 The way a lot of those lands are

19 acquired is with the help of various

20 conservancies, the Nature Conservancy, Western

21 Pennsylvania Conservancy. A number of the

22 conservancies will actually acquire the

23 properties and then they will transfer them to

24 us, and our cost share of that is the $400 an

25 acre, just for a brief explanation for the 36

1 Committee.

2 REPRESENTATIVE MALONEY: Thank you.

3 Thank you, Mr. Chairman.

4 MAJORITY CHAIRMAN GILLESPIE: Thank you,

5 Representative Maloney. Representative Fee.

6 REPRESENTATIVE FEE: Thank you,

7 Mr. Palmer, for your testimony. I appreciate

8 it. Being from northern Lancaster County, I

9 have the treasure of Middle Creek in my

10 district. And I know it's been addressed that

11 that might be one of the places we cut.

12 So I really have two questions. Number

13 one is, I'd like you to address what exactly

14 that means. Many of my constituents are asking

15 that. What did you mean by, you know, we need

16 to cut Middle Creek?

17 MR. PALMER: Absolutely. And first let

18 me say that I completely agree with you that

19 Middle Creek is not just a treasure in your

20 district but a treasure for the whole

21 Commonwealth. Very big tourist draw for the

22 area. We've had people traveling from as far as

23 China fairly routinely just to take advantage of

24 some of the peak Snow Geese migrations and swan

25 migrations. 37

1 We realize the value of Middle Creek.

2 We run thousands of people through there, do

3 lots of wildlife education there. It certainly

4 is not something we would want to do. It would

5 probably be as far down the list as we could get

6 it.

7 And what I think Director Hough alluded

8 to in the annual report that got some of this

9 discussion started was that there are certain

10 aspects of Middle Creek, though, that could be

11 impacted.

12 If we continue to go forward without a

13 revenue increase, that may force some of the

14 closure of the visitor center. It certainly is

15 not going to be to drain the lake like some

16 people had portrayed earlier.

17 The public would still have access to it

18 through the public roads. But if we don't have

19 the personnel to maintain the parking lots, we

20 don't have the personnel to man the visitor

21 center, those are some things that might be

22 looked at.

23 REPRESENTATIVE FEE: So if the

24 legislation did pass, what would that mean?

25 MR. PALMER: That would allow us to 38

1 continue and potentially even expand operations

2 there.

3 REPRESENTATIVE FEE: Okay. One of my

4 other questions that I get, you know, I go out

5 and talk to all my different sportsmen's clubs

6 and I try and communicate as much as I can.

7 Being a Legislator, I'm held accountable to my

8 constituents.

9 And one of the most important things, I

10 think, that my hunters say to me is they don't

11 feel as if they have a voice with the Game

12 Commission. So, I guess, is there anything in

13 place where you could hear from the average

14 hunter or sportsmen to what their views are on

15 what kind of job you're doing?

16 MR. PALMER: Absolutely. There's a

17 number of venues. The most direct one would be

18 to attend the Commission meeting for the public

19 comment day and speak directly to the

20 commissions, to voice their concerns or

21 opinions.

22 There's also a participation through the

23 Federation of Sportsmen's Clubs at the county

24 level. County delegates take a number of votes

25 throughout the year. They can contact the Game 39

1 Commission in a number of formats, if they have

2 a question or a concern, from social media to a

3 direct call to one of our dispatch centers; and

4 we will certainly try to answer their questions.

5 REPRESENTATIVE FEE: Good enough. Thank

6 you.

7 MAJORITY CHAIRMAN GILLESPIE: Thank you,

8 Representative Fee. Representative Heffley.

9 REPRESENTATIVE HEFFLEY: Thank you, Mr.

10 Chairman. As I listen to the testimony today, I

11 understand the need, obviously, I believe for

12 both the Game Commission and the Fish

13 Commission.

14 I'm going to kind of address my concerns

15 right upfront because I do have to leave and

16 won't be able to stay for the whole meeting.

17 But the Fish and Game Commission are set up as

18 independent agencies.

19 And it was very clear last session when

20 we looked at ways to actually have some

21 oversight over some of the studies that you do

22 on land on endangered species in which there is

23 no oversight because you're an independent

24 agency, so you actually have more information on

25 private property than the property owner and you 40

1 do not share that, nor will you, nor will you

2 even share how you make those determinations

3 with the public. Limited oversight, as a

4 legislative body, is controlling your increases

5 and licenses and the appointment process to the

6 Board of Commissioners, which was changed

7 because I think a lot of members feel that there

8 isn't enough oversight.

9 People come to my office and complain to

10 me. I have to be responsive to the public. The

11 question earlier was, Is the Game Commission

12 responsive to the sportsmen? I don't always see

13 that. I consider that it has gotten better. I

14 want to really commend the WCOs in our area who

15 are doing a phenomenal job. They are stretched

16 very thin, and I understand the need for more

17 WCOs.

18 However, I think it's kind of -- it's a

19 lot to ask for us to give up the only oversight

20 that we really have over agencies that have more

21 authority over our private property than we do

22 or anybody else.

23 You can come into anybody's property and

24 make a determination of the potential for an

25 endangered species and render that property 41

1 undevelopable and really don't have even the

2 authority to question it. The only authority we

3 have is these fees and licenses. And to give

4 that up -- I mean, I can understand the need for

5 increasing maybe some of these fees. But maybe

6 I don't understand, and I don't know if I would

7 support it or not, but it's a lot to ask for

8 this Legislature to just step back and give you

9 and every future director of the Game Commission

10 and the Fish and Boat Commission is unchecked

11 authority. I think it would be foolish on or

12 behalf to do that.

13 Thank you.

14 MR. PALMER: If I may respond to that?

15 In addition to what my previous comments were

16 about 328 being changed a decade or so ago that

17 brings us before this Committee every year to

18 report, there's also been recent changes where

19 commissioners' term limits have been reduced to

20 four years for all new members.

21 So you would have some oversight over

22 the Board, as well as the fact that it would not

23 be the director of the Agency making that

24 decision. Staff may put together a recommended

25 package, but would have to go through a 42

1 regulatory process and pass through an entire

2 board to be passed.

3 REPRESENTATIVE HEFFLEY: I understand.

4 I actually sponsored some of that legislation

5 that was passed. And I want to say that I am a

6 sportsmen. I hunt; I fish. I think there needs

7 to be more deer, more fish; but that's another

8 subject.

9 But aside from that, you know, going

10 through our regulatory process; but it wouldn't

11 go through a legislative process. And we all in

12 here, despite our party or beliefs, work very

13 hard for the constituents in our districts. We

14 are accountable to them.

15 We're there at the fire company

16 breakfast on Sunday morning when they have a

17 gripe and they're going to come to us; and I

18 want to be able to say that we have some

19 influence on this process.

20 Knowing that your charge is to protect

21 our natural resources and those state game lands

22 and hunting opportunities, when knowing our

23 charge is also to protect our constituents; and

24 that's how I'm very concerned with this

25 legislation. I think it would be more practical 43

1 to maybe look at rate increases rather than, you

2 know, a blanket overall say, well, going

3 forward, Legislature is not going to have

4 anything to do with this at all.

