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Senate Finance met January 31, 2019, covering Article VII – Business and Economic Development. The Committee heard invited testimony from Department of Motor Vehicles, Housing and Community Affairs, Texas Workforce Commission, Department of Transportation, and Lottery Commission.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Department of Motor Vehicles

Thomas Galvan, LBB

  • Reviewed funding changes
  • Reviewed Sunset recommendations for DMV
  • West – On item 5, 50% of dollars go to program, where does the other money go?
    • LBB – They remain in GR fund and are available for certifications

 

Whitney Brewster, Exec. Dir. DMV

  • 18-19 BE DMV has made significant strides in using appropriations for what the lege wanted
    • Title fraud investigations have begun and so far are successful
    • Efficiency gains for licensing
  • For every $1 appropriated to DMV, $11 is generated for the state
  • Exceptional items
    • $7.4m to improve tech infrastructure
    • $1.9m in to increase IT staff by 12 FTEs
    • $568k for consumer protection and tracking
    • $904k for customer service reps, 9 additional FTEs
    • $1.9m related to statewide cost allocation plan
    • $5.1m for HQ facilities
    • $500k to design regional service centers for maximum customer flow
  • Tommy Hansen, ABTPA – The ABTPA is appropriated only 25% of what is collected
    • There has been an increase in vehicle theft over the past year
  • Nelson – Is your agency positioned to take on the function of divers’ licenses that was discussed in the DPS hearing last week?
    • Brewster – If funded properly and staffed appropriately DMV could take on drivers’ licensing successfully. Says it would be number one priority if the driver licensing was transferred. Brewster highlights her experience in administering licenses for Alaska.
  • Hinojosa – Special item funding for ABTPA, the request asks for special prosecutors, where would they be stationed?
    • Hansen – They would assist DAs with title fraud, vehicle theft, etc.
    • Hinojosa – Seems like a better approach would be to give grants to DA offices to hire people to focus on these issues
    • Hansen – Yes that is exactly what the plan is, we would be giving money to DAs to hire people, they would not be employees of DMV
  • Perry – If drivers licenses are moved to DMV make sure you work with county officials.
    • Perry – Mentions problems with DMV shifting certain vehicle title processing responsibilities onto
  • Perry – There is $100m per biennium collected through the auto task force in ABTPA. About $25m of that is appropriated during the biennium. They are proposing to take $6.6m of the $25m and re-allocating it to different areas of the state, so there will be less money for statewide operations. Am I correct in my understanding?
    • Hansen – It would be a re-allocation, we would have to dissolve inland programs to focus on the border and the coast
    • Perry – There are $75m of net proceeds to GR, we would be short sighted to move $6.6m to one area of the state at the expense of other areas.
  • West – In north central Texas where is DMV located
    • Brewster – We have Carrollton and Ft. Worth offices
    • West – Why is there not one in Dallas?
    • Brewster – We have analyzed transactions by zip code and determined that Carrollton is the most central location in the region
    • West – Where are most of your customers coming from, mopst customers coming from Dallas have to drive to Carrollton correct?
    • Brewster – I do not have that information
    • West – If the bulk of customers are coming out of Dallas, it would make sense to have an office in Dallas, correct?
    • Brewster – Yes
  • West – Question on the $43m budget overrun on the registration and titling system
    • Brewster – Estimated dollars for that project were initially lacking, did not include internal costs or hardware costs. Once the accurate amount was determined and submitted to QAT the project was on budget and on schedule and the project has now closed out.
    • West – Where did the money come from in order to pay for this?
    • Brewster – The dollars were appropriated from the automation fee. Once we realized the project would be over budget we came back before lege and requested those appropriations.
    • West – So the original cost was $28.3m, and last session we appropriated the additional dollars? How were they appropriated?
    • Linda Flores, CFO, DMV – Original appropriation was derived from TxDOT. Under TxDOT there was $60m appropriated for a project called Vision 21. When DMV was separated from TxDOT all $60m for that project was transferred to DMV.
    • West – How much was appropriated for this particular project?
    • Flores – $60m
    • West – And those were the dollars used for the budget overrun?
    • Flores – Correct
  • West – Question about why web dealer project is 42 months behind schedule
    • Brewster – Original schedule was based on a limited number of phases, once the project started we added new phases. The project did not go over budget, but it did go over schedule. Also had to make changes in order to deal with single sticker.
    • West – Has there been a formalized mitigation plan for how to move forward?
    • Mike Higginbotham, CIO, DMV – Yes, but it has not been presented to QAT
