COMMONWEALTH OF PENNSYLVANIA
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 GERALD MULLERY, MINORITY CHAIRMAN HONORABLE JOE EMRICK HONORABLE GARTH EVERETT HONORABLE MINDY FEE HONORABLE DOYLE HEFFLEY HONORABLE BARRY JOZWIAK HONORABLE DAVID MALONEY, SR. HONORABLE BRETT MILLER HONORABLE PARKE WENTLING HONORABLE FRANK FARINA HONORABLE PATRICK HARKINS HONORABLE ED NEILSON 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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1 ---oOo---
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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