5 Thank you.

6 MAJORITY CHAIRMAN GILLESPIE: Thank you,

7 Representative Heffley. Representative Farina.

8 REPRESENTATIVE FARINA: Thank you, Mr.

9 Chairman. Thanks for your testimony. I had the

10 opportunity to hear your testimony at the

11 Pheasants Banquet in Dallas. I believe that was

12 a few weeks ago. And the feedback -- I think

13 there was probably close to 200 sportsmen and

14 women there, and the feedback seemed to be

15 pretty positive.

16 The only question that I have is on the

17 adult nonresident hunting fees. Do we have any

18 numbers for our neighboring states what they're

19 charging for out-of-state?

20 MR. PALMER: Yes, I do. We did take a

21 look at that recently. The average price

22 nationally is about $162 if you combine all 50

23 states.

24 Some of the western states, as you know,

25 because you've hunted out there, are fairly high 44

1 for nonresidents. Most of our surrounding sates

2 are fairly comparable to Pennsylvania, right

3 around 100- to $130-range if you're talking the

4 immediate neighboring states.

5 REPRESENTATIVE FARINA: Okay. Yeah, I

6 would just like to explore that a little more,

7 just because -- you know, especially if we're

8 going to do habitat improvements and increase

9 and we're going to attract more -- make it a

10 better place to hunt and, you know, we're one of

11 the top states in the nation the way it is.

12 I think we could sell ourselves short.

13 I think we could charge a little bit more.

14 MR. PALMER: Yes, sir.

15 MAJORITY CHAIRMAN GILLESPIE: Thank you,

16 Representative Farina. Representative Mullery.

17 MINORITY CHAIRMAN MULLERY: Thank you,

18 Mr. Chairman; and thank you for your testimony

19 today. I just have one question and one

20 comment. My question is in follow-up to what

21 Representative Emrick and Representative

22 Heffley, I think, were getting to. If we were

23 to give up this oversight and the ability to

24 control this, I think we would need some type of

25 ability to review. And you talked about the 45

1 legislative review that is currently in place,

2 and what I think you were talking about was the

3 audits done by the Legislative Bureau and

4 Finance Committee, correct?

5 MR. PALMER: I was talking about us

6 having to provide an annual report to you. But

7 the legislative and Budget Review is also a good

8 example of oversight and accountability.

9 MINORITY CHAIRMAN MULLERY: Now, it's my

10 understanding that as is done with the Fish and

11 Boat Commission, that's done every three years

12 on you, as well, correct?

13 MR. PALMER: Correct.

14 MINORITY CHAIRMAN MULLERY: But it's

15 also my understanding, and correct me if I'm

16 wrong, that the audit that's done on the PFBC

17 goes simply beyond whether or not they are

18 complying with your strategic plan and it

19 actually does more of an in-depth audit on

20 everything it does, everything it spends, and

21 everything it plans, but yours does not. Is

22 that accurate?

23 MR. PALMER: Correct. I believe theirs

24 has a component that is extended to it called a

25 performance audit. 46

1 MINORITY CHAIRMAN MULLERY: Okay. So if

2 this bill were to make it up for a vote and I --

3 because this would be something that I would be

4 interested in offering as an amendment, were to

5 put you in the same category as the PFBC when it

6 comes to these audits, what would the position

7 of the Commission be on that?

8 MR. PALMER: Well, I can't speak for the

9 Board of Commissioners; but if I had to guess, I

10 would say they would have no issues with that.

11 I know certainly I would note, and I do not

12 believe our Executive Director would either.

13 MINORITY CHAIRMAN MULLERY: And I think

14 that's something that would be helpful to, you

15 know, potentially win the support of somebody

16 like Representative Heffley or Representative

17 Emrick and others who think, listen, we're

18 giving up too much here; at least give us the

19 opportunity to do a thorough audit that goes

20 beyond simply, are you or are you not complying

21 with your strategic plan.

22 The next thing I have, and really this

23 is just more of a concern based upon something

24 you said earlier when you were talking about the

25 program cuts, the fact that -- I don't know if 47

1 the decision was made or it's currently being

2 contemplated that you're scaling back the Gypsy

3 Moth spraying. What was it? Are you

4 contemplating it, or is that something that has

5 actually been done?

6 MR. PALMER: Well, what we had to do was

7 prioritize it. I think that if our foresters

8 had their wish list, they would have done many

9 more acres and planted more acres for spring.

10 I want to make sure that it's understood

11 that we are still spraying, especially the

12 areas -- we're having to prioritize the areas

13 that we feel have the worst potential for

14 impacts. Some of the areas may have Gypsy

15 Moths, but may not kill the trees. Right?

16 There are some places where there's ways

17 that they can look at what the damages are and

18 we can prioritize what we would have. The point

19 that I was making is we would probably do more

20 if we had the revenue to do it.

21 MINORITY CHAIRMAN MULLERY: Yeah,

22 because I was just trying to correlate that with

23 what you said about if you had the additional

24 revenue, you'd consider launching a large

25 habitat improvement initiative when, you know, 48

1 several minutes before that you're talking about

2 potentially stopping the spraying for the Gypsy

3 Moths, so those two don't correlate in creating

4 a better habitat.

5 MR. PALMER: Correct.

6 MINORITY CHAIRMAN MULLERY: Okay. Thank

7 you very much.

8 MAJORITY CHAIRMAN GILLESPIE: Thank you,

9 Vice Chairman Mullery. Any other questions from

10 any of the members?

11 Mr. Palmer, Representative Miller did

12 have a question. He had to step out for a

13 minute. And if you're willing to stick around,

14 maybe we can get you back up here --

15 MR. PALMER: Sure.

16 MAJORITY CHAIRMAN GILLESPIE: -- if he

17 indeed returns. Just if I may, one question;

18 and I don't have the legislation in front of me,

19 but I believe that this Senate Bill 1168 would

20 have a sunset provision there after three years

21 that we would have to come back before the

22 Committee to --

23 MR. PALMER: 1168 is the Fish

24 Commission.

25 MAJORITY CHAIRMAN GILLESPIE: Oh, I'm 49

1 sorry. I'm looking at the wrong one here.

2 MR. PALMER: But I believe they both

3 have a sunset.

4 MAJORITY CHAIRMAN GILLESPIE: 1166, I

5 guess, is what I meant.

6 MR. PALMER: They both have sunsets.

7 MAJORITY CHAIRMAN GILLESPIE: Right.

8 Also, for the members -- and again, I made the

9 mistake by reading Trout Unlimited's letter of

10 support. Within your packets -- Executive

11 Director Raffensperger asked and solicited

12 letters of support or comments from a numerous

13 amount of agencies throughout the Commonwealth,

14 and they are distributed within your packet.

15 I thought your last slide was

16 interesting there, particularly with the number

17 of states that are actually tapping into the

18 General Fund and I'm not sure if the

19 Commonwealth with its budget woes right now

20 would be looking to have another line item in

21 the General Fund if we got to that point in

22 time.