    • West – When will it be presented to QAT?
    • Higginbotham – I will have to go back and check
    • Brewster – We communicate with QAT monthly on this project, we will present our mitigation plan to QAT before the completion of the month
  • West – Why have you not hit hub goals over the last 5 years?
    • Brewster – We have met hub numbers consistently before the last few years, these last few years the numbers have been skewed by large tech projects. Hub program is important to our agency. We have been communicating with hubs about why they are not putting in bids.
  • Taylor – Question about ABTPA funding requests
    • Hansen – When SB 1 and HB 1 came out they required us to use more funding in border areas. If we don’t get any more money we will have cut some programs away from the border.
    • Taylor – When we talk about auto theft we are not just talking about breaking into and stealing cars?
    • Hanses – Stolen cars are used for ATM smash and grabs, new crime popping up called “jugging”, there are a lot of new jugging cases in cities.
    • Taylor – Are these associated with organized crime?
    • Hansen – We have a massive ongoing investigation about connection of car theft with cartels, other organized crime.
  • Flores – There is a $2 fee for ABTPA on insurance payments correct?
    • Hansen – Yes
    • Flores – And there is $75m collected from those fees that are not appropriated to you?
    • Hansen – Yes
    • Flores – This is to fund task forces, what are those comprised of?
    • Hansen – They do a number of operations, including covert operations. Others are multi-agency, serve multiple counties, help local sheriffs with certain crimes sheriff offices are not equipped to handle. On most occasions car theft leads into other kinds of criminal activity.
    • Flores – How is title fraud connected to this?
    • Hansen – DMV has been investigating, but they are not law enforcement, so we have to step in to help with the law enforcement aspect of title fraud.
    • Flores – Is expansion of title fraud investigation included in the requests?
    • Brewster – No, this funding would be for grant funding to local police agencies to add employees who specialize in title fraud
  • Nelson – Flores said we are leaving $75m on the table, and legislature can only appropriate half of the correct?
    • Hansen – Yes only half
    • Watson – This is a GRD account and because the money was not being appropriated Chairman Williams, who was chair of transportation at the time in 1997, doubled the fee from $1 to $2 so the whole dollar could be put into the program. But we are still only appropriating the statutory minimum, so we are “double dipping” on diverting the money. The program also changed the GRD account to a GR account.
  • Nichols – How many other states do drivers’ licenses through DMV?
    • Brewster – 42
    • Nichols – Are exceptional items in priority order?
    • Brewster – Yes
    • Nichols – How often does the vehicle registration system go down?
    • Higginbotham – Over the last year there have been 5 instances where the system went completely down, there are also more instances where it will go down for a single county or location but not the state. Some of these are due to power outages which we are not in control of.
    • Nichols – Do you have to shut it down for regular backups
    • Higginbotham – Yes and people cannot register during those times
  • Nichols – Last session I passed a bill that allowed certain kinds of containers to come through ports, which if it had not been passed we would have lost $42b to Louisiana. A lot of these containers then got automated permits through the DMV, which is illegal, how do we prevent that?
    • Brewster – It difficult to enforce, we cannot control the dimensions a carrier gives us. We cannot inspect every vehicle
    • Nichols – So they can falsify information and automatically get a permit?
    • Brewster – Yes
    • Nelson – What is the penalty for that?
    • Nichols – 4 or 6 years ago we bumped up the penalties quite a bit.
  • Huffman – You said cars are harder to steal now, car jackings are up (car jacking is when you are in the car and they steal it), are there any task forces doing similar things as you to work on this?
    • Hansen – No, other agencies are reactive, whereas we are proactive. Most jurisdictions don’t even have the reactive agencies.
    • Huffman – Motor vehicle burglary is a misdemeanor, but it is becoming a more organized crime, correct?
    • Hansen – Yes, it is more organized, and they are looking for large amounts of money
    • Huffman – This affects a lot of small businesses who have to hire security for their parking lots
  • Huffman – Sunset recommended there be a 3rd party study to look at DMV transition to licenses, how much would that study cost?
    • Brewster – That was a recommendation in DPS sunset report, I don’t believe they have put forward an estimate
  • Birdwell – Gives explanation of why sunset recommended a study of how to transfer drivers’ licenses to DMV. The only way to improve to license process is to give assets to DPS this session which would then be transferred to DMV when they receive it in September 2021.
  • Watson – We set a “drop dead date” of Sept 2021 so we could have another session to decide how to do it before the final transfer.