23 Do you have any -- I mean, I know I'm

24 hitting you could here. Do you have any history

25 regarding the states that did go to the General 50

1 Fund in addition to their hunting license fees

2 to balance their budgets?

3 MR. PALMER: Some of them have always

4 had a certain level of an appropriation assigned

5 to them. A lot of it -- in recent years, some

6 of it has developed, like Missouri, the

7 one-eighth of a percent of the state sales tax;

8 and those goals were to create a form of stable

9 long-term funding.

10 They're really all over the place. A

11 lot of the states simply have an annual

12 appropriation, and a lot just is whatever falls

13 within the state budget at the time.

14 So I can't really say there's a

15 consistent pattern or a recent increase in that

16 level. But what a lot of it is attributed to is

17 the nationwide decline in hunting license sales,

18 which is far worse around the rest of the

19 country than it is in Pennsylvania.

20 We actually have some positive success

21 stories. Even though the overall license

22 decline is down, we have a dramatic increase in

23 the amount of women hunters. Just sine 2009,

24 we've added over 30,000 women hunters to the

25 ranks now. They're approaching 93,000 total 51

1 women hunters. So there are some positive

2 stories in there.

3 We're holding our own with the junior

4 license sales much better. Up to 2000 from

5 about 2009 to 2014, I believe we had an increase

6 of around 5,000 junior hunters. Even though

7 there's a little tic downward right now,

8 overall, there's some good news in there, too.

9 A lot of it is the aging demographics of

10 hunters.

11 MAJORITY CHAIRMAN GILLESPIE: Okay,

12 Mr. Palmer. Thank you. Any other questions

13 from any other members? Oh, okay. Boy, the

14 timing couldn't have been better.

15 Representative Miller, I understand you

16 had a question or so for Mr. Palmer.

17 REPRESENTATIVE MILLER: Well, thank you.

18 Let's see. My question was this, and maybe it

19 was answered when I was gone: What percentage

20 of your revenue is from the oil and gas and

21 timber?

22 MR. PALMER: I have to refer to a graph

23 here. Natural resources and right-a-ways

24 accounts for about $26-and-a-half million.

25 REPRESENTATIVE MILLER: And your overall 52

1 budget is how much?

2 REPRESENTATIVE MILLER: The one that I'm

3 quoting from, the budget was 105 and the

4 revenues were 101.

5 REPRESENTATIVE MILLER: Okay. So about

6 25 percent. The saying, what goes up, must come

7 down is not necessarily true. In government,

8 when taxes go up, they pretty much almost never

9 come down.

10 My question is this: Right now, the oil

11 and gas timber revenues are down. If this bill

12 goes through and you're allowed to raise various

13 fees and a year or two from now the oil and gas

14 revenues, timber revenues go very high again,

15 what will you be doing in terms of the fees

16 then?

17 MR. PALMER: Right. I think that's some

18 of the benefits of Senate Bill 1166, just in the

19 concept. When the Agency had the ability to

20 raise its fees -- right now we have to come to

21 the Legislature and go for a license increase,

22 try to get back on our feet and project out for

23 a period of time.

24 If we had the ability to increase our

25 fees, we could do an incremental increase and if 53

1 we were receiving enough revenues when we didn't

2 have to do that increase, we could use those

3 revenues just as we had in the past in the boom

4 period to utilize that as a funding source so we

5 wouldn't have to raise license fees.

6 REPRESENTATIVE MILLER: But if you go

7 ahead and raise the fees so now your fees are

8 here but your revenues from oil and gas go to

9 here, are you going to keep the fees the same at

10 that higher level, or are you going to reduce

11 them because they've been made up?

12 MR. PALMER: There is a potential for

13 reduction as well, yes.

14 REPRESENTATIVE MILLER: That's one of my

15 concerns; because typically when there's an

16 opportunity to raise the fees, they never come

17 down.

18 MR. PALMER: Right.

19 REPRESENTATIVE MILLER: And because they

20 spilled in as that's part of our revenue and

21 then you add expenses to whatever you're doing

22 to therefore justify the increased fees and we

23 can't lower them.

24 So that's one of the concerns I have

25 about this, because of the fluctuations of your 54

1 revenues and so you try to budget for the mean

2 with the good years and the bad years so that

3 you don't have to have these increases. So

4 that's just one of the concerns I wanted to

5 bring up.

6 MR. PALMER: Understood.

7 REPRESENTATIVE MILLER: Thank you, Mr.

8 Chairman.

9 MAJORITY CHAIRMAN GILLESPIE: Thank you,

10 Representative Miller. Any other questions or

11 comments from the Committee?

12 (NO RESPONSE.)

13 MAJORITY CHAIRMAN GILLESPIE: Mr. Palmer,

14 thank you so much.

15 MR. PALMER: Thank you.

16 MAJORITY CHAIRMAN GILLESPIE: With that,

17 if we're ready, we'll have John Arway, the

18 Executive Director of the Pennsylvania Fish and

19 Boat Commission. Mr. Arway, whenever you're

20 ready.

21 MR. ARWAY: Hi, Representative Gillespie

22 and Vice Chairman Mullery, and the rest of the

23 members of the House Game and Fisheries

24 Committee. It's a pleasure for me to be here

25 today. We've been working on this issue for a 55

1 long time and trying to come up with a solution

2 to, as this first slide says, establish a

3 sustainable future for fishing and boating in

4 Pennsylvania.

5 We were together in February, and one of

6 the major topics of discussion was a proposal

7 from Senator Eichelberger and Wozniak regarding

8 the authority to allow the Fish and Boat

9 Commission to establish their own fees, and

10 the idea gained quite a bit of traction on the

11 Senate side of the House.

12 And as a result of that, we've got 22

13 sponsors right now on that legislation, Senate

14 Bill 1168. And I'd like to tell you a little

15 story today about why we believe that's the

16 future of fishing and boating in Pennsylvania

17 and why we need to look at different model

18 because of the sales trends we've been seeing

19 over time and what we've learned since we began

20 selling our first fishing license in 1922 to our

21 residents. We sold our first non-resident

22 license in 1919.

23 Well, first of all, fishing and

24 boating's big business. We have over 1.1

25 million anglers, and that's estimated by the 56

1 National Survey for Fishing, Hunting,

2 Wildlife-Associated Recreation. That survey's

3 been taking place across the country, both at

4 the national level and state level since the

5 1940s; so we have a pretty good idea about how

6 many people are fishing, boating, hunting and

7 watching wildlife in our country, as well as at

8 the state level.

9 I personally happen to be Chair of the

10 National Technical Workup right now to redesign

11 that study, because we've lost some of the

12 accuracy because of some of the methods, I

13 think, we've applied over time.

14 We used to have a phone method that the

15 Census Bureau, as well as the National Fish and

16 Wildlife Service used; and we kind of lost some

17 of the accuracies in the 2011 survey. We still

18 maintain the accuracy at some of the state

19 levels that have major participation in the

20 sports; but in some of the other states that

21 have minor participation, we lost some of the

22 accuracy.

23 So we're basing the transfer we talked

24 about both nationally and the participation not

25 only on estimated trends but also on number of 57

1 licenses we sell, and there's a relationship

2 between the two; and I'll talk a little bit

3 about that in a bit. But much more recreational

4 opportunities are supported by natural

5 reproduction of fish such as trout, panfish, and

6 black bass.

7 You'll see that we sell over 885,000

8 licenses now in 2015. And 70 percent of those

9 license buyers purchased a permit to fish for

10 trout, and that's why we call ourselves a trout

11 state; because most of our anglers, although

12 they fish for trout, they may fish for other

13 species of fish, but they also -- the majority

14 of our anglers fish for trout.

15 But we also have fisheries that are

16 supported by natural reproduction for wild

17 trout, panfish, black bass, American shad, and

18 others that live and are reproduced and grown in

19 our 86,000 miles of streams and rivers and over

20 4,000 lakes.

21 Believe it or not, we're second most to

22 only Alaska in the number of flowing waters we

23 have in Pennsylvania, so we've got a huge

24 potential to market fishing and boating

25 opportunities that we never really had to do 58

1 before. People used to always buy a fishing

2 license. We have a strong hunting and fishing

3 heritage in our state, and we're very proud of

4 that. But today, there's just so many

5 distractions to life and so many demands on our

6 leisure time, that now we have to market what we

7 have. And we've got a marketing plan, and I'll

8 talk a little bit about how we're planning to

9 market fishing and boating opportunities in the

10 future.

11 We also contribute significantly to the

12 economic value of fishing and boating. You'll

13 see that anglers and boaters spend $1.2 billion

14 every year in our state to fish and boat.

15 That's a lot of money.

16 We rival fruit and vegetable agriculture

17 as an industry. A lot of people don't realize

18 that, that we're that type of business; but we

19 really are. We draw in more money into our

20 state than most of our major league sports

21 teams, and we don't get any subsidies. We do it

22 ourselves. We sell fishing licenses, register

23 boats.

24 We get the excise tax fee through the

25 Federal government based upon how many licenses 59

1 we sell, so we live within our own means and

2 we're proud to do that.

3 We follow the North American model of

4 wildlife conservation that was adopted by all

5 the states back in the 1930s, and that was an

6 outgrowth of how sportsmen believed that we

7 needed to support ourselves, not be supported by

8 legislators or administrations in what we do;

9 and we've done that ever since we began selling

10 that first fishing license in 1922.

11 We stock 3.2 million catchable trout.

12 We provide over a million fingerlings to co-op

13 nurseries around the state that grow and stock.

14 We provide over 10 million cold and warm water

15 fish species to stock in our lakes and streams

16 to sustain those fisheries, because a lot of

17 those waters can't sustain themselves through

18 natural reproduction.

19 Our WCOs police our waters to ensure

20 they're protected, and our biologists survey our

21 waters to determine how they should be managed

22 and conserved; and our staff work to enhance our

23 waters by improving our habitats of various

24 species used to reproduce and survive.

25 We realize right now the -- and since we 60

1 established the fee for fishing licenses, the

2 Legislature sets our fees since 1922; and we do

3 that every so often based upon what our needs

4 might be and how inflation really draws down the

5 value of our dollar, much like it does for the

6 cost of a loaf of bread or a gallon of milk.

7 Our last boat registration increase was

8 in 2004; and our last fishing license increase

9 was in 2005, and we all know what's happened

10 with the cost of other products over that time.

11 There was an article in the York Paper

12 the other day where the writer talked about how,

13 if you were a shopper and you walked into a

14 grocery store and the prices were the same for

15 the last ten years for all the products in that

16 grocery store and suddenly you walked in and you

17 got the price shock that prices just went up 10

18 or 15 or 20 or 30 or 40 percent, that would

19 really catch your attention and you'd probably

20 go try to find another grocery store, if you

21 could, to minimize the impact of those price

22 increases on your wallet.

23 That's exactly the kind of sales

24 response we see from our license buyers. They

25 get shocked every 5, 10, 15 or 20 years with a 61

1 major license increase. And then I'm going to

2 talk a little about what kind of sales response

3 we see from our customers. Results in large

4 increases, we know, drive down participation.

5 However, Act 866 of 2012, allowed us to do some

6 innovative things; and we really appreciate all

7 your support for that act.

8 It allowed us to sell multi-year

9 licenses and also allowed us to sell licenses

10 for less than the cost of the licenses that you

11 set -- prices that you set. So we tried a

12 couple of things ever since we got that

13 authority in 2012; and I'll talk a little bit

14 about the sales response we've seen to those in

15 a little bit.

16 First of all, we want to be convenient

17 and cost-effective with the way we market and

18 sell licenses. It helps retain and reactivate

19 anglers. There's a national campaign called

20 R3; it's retention, retain what we have,

21 reactivate those that are in what we call the

22 churn.

23 We estimate 1.1 million anglers fish in

24 our state, and we only sell 860,000 licenses; so

25 our attrition rate's about a quarter of a 62

1 million people. So we know that those people in

2 that churn rate actually want to fish, but they

3 don't have time to fish. They come and go from

4 our sport much like they do from other sports,

5 based upon budgeting the leisure time that they

6 have. So what we need to do is figure out how

7 to move fishing up on our leisure time list so

8 that people can and will spend more time fishing

9 and boating in Pennsylvania.

10 So understand with Bill 1168, Fish and

11 Boat would be able to offer the popular

12 multi-year licenses and permits, so we can still

13 sell those. Multi-year licenses have helped by

14 reducing some of the churn by the way of setting

15 fees.

16 And we sent a report from Southwick &

17 Associates that we hired, it's a national firm

18 that studies recreational economics and the

19 power behind some of the things that we're

20 trying with license sales; and they found that

21 we actually, based on the multi-year license

22 sales, provided a mechanism for people to buy

23 licenses -- to lock into a license three or five

24 years when they wouldn't have bought a license

25 every year for three or five years anyway. 63

1 So 50 percent of the licenses we sold,

2 people were locked in. It was a convenient way

3 to make sure you have a fishing license in your

4 back pocket. And, in fact, it was funny, one

5 day -- last year, we sold to Governor Wolf and

6 his wife, Francine, a fishing license at the

7 Outdoor Show.

8 And there was an event over at the

9 Governor's mansion and I walked up, and the

10 first thing, he pulled out his wallet and showed

11 me his fishing license. He was proud to show me

12 that he had his fishing license with him, and

13 that way he could fish anytime he would choose

14 to and he wouldn't have to go looking for it.

15 But, more importantly, what it did was,

16 those 50 percent of the people fish about 50

17 percent more than they would've fished if they

18 hadn't bought a multi-year license. So we got

19 more people fishing, and they also spend about

20 $1.5 million more in Pennsylvania than they

21 would have spent had they not bought a

22 multi-year license. So we were able to not only

23 drive people to fish more, but also drive people

24 to spend more time outdoors and spend more money

25 in our state by offering them that convenience 64

1 of buying a multi-year license, and they

2 actually save some money by doing that.

3 You also know that -- you probably heard

4 that we also tried using the other part of that

5 legislation by reducing the cost of a license by

6 a dollar.