 

Texas Workforce Commission

Caitlin Pearson, LBB

  • Increase of $89.1m in budget from 18-19 base
  • TWC is 83% federal funds, 11% GR funds
  • Reviewed funding changes from 18-19 base
  • Nelson – Question about the Windham adult education program grant budget
    • Pearson – Windham counts as expenditures in TEAs budget, but they count toward the TWC match. Adult education literacy money is administered by TWC

 

Ruth Hughes, Chair Texas Workforce Commission

  • Reviewed budget and funding of TWC
  • Biennial requests
    • $228m for salaries of 4,800 FTEs
    • $1.3m in GR for apprenticeship program
    • $35.1m in fed funding to restore number of children to be served in 2021 by 6k per day
    • $40m, mostly fed funds, for IT projects
  • Nelson – Talks about experience as adult literacy tutor, “surprising” number of adults who cannot read at a 5th grade level. Hundreds of millions spent on adult literacy, what measurable outcomes are there, are we focusing more on literacy or job skill training?
    • Hughes – Both, we work with programs like Windham and others to connect literacy or ESL to marketable job skills
    • Nelson – Who is teaching these people to read? Root of why people don’t have jobs and are in prison is because they don’t know how to read
    • Ed Serna, Interim Exec. Dir. – I would describe them as professional teachers, most of our grants go to ISDs and community colleges
    • Nelson – We are focusing too much on marketable skills, and marketable skills are important, but we should be doing more to teach people how to read. I want to know what program grant recipients are using and who specifically is teaching them how to read.
    • Serna – We will get you that information.
  • Perry – Mentorship program to help youth while in high school learn job skills, from this program some kids get $20/hour right out of high school. Program is a huge asset.
  • Perry – When there is an unemployment claim, are there best practices you can provide employers for “gotcha” questions concerning unemployment claims. “Common sense has left the building” in many of these claims.
    • Hughes – We have several resources, including a 1-800 number where we have 4 attorneys who answer calls. We put on conferences around the state. We also have a handbook to guide employers through the process.
  • Watson –What is the total wait list to receive assistance for child care?
    • Randy Townshend, CFO, TWC – Around 21,000
    • Watson – What would it cost to eliminate that
    • CFO – Around $5k per child, so $108m in total
  • Hinojosa – Talked about importance of teaching job skills to people, getting private sector partners involved.
  • West – Have you developed a strategic plan for increasing African American male and Hispanic male educational attainment along with TEA and higher ed?
    • Hughes – We submitted a plan, over the past few years African American educational attainment of bachelor’s and master’s degrees has increased
    • West – Asking about the males, that statistic did not break it down by male or female
    • Hughes – No we don’t have statistics for specifically males
    • West – How close is the STEM program to implementation
    • Serna – I don’t know I will find out
    • West – TWC is asking millions of dollars, you know Texas has problems with two subgroups and I am not getting specificity on how to deal with this problem. I feel like you are not taking me very seriously.
    • Serna – We are taking you seriously, the agency has had conversations with you about this. We will develop a plan for dealing with this problem.
    • West – So can I have that plan next week? We have been talking about this all year, can you get it next week?
    • Serna – We can’t promise next week but in the next couple of weeks
    • Hughes – what we submitted previously we not satisfactory to you, we will get a more specific plan
    • West – “Senator Whitmire wants me to make sure you understand that your job depends on it”
    • Whitmire – “Like your job depends on it”
  • Nichols – Unemployment insurance plan is $40m, but it says using fed funds. Is that $40m appropriated somewhere else or is it with the feds and will be left there if we don’t use it?
    • CFO – It would be left with the feds if we don’t use it.
    • Nichols – Why wouldn’t we do that?
    • CFO – I don’t know why we wouldn’t do it.