7 When I walked into some Representative's

8 office back when I first became Director and

9 talked about testing that reverse paradigm, they

10 thought I was nuts; because as Representative

11 Miller explained, costs always go up but they

12 never come down. Well, in this case, they came

13 down.

14 And we tried it, because nobody else in

15 the country was willing to try it; and you

16 probably wonder what kind of sales response we

17 saw. We were hoping that -- we needed about

18 3-percent increased sales to break even. We saw

19 about a percent-and-a-half sales, so we lost

20 about $400,000.

21 And one of our Commissioners, Lori

22 Elliott, said at their last Commission meeting

23 that that was probably one of the best

24 investments we had, because what it really did

25 show was that we were interested enough in 65

1 testing various models to be able to increase

2 participation that we were willing to lower the

3 cost of a license to see if we could do that.

4 So I would say those losses were offset

5 by the gains that we have with the multi-year

6 license by over a million dollars. So even

7 though that experiment didn't exactly work as

8 planned, the other experiment did and it worked

9 better than we thought it would.

10 So what happens over time when we

11 increase license fees? This graph I've used

12 many times, and you've probably seen it. It

13 shows the points of whenever we increased fees

14 what happens to sales. And you'll see, since --

15 well, let me tell you the story about what

16 happened prior to 1990.

17 Prior to 1990, we grew sales from 1922

18 and 1990; and although we saw the same sales

19 response, we saw a decrease in fees immediately

20 after we raised fees. We grew that

21 participation and gradually added to the number

22 of licenses we sold until we peaked out in 1990

23 at 1.2 million. And then ever since 1990,

24 you'll see we've increased fees three times.

25 And you'll see those arrows on that graph, and 66

1 sales dropped anywhere from 8 to 10 percent the

2 immediate next year in response to an increased

3 fee.

4 And then after that, we either

5 stabilized or gradually decreased to bring us to

6 where we were today, and that's 860,000 license

7 sales. What we don't want to do, is we don't

8 want to cause those immediate responses, kind of

9 like those people that walk into that grocery

10 seeing that price increase of 50 percent occur

11 all of a sudden.

12 And we believe that we can change the

13 model by tempering out those fee increases. I

14 can't act like a standard business by -- if I

15 were M&Ms, I could take a few M&Ms out of a

16 package and sell it for the same price and

17 people wouldn't notice.

18 If I took a few trout out or buckets of

19 fish that our hatcheries produce, people notice.

20 So what I don't want to do is affect the goods

21 and services that we provide, but at the same

22 time we have to raise revenue to keep up with

23 the inflationary costs and these extra expenses

24 that we're seeing from healthcare and pensions

25 that we have to pay for with the budget that we 67

1 have.

2 This (indicating) is another graph

3 showing the age distribution of anglers across

4 the state, and I did have an animated file to

5 show you that showed this bubble moving forward

6 into the future.

7 But I've got a couple of arrows, and the

8 blue arrows just follow the points of

9 participation over time. There's an 11-year

10 period between time. And you'll see that shift

11 from 2004 through 2013. 2004 is the blue or

12 purple graph. The overlap you can see.

13 Then 2013 is the greenish graph. And

14 you'll see that -- our population of anglers are

15 aging, and they're gradually disappearing. And

16 the problem is, we're not replacing them the

17 same rate they're leaving.

18 Whether they're leaving the sport or

19 whether they're just passing away, we're not

20 recruiting at the same rate that we're losing

21 anglers; and that's really the dilemma. We've

22 been working with national experts across the

23 country and in our own state trying to figure

24 out this trend and how we can change it. But we

25 know that recruiting kids with the way we're 68

1 trying to recruit kids today is not working;

2 we're not getting them back at the same rate

3 we're losing older anglers.

4 So this is a real wake-up call for me

5 when I saw this graph, because the large bubble

6 of anglers moving through this is really

7 changing the way that we can support the

8 programs that we want to sustain to keep anglers

9 boating and fishing in Pennsylvania.

10 So recruiting kids is not enough to get

11 us back to where we need to be, simple as that.

12 Ultimately, we need to find a balance between a

13 fee structure that gets us the revenue we need

14 to operate without creating a disincentive for

15 people to buy a fishing license.

16 So along came Senate Bill 1168, and

17 Senators Eichelberger and Wozniak were at a

18 legislative luncheon we had and many of you have

19 joined us at those luncheons in your districts

20 across the state. They're probably one of the

21 best things that we've ever done. We get to

22 come out to you in your home districts and talk

23 about your issues and not be clouded by all the

24 other issues that are occurring across the state

25 and then work with you to try and come up with 69

1 solutions to your problems back home.

2 Well, that held true for that

3 legislative luncheon discussion we had with the

4 two senators, Eichelberger and Wozniak. And

5 they said, Well, why don't we just delegate you

6 the authority to set your own fees?

7 Honestly, you don't want to do anything

8 counterproductive to raising your own fees,

9 because you've been doing this since 1922 and

10 you understand the business better than we

11 understand the business. And we said, Where

12 have you been all of our lives? This is exactly

13 what we like to do and need to do in order to

14 regrow our business in Pennsylvania.

15 Agriculture does it for themselves.

16 Most other for-profit businesses do it for

17 themselves, because they've got the data,

18 they've got the interest; they've got the

19 motivation to do it better for themselves rather

20 than us trying to come over to you every so

21 often and convince you we really need a license

22 increase.

23 So, you know, we really appreciate the

24 support from Senators Eichelberger, Wozniak, and

25 the other 20 senators that we've got on our bill 70

1 in the Senate. Hopefully that support carries

2 over here to the House when you have a chance to

3 consider this bill.

4 As I explained to you in February, in

5 order to sustain our core operations while

6 meeting rising retirement and healthcare

7 obligations, let me just put that in

8 perspective.

9 We've got a $52-million budget. That

10 $52 million is to sustain our core operations,

11 but along came these increased pension costs and

12 healthcare costs that you're struggling with

13 solving at a larger scale for the entire state

14 government. We're part of that. And even

15 though proportionally we're a small part of it,

16 the reality of it is, it's a big issue for us.

17 So trying to find $9.2 million with a

18 $52-million budget without raising revenue and

19 by cutting operational expenses to find that is

20 a pretty difficult task, and we've been trying

21 to do it over the last four or five years by

22 what we call a spending reallocation plan.

23 We've been taking a look at the money we

24 earned and even though we're authorized to spend

25 62 million every year, we've only spent $52 71

1 million a year because that's all we earn.

2 And in my personal life, I brought this

3 philosophy through to my business life with the

4 Agency when I became Director, we are not going

5 to spend more than we earn. We are not going to

6 be in deficit spending. We're going to have a

7 balanced budget every year, and we've been able

8 to do that the last six years that I've been

9 Director.

10 And I can promise you, we will not spend

11 more than we earn, whether we get this revenue

12 fee authority authorization or not or any fee

13 authority, we're going to continue to be frugal

14 with the way we use angler and boater dollars

15 and we're going to spend them in the right way.

16 The Legislative Budget and Finance

17 Committee called us the most efficient agency in

18 the entire country, Fish and Wildlife agency, in

19 the way we spend angler and boater dollars; and

20 we're going to continue on that path.