 

Housing and Community Affairs

Melitta Berger, LBB

  • $573.8m all funds, increase of $24m, increase is primarily fed funds
  • Reviews exceptional items
  • Hinojosa – Question about exceptional item 2
    • Berger – Agency requested a change in the method of finance from GR to appropriated receipts

 

David Cervantes, Acting Director, Housing and Community Affairs

  • Main increase in funding is from federal funds
  • Reviewed programs run by the agency
  • No exceptional item requests
  • Hinojosa – What is your role in working with communities with large homeless populations?
    • Cervantes – We have two programs, the Emergency Solutions Grants program and the State Housing and Homeless Services program
    • Hinojosa – How much is in each program?
    • Cervantes – About $9m per biennium for the nine largest cities (unclear if this is per city or total)

 

Texas Department of Transportation

Thomas Galvan, LBB

  • Reviewed budget changes
  • Reviewed exceptional items
  • Increases in state highway fund offset by increases in bond proceeds and Texas mobility fund
  • Nichols – Last session lege approved 313.5 new FTEs, does this bill reduce it by 206?
    • Galvan – Yes that 206 is related to a summer hire program, those are exempt from the cap but are reported in FTE usage reported to state auditors office.
    • Nichols – Would it not make sense to combine the prop 1 and prop 7 accounts?
    • Galvan – Prop 7 can also be used for GO bond debt service, so they have been treated separately. The lege if they wanted to could combine them.
    • Nichols – About how much is paid to that debt service?
    • Galvan – About $1.1b a year
    • Nichols – This is why pay as you go is a good deal
  • Hinojosa – Is the LBB recommending an increase in FTEs to deal with the increase in funding?
    • Galvan – They are requesting more FTEs
  • West – Did you have a number in terms of the amount of debt capacity we have?
    • Galvan – Prop 12 had a constitutional cap of $5b, mobility fund did not have a defined cap, but they ended up with a capacity of $7.4b. The capacity has been used, there is no more capacity. The agency has not requested more capacity
  • Campbell – What is the veteran toll discount?
    • Galvan – Tolls would be waived for cars which display purple heart or legion of valor
    • Campbell – What was the cost
    • Galvan – It was $7m in the first year $9m in the second
    • Campbell – How much in the next biennium?
    • Galvan – Around $16m
    • Campbell – This will continue to increase, is there a new way to fund this?
    • Galvan – The agency has been using existing funds, but it is not sustainable. The agency has requested GR funds in the last 2 sessions but has not received it and are requesting it this session again.
  • Watson – For SH 130 one of the sources of funding was from private developers’ concessions at no taxpayer expense?
    • Galvan – Yes

 

James Bass, Exec. Dir., TxDOT

  • Chairman Bruce – Discussed prop 1 and prop 7, funding and plans of TxDOT
  • Watson – You are looking to move out a leased space on Riverside to a consolidated space in eastern Travis county, what happens if we don’t fund the construction of that consolidated space?
    • Bass – Due to the need for a construction schedule if we are not able to secure funding for round 2, then we would have to start looking for alternative lease space for some people at riverside and Camp Hubbard.
    • Watson – In order to keep thing moving we’ve been taking steps and the exceptional item is to keep that in progress?
    • Bass – Yes, we leased that building and the land in the late 80s, after 20 years we bought the buildings but we still lease the land so we would like to get out of that situation. In addition to the Riverside campus we have a lab in Cedar Park, we lease a couple other spaces and we would like to move those to the new consolidated campus
    • Watson – If you sell those building would that funding go into GR?
    • Bass – It could go into GR or any number of things, funding new road projects, etc.
  • Nichols – Question about UTP funding
    • Bass – It is an estimate of dollars that will be available for construction projects over the next 10 years, it does not include engineering, staff, etc.
    • Nichols – So it’s really highway projects?
    • Bass – Yes
  • Nichols – Question on FTE cap
    • Bass – Prior years show actual usage, which includes FTEs subject to the cap and summer hires not counted toward the cap. What you see for the future is the number of FTEs but it does not include the summer hires
    • Nichols – Have you been successful in hiring new FTEs?
    • Bass – We have been successful in bringing on those FTEs, although we are still 200 under the FTE cap, we have seen huge growth in 18-19 and we believe we will be hitting the cap this fiscal year
    • Nichols – You have some flexibility in the cap?
    • Bass – Yes but it is only 50 FTEs which is less than 0.5% of our cap, so it is not much flexibility
  • Nichols – In Sunset the high risk of MPPM was identified, can you give an update?
    • Bass – MPPM is our design software, it ties in to out UTP program. Currently we use a mainframe from the 80s. Phase 1 of MPPM to update that will be rolled out in February
  • Nichols – Question about TERP transfers
    • Bass – TERP transfer is a portion of the non-dedicated portion of state highway fund. Last year it was $145m, which is scheduled to end this FY. We have assumed that that money will be available for the state highway fund and will not go to TERP in our 10-year UTP. If the TERP transfer program is renewed we will change our projections.
    • Nichols – So you have already programmed about $1.4b from this in the UTP?
    • Bass – Yes, around $1.4b
    • Nichols – Using CMAQ money for reducing emissions in non-attainment areas, would that count toward credits with TCEQ?
    • Mark Williams, Deputy Exec. Dir., TxDOT – Describes CMAQ’s function, CMAQ money can only go to projects to help reduce mobile source emissions. TxDOT has not had discussions with TCEQ about setting up a similar program or supplementing CMAQ.
    • Nichols – If we don’t have a revenue stream for TERP the feds will come in and apply fines themselves and they will take the money
  • Flores – Question about roads in Permian, transferability of funds between projects, should the lege give you more authority to transfer those funds
    • Bass – In SB 1 we are given more flexibility to transfer those funds
  • Flores – Question about what new FTEs would be doing
    • Bass – They would be going into districts, currently we are contracting that work and it would be cheaper to have FTEs do that work. Others would be contract managers
  • Taylor – Plans for Grand Parkway?
    • Bass – Segments H and I under construction, not aware of any analysis for traffic and construction costs. Delegation recently talked to us about segment B
    • Taylor – So it is still in progress?
    • Bass – Yes
  • West – What is the condition of our bridge infrastructure?
    • Bass – We have the best bridge infrastructure of any state. We have the smallest percentage of bridges that are “functionally obsolete” out of any state
  • West – What is going on with I-30 and I-345?
    • Bass – The council recently rejected a plan for new construction of I-30 through Dallas
    • West – There are a number of developers who want to develop without consideration of traffic flow, especially I-345. There have been proposals to bring down I-345 which I oppose.
  • Kolkhorst – Were you made whole for the overtime and wear and tear on vehicles during Harvey response efforts, and did that come from FEMA?
    • Bass – We are still about $9m short.
    • Kolkhorst – Question on I-69
    • Bass – There are segments moving forward, it will not be complete to interstate standard within the next 10 years but there is progress
  • Nichols – We started putting money 2 cycles ago into port improvements, in this budget cycle are we equal to where we were last cycle?
    • Bass – Yes

 