21 We are not going to spend our reserve

22 down, because I understand the importance of a

23 reserve; because it's an emergency fund and it's

24 helped us a lot in the recent past about bailing

25 us out on some emergencies that we didn't have 72

1 budgeted. So we're going to continue on that

2 same pattern and we're going to continue to

3 tighten the belt.

4 On our own volition, we've reduced staff

5 from 432 staff down to 380. We still provide

6 3.2 million stocked trout; we still provide the

7 law-enforcement services we provide. We're down

8 a few right now, but we're just having a new

9 class come through.

10 The Governor put a ceiling of 380 on our

11 complement now; so if I want to run a new class

12 without any additional revenue, I would have to

13 cut 20 positions from our other programs in

14 order to do it.

15 And understanding that 25 percent of our

16 agency is law enforcement and 25 percent is

17 hatcheries, I can't find many other places to

18 cut those jobs except, for example, fisheries

19 and hatcheries.

20 So the balancing act that we have to go

21 through to keep afloat is a very difficult one.

22 But I can tell you that we don't hear many

23 complaints and hopefully you don't hear many

24 complaints about the goods and services we

25 provide even with the declining budget. And 73

1 we're going to still try to do that, but we've

2 kind of reached the point of no return.

3 We're at a point in our business life

4 right now where we can't cut any deeper, and

5 this inflation is just going to take us over

6 with increased pension costs and healthcare

7 costs.

8 So what does Senate Bill 1168 do to

9 allow us to better manage our business? First

10 of all, it authorizes us to establish our own

11 fees for fishing licenses, permits, boat

12 registrations, and titles and other outdated

13 fees.

14 Our three funding sources right now are

15 fishing licenses, boat registration fees, and DJ

16 Walbrook moneys. Similar to the Game Commission

17 receiving Pittman-Robertson money, we receive

18 the federal excise tax on sport, fishing, and

19 boating equipment that's collected by the US

20 Fish and Wildlife Service in Washington and then

21 redistributed to states based upon a formula

22 that is primarily driven by how many licenses we

23 sell. So the more licenses we sell, the more

24 federal money we can get. And, you know, that's

25 one of the reasons behind why we sell our 74

1 voluntary youth license now. If we sell a

2 voluntary license for a dollar, we capture $5 in

3 federal revenue, just like the $5 in federal

4 revenue we get for a $20 license.

5 So the more license categories and more

6 new customers we bring in, the more federal

7 money we get. It also requires public comment.

8 We want to be as open and transparent with this

9 process as we can.

10 We planned to go out for a proposed rule

11 making so let's seek public comment on any fee

12 increase that we would propose with this

13 authority and then do final rule making as our

14 board at a second meeting.

15 It has a 3-year sunset provision. Now,

16 I'm not sure if three years is really long

17 enough for us to test an incremental increase,

18 kind of raising the price a little bit over time

19 instead of hitting our customers all at once;

20 but it gives us a little bit of time to test

21 that incremental approach. And it also broadens

22 the use of our Lake Erie funds for public

23 fishing and technical amendments. So I believe,

24 based on our past performance, we consistently

25 demonstrated a commitment to fiscal discipline. 75

1 And we were recognized by the LBFC, as I

2 quoted, in our triennial audit. And Senate Bill

3 1168 would allow us to take the next step, which

4 we've got to take the next step sooner or later

5 if we want to continue to grow fishing and

6 boating opportunities in our state to apply the

7 same disciplined approach that we have in

8 allowing us to charge fees for our customers.

9 So along with working with the national

10 data, we're also working with the state date.

11 And I've actually approached Penn State

12 University's Smeal Business College to put

13 together a business plan for us. I took a look

14 at our last strategic plan, and our last

15 strategic plan that we just proposed was going

16 to scale back operations consistent with the

17 revenue that we had.

18 And I thought, there's a better way to

19 do this. And even though we're not a for-profit

20 business, I call us a government business; and I

21 think we have to run ourselves like a government

22 business. We have to live within our own means;

23 we have to live off of customer sales just like

24 for-profit businesses, but we have to operate by

25 the rules of government. 76

1 Deputy Director Palmer talked about the

2 increased costs that are imposed upon the

3 agencies. Even though we're an independent

4 administrative commission, we still have to

5 follow the rules of government.

6 We have to do the IT upgrades the

7 government requires. We have to do all the

8 other -- comply with all the other rules of

9 government the government puts before us.

10 But once I get the business plan from

11 Smeal, I'm going to take it and I'm going to

12 look at how I'm going to be able to implement it

13 based upon the rules of government that I have.

14 And I'm pretty confident and excited about our

15 ability to do that, especially if we get this

16 additional fee authority.

17 Smeal's going to be looking at the

18 various license categories that we have. We

19 don't have many. We've got a few. But they're

20 going to look at price resiliency within those

21 categories to see which ones respond to

22 increases more than others.

23 We know as a general response, we're

24 seeing, like the sales response I showed you on

25 the graph, 8- to 10-percent loss; we don't 77

1 recover. So can we do that better? Can we look

2 at certain license categories more than other

3 categories and kind of have a flexible price

4 increase based upon the category of licenses

5 that we're looking at?

6 Because we want to minimize the overall

7 impact we have on sales so that we can maximize

8 the participation rates we have with angler and

9 boaters driving local rural economies in our

10 state. We know the importance of the opening

11 day of trout season, the importance that is to

12 the local rural economies in bringing people

13 into their towns who would spend money and enjoy

14 the benefits of recreational fishing.

15 So the PFBC approach that we would take

16 if we would get the authority to set fees, would

17 be, first, we would account for inflation since

18 the last license increase. And I did an

19 analysis when I applied for director the last

20 time, the first time, in 2005; and it was called

21 the purchasing power of the fishing license

22 dollar. And it's just kind of like the cost of

23 a loaf of bread going up over time, based on

24 inflation, or a gallon of gasoline.

25 And I looked at the CPI inflation index 78

1 as it related to the cost of our original

2 license, which was a dollar in 1922, and saw

3 that even with our trout stamp and Lake Erie

4 permit, the value that anglers are getting is

5 the same values that they got in 1922 for the

6 $20-plus that they spend for a license today.

7 So, overtime, whenever we increase

8 license prices, we only kept up with general

9 inflation; so we don't charge anglers

10 proportionally any more today than we did in

11 1922. I think that's the sound of good

12 responsible business.

13 So I'll go on to the next one. So I

14 know you asked the Game Commission what would

15 their proposal be. We have Senate Bill 1103,

16 the response by Senator Brewster over on the

17 House side before we even came up with this new

18 idea. And these are the fee increases that we

19 would propose as a starting place.

20 I could promise you we wouldn't go

21 higher than this, but potentially we would go

22 lower than this based upon, one, our business

23 analysis and, two, our public input that we're

24 going to receive from the public and how to

25 adjust these fees based on the categories that 79

1 you see on the screen before you.

2 So I have to thank Senators Brewster

3 and Eichelberger in the Senate for advancing

4 this idea and also Senator Brewster for

5 introducing this Senate Bill 1103 to get the

6 discussion started and then supporting this

7 other alternative where we could set our own

8 fees ourselves.

9 Well, we know a lot more about how

10 anglers come and go from our sport and which

11 ones buy licenses and which ones don't than we

12 ever have. Ten percent of our population in

13 Pennsylvania fishes. In terms of our estimated

14 participation rate, we've got 12.8 million

15 people in our state; 1.1 million fish; so we

16 know we've got about 10 percent.

17 Only four of those people buy a license

18 every year for 10 years in a row. So if we can

19 get them to buy a license more often like with

20 the multi-year license incentives, we can get

21 them committed to fishing more often, spending

22 more money in the local economies, and also

23 stabilizing our revenue so that we can -- and

24 then plan for the future with the revenues that

25 we have. And then you can see the rates of 80

1 license purchases both in Pennsylvania and

2 across the country.

3 Our anglers are a little more loyal than

4 the national average, where 20 percent of them

5 buy a license five out of five years. But as I

6 mentioned, that experiment we did with the

7 multi-year, we were able to have 50 percent of

8 our customers buy a license every year; so we

9 locked them in because of convenience and

10 pricing where we wouldn't have been able to do

11 that before.

12 So we think that's a positive step in

13 the way we can market fishing and boating in our

14 state. We will be transparent with our decision

15 making by our Board of Commissioners. All this

16 is open. Everything I've talked to you about

17 today is on our website. If you want to find

18 out any information about either our budget,

19 about our sales patterns -- we've got sales

20 patterns that date back to 1922, and you can

21 take a look at how those sales have fluctuated

22 over time.

23 We'll publish in the Pennsylvania

24 Bulletin. All government agencies do that to

25 solicit public comment. We'll put out news 81

1 releases. We'll ask the public for their

2 opinion, and then we'll consider it at two

3 public meetings. So we'll be transparent open

4 government, as you know it, as a 3-year sunset

5 provision.

6 So you'll be able to allow us to report

7 back to you every year, either through our

8 annual reports or to both committees on the

9 House and Senate side or through the Legislative

10 Budget and Finance Committee's review or, you

11 know, you can test our commissioners when they

12 come back to you every four years for

13 confirmation, at least on the Senate side and

14 also through their appointment through the

15 Governor.

16 So we believe there is legislative

17 oversight that's connected to this. And really

18 the risk you're taking is not that great; it's

19 only three years. You're going to give us a

20 chance to develop our business ideas over the

21 course of the next three years, and then we'll

22 come back and tell you whether it worked or not.

23 So, essentially, you're going to have

24 more involvement in setting these fees than you

25 have right now, waiting for 10 or 20 years to do 82

1 it every so often.

2 So, again, thanks to Senator

3 Eichelberger, Wozniak, and the 20 other Senators

4 and cosponsors. And also thanks to the

5 sportsmen's groups that have spoken out in favor

6 of this right out of the shoot: The

7 Pennsylvania Federation of Sportsmen's Clubs,

8 the Unified Sportsmen of Pennsylvania, Trout

9 Unlimited, and the Congressional Sportsmen's

10 Foundation.

11 And I'd like to say it best in their

12 words, not my words: The Federations says, it

13 supports the efforts to increase license fees

14 for both agencies and that it supports going

15 forward one step farther to allow the agencies

16 to have the authority to set their own fees.

17 Unified says, Unified supports the

18 current legislation to allow the Fish and Boat

19 Commission to increase license fees as

20 identified in Senate Bill 1168. Trout Unlimited

21 says to preserve Pennsylvania's fishing heritage

22 and to ensure that fishing continues to support

23 the state and local economies, the Fish and Boat

24 Commission must be able to determine its own

25 license and permit fees to make sure it has the 83

1 necessary resources on an annual basis to

2 fulfill its mission and provide abundant

3 world-class fishing opportunities. In

4 conclusion, PATU supports Senate Bill 1168.

5 So, again, I really thank you for your

6 time to literally tell you the story behind

7 what's going on with this idea; because it is

8 truly a novel idea for state government. And I

9 know some of you are going to struggle with it

10 because it doesn't conform with the old model of

11 how we set license fees throughout the past. If

12 you look at that graph, you're going to be as

13 concerned as I am about continuing with the old

14 model and driving down fishing and boating in

15 our state and economic activities.

16 So thanks, and I'll be available for any

17 questions.

18 MAJORITY CHAIRMAN GILLESPIE: Thank you,

19 Mr. Arway. Representative Farina.

20 REPRESENTATIVE FARINA: Thank you, Mr.

21 Chairman; and thanks for your testimony. And

22 thanks for everything that the Fish and Boat

23 Commission contributes to the state. I greatly

24 appreciate it, because my family and I, we spend

25 many weekends fishing, specifically on Sundays; 84

1 because with a busy schedule, we're not afforded

2 other opportunities.

3 But I believe you said the first fishing

4 license was sold in 1922. And I believe, you

5 know, correct me if I'm wrong, but it wasn't

6 until like the 1970s that they allowed for

7 fishing on Sundays in Pennsylvania; is that

8 correct?

9 MR. ARWAY: It was in the 40s. It was

10 prohibited prior to then. And then about three

11 years later, the ban was lifted on Sunday

12 fishing. But we do have a couple of waters

13 around the state where the local landowners post

14 the stream because of their desire to keep the

15 stream closed during Sundays. But statewide,

16 fishing's open on Sundays.

17 REPRESENTATIVE FARINA: And do you

18 believe that being allowed to fish on Sundays

19 increases the participation?

20 MR. ARWAY: Absolutely.

21 REPRESENTATIVE FARINA: Excellent.

22 Thank you.

23 MAJORITY CHAIRMAN GILLESPIE: Thank you,

24 Representative Farina. Representative Mullery.

25 MINORITY CHAIRMAN MULLERY: Thank you, 85

1 Mr. Chairman. Thank you, Mr. Arway, for being

2 here testifying.

3 You were here for the Game Commission

4 testimony. Approximately 72 percent of their

5 total budget for the upcoming year is related to

6 personnel costs. What is the Fish and Boat

7 Commission's percentage that is related directly

8 to personnel costs?

9 MR. ARWAY: It's around 67 percent.

10 That's pretty consistent across state government

11 if you look at it.

12 MINORITY CHAIRMAN MULLERY: You talked

13 about the reserve fund that you currently have.

14 Can you tell us how much you have in the reserve

15 fund?

16 MR. ARWAY: It varies from 40 million to

17 60 million, based upon the time of year. Our

18 reserve is different than most agencies, in that

19 our -- the majority of our revenue doesn't come

20 in until three-quarters of the way through our

21 fiscal year. So we have to keep at least 20

22 million in our reserve so that we can make

23 payroll for that three-quarters of the year

24 until we start selling -- our peak license sales

25 occur like right now when our fiscal year begins 86

1 in July.

2 MINORITY CHAIRMAN MULLERY: So when you

3 take the money out of the reserve fund to make

4 those payroll payments, that's something that

5 goes back in once you get your license fees in?

6 MR. ARWAY: Correct. It gradually rolls

7 in and rolls out.