Texas Lottery Commission

Melitta Berger, LBB

  • $532.1m, all GR dedicated funds, decrease by $3m from 18-19 base
  • Reviewed budget changes, exceptional items
  • Nelson – How much does the lottery bring in?
    • Berger – $1.3b, but this may have been updated by the agency
  • Kolkhorst – Unclaimed prizes to GRD fund 5049, does that go to a particular entity?
    • Berger – It goes to HHSC
    • Kolkhorst – And it just goes into their general pot of money?
    • Berger – I believe it is appropriated directly to UTMB, but I would have to look into that
  • Perry – How long until the unclaimed prizes are put into this fund?
    • Berger – It is 180 days
    • Perry – How did this get around the 7-year rule for unclaimed property?
    • Berger – We can look into that

 

Kathy Pyka, Controller, Lottery Commission

  • Exceptional items
    • $1.8m from lottery dedicated for commission move from capitol complex in 2022, including a drawing studio and claims center
    • Restore lottery retailer bonus program at $4.2m in each year of biennium
  • Nelson – How much of the education fund do lottery revenues pay for
    • Pyka – The amount transferred to the education fund is a small percentage of the education fund
  • Nelson – Question about retailer bonus rider
    • Grief, Exec. Dir. – Rider would allow in the event a retailer sells a winning top-jackpot prizes they can receive 1% of that jackpot capped at $1m
    • Nelson – Didn’t the governor veto this in the past?
    • Grief – Yes but we have not got a yes or no from the governor this time yet
  • West – other agencies could learn from you

 

Public Testimony

Michelle French, President for Tax Assessor Collectors of Texas  

  • Involved in DMV Sunset
  • Want to work with DMV, feels Sunset process has improve dialogue between groups
  • Points out they will send email on downtime and how it impacts them, request DMV get funding in budget to help with technology
  • Nelson – very aware and concerned with technology issues as well

 

Shay Ludecke, Tax Assessor Collectors of Texas  

  • Testify on IT budget request of DMV
  • Lack of test system for RTS
  • There are various reasons for downtime, sometimes problem with data centers DIR is hosting
  • DMV meeting last week, they are providing some updates and changes to system some things may take until September of this year to be worked on
  • Nelson – asked if they watched Sunset proceedings
    • Yes, was here

 

Terry Hall, Texans for Toll Free Highways

  • TxDOT is not equipped to handle new funding
  • Transportation Commission current process tends to favor “horse trading,” uses status quo in prioritizing projects

 

Don Dixon, Volunteer

  • Engineers build roads for us safely, at one time there were many in the agency and now about 85% of engineering for our roads is contracted out
  • Do it in house, very large funding mechanism for this agency

 

Christi Gendron, Texas Network Abuse Services

  • Request funding through TDHCA for children and adults that are homeless
  • Nelson – asked if Austin or all of Texas
    • Texas

 

Danielle Owens, LifeWorks (Travis County based)

  • Request dedicated funding to address youth homelessness
  • Youth at risk of human trafficking
  • Nelson – will be directing a lot of attention to trafficking, mental health, etc
  • Taylor – shared statistics that are alarming for Texas, Houston number one trafficking center in the country

 

Franklin Fischer, self

  • Spoke on his homeless experience and his work with Lifeworks and how they helped him
  • Watson and Nelson commended LifeWorks on their work

 

Leslie Bourne, Covenant House

  • They shelter homeless youth
  • Request additional funding to TDHCA

 

Justin Hayward, self

  • Person from Covenant House, spoke on results of program
  • Perry – wants to know what changed your path?
    • Was 19 in Salvation Army, going to take his life that day and someone poured into him, he started writing more
  • Watson – we need to pass some legislation, we know we need to do a better job preparing our youth and notes witness is an example
    • He would love to help however he can

 

Neia Corlow, Texas Network of Youth Services

  • Explained her homeless situation when she was younger, living with her mom
  • Can’t imagine what it is like for people on their own, outside
  • Perry – wants to know what changed your path?