8 MINORITY CHAIRMAN MULLERY: Okay. So

9 other than that recurrent in and out of funds,

10 what else, let's say in the last five years,

11 have you had to utilize those reserve funds for,

12 specifically like an emergency situation? What

13 has caused you to say, you know what, this is

14 something that is so important, we need to dip

15 into the reserve?

16 MR. ARWAY: Well, I get requests from

17 staff all the time to dip into the reserves,

18 whether, you know, we have a major generator

19 that goes down in our hatchery system. So I

20 constantly approve projects, small projects,

21 that dip into the reserve because it's outside

22 of the scope of our particular program's budget.

23 But, most importantly, we were able to

24 buy a facility in Centre County recently because

25 we had a solvent reserve; and that's going to 87

1 allow us to move a hundred people into one

2 complex and eventually save money and become

3 more efficient by being able to afford that

4 ourselves.

5 We didn't have to take a bond issue out.

6 We had a solvent reserve, and we were able to

7 take advantage of that purchase at a

8 below-market price value because we had a

9 solvent reserve.

10 So, most recently, that's the biggest

11 project that we used the reserve for.

12 MINORITY CHAIRMAN MULLERY: My last

13 question is, You had put together a chart that

14 you titled Senate Bill 1103, because in your

15 statement here, you say you're frequently asked

16 what these rate hikes would look like.

17 And as I go through those different

18 licenses categories, I really don't have a

19 problem with any, with one exception, and that

20 would be the senior resident annual license.

21 That is quite a dramatic increase there

22 from 50 to $100 up to 115 by 2022. Why do you

23 feel it's important, or what's the justification

24 for such a dramatic increase on that one license

25 when all of the other ones seem to be relatively 88

1 benign?

2 MR. ARWAY: Well, when you become a

3 senior lifetime license buyer, it's kind of like

4 a right of passage. A lot of anglers can hardly

5 wait till they become 65.

6 I'll be 65 next year; I'll qualify. I'm

7 more than willing to pay a hundred dollars for a

8 senior lifetime license, because it's the last

9 license that I'll ever buy. It's good until I

10 pass away.

11 And as a result of that, it's a

12 bargain -- it's an extreme bargain at $50; but

13 again, inflation has devalued our dollar. The

14 cost of fishing for a lifetime also has to

15 increase proportionally with that devaluation.

16 So remember, that's just a one-time

17 lifetime purchase and you're good to go for the

18 rest of your life.

19 MINORITY CHAIRMAN MULLERY: The

20 reimbursement of federal moneys for the license

21 sales, the $5, with the senior resident lifetime

22 license, is that just a one-time $5 hit; or do

23 you get $5 for every year -- are you able to

24 establish proof of life and get a

25 $5-reimbursement from the feds, or is that just 89

1 a one-time license sale thing?

2 MR. ARWAY: That's -- for 17 years,

3 we're able to continue to get the $5 from a

4 senior lifetime license sale. So we don't track

5 whether people still fish or not after they buy

6 their senior license.

7 But the Fish and Wildlife Service has a

8 model where they look at life expectancies and

9 they've allowed the states who have senior

10 lifetime licenses to recover that reimbursement

11 for 17 years.

12 MINORITY CHAIRMAN MULLERY: And finally,

13 not a question, just a comment, I want to thank

14 you and the staff, the Wildlife Conservation

15 Office; you've been in my district many times

16 answering questions directly from anglers and my

17 constituents, and I appreciate the job that you

18 guys are doing. Thank you.

19 MAJORITY CHAIRMAN GILLESPIE: Okay.

20 Just one question, if I may, Mr. Arway? You had

21 talked about, as part of the consideration of

22 license increases of having public comment. How

23 would you foresee that happening? Would it be

24 like a traveling road show, or would it be

25 something that would be received at your 90

1 offices? How would you facilitate the public

2 comment?

3 MR. ARWAY: We really haven't planned

4 that out yet. We could do it at the pleasure of

5 the Legislature. But the reality of it is, our

6 typical public comment is that we have a

7 proposed rule making at our Commission meeting.

8 We put it out for formal comments. We'll put a

9 press release out; seek written comments, e-mail

10 comments, oral testimony at our Commission

11 meeting; and then our Commissioners will hold it

12 open for one or two months and then deliberate

13 over the comments that we receive.

14 Staff will summarize those and provide a

15 response and any changes that we believe may be

16 necessary in that proposal, whether it's a

17 license fee increase or another regulatory

18 action. And then the Board usually acts at

19 their next Commission meeting, the quarterly

20 meeting, on final rule making.

21 MAJORITY CHAIRMAN GILLESPIE: Okay. Any

22 other -- Representative Jozwiak?

23 REPRESENTATIVE JOZWIAK: Thank you, Mr.

24 Chairman. I just have one question. Are you

25 considering any new types of licenses? 91

1 MR. ARWAY: Not that I know of. Yeah,

2 the Legislature makes that determination. We

3 wouldn't get that ability through Senate Bill

4 1168.

5 So if we would consider another type of

6 license, we would be back asking you to create

7 one, since we don't have that authority

8 ourselves.

9 But, right now, we're not contemplating

10 any new license types.

11 REPRESENTATIVE JOZWIAK: Okay. Well,

12 last time we met, I brought up the boat license;

13 and we were going to talk about it. I didn't

14 know if you've receded along those lines at all.

15 MR. ARWAY: We're evaluating the price

16 impact of creating a boat license. I think as

17 we last spoke, one of the things we don't want

18 to do is lose money. You've seen our fiscal

19 condition. So any license types that we would

20 create would either have to be stable or

21 increase revenues.

22 So the challenge is to set the price

23 that would offset license loss that we would get

24 if we would create the boat license. And we're

25 still going through that analysis. So our 92

1 office will be talking to you about, once we get

2 through the analysis and determine how high we'd

3 have to set that price and talk to you about

4 whether or not that's a reasonable option to

5 move forward with.

6 REPRESENTATIVE JOZWIAK: Yeah, I looked

7 at that as a very limited thing once or twice.

8 People who don't have licenses at all don't

9 fish, try it out, go on a boat, fish once or

10 twice and then go buy a license. I looked at it

11 increasing the license sales and increasing your

12 boat fees.

13 So I guess that's all the questions I

14 have.

15 MR. ARWAY: Thank you.

16 MAJORITY CHAIRMAN GILLESPIE: Thank you,

17 Representative Jozwiak. Anybody else? Okay.

18 With that, Mr. Arway, thank you so much. Vice

19 Chairman Mullery, closing comments?

20 MINORITY CHAIRMAN MULLERY: No.

21 MAJORITY CHAIRMAN GILLESPIE: Okay.

22 With that, I want to thank everybody for their

23 attendance and for coming out today. And with

24 that, we're going to conclude the meeting here

25 of the House Game and Fisheries Committee. 93

1 Thank you.

2 (Whereupon, the hearing concluded at 11:44 a.m.)

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25 94

1 CERTIFICATE

2

3 I hereby certify that the proceedings and

4 evidence are contained fully and accurately in the notes

5 taken by me on the within proceedings and that this is a

6 correct transcript of the same.

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8 ______

9 Tracy L. Markle, Court Reporter/Notary 10

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