PART 8. TEXAS RACING COMMISSION
CHAPTER 309. RACETRACK LICENSES AND OPERATIONS
SUBCHAPTER A. RACETRACK LICENSES
The Texas Racing Commission adopts on an emergency basis an amendment to 16 TAC §309.8, Racetrack License Fees, relating to the fees charged to pari-mutuel racetrack licensees. The changes to §309.8 increase the annual license fee for licensed but inactive pari-mutuel racetracks by $25,000 annually. For Fiscal Year 2009, the inactive racetracks are credited for the amounts already paid on September 1, 2008, and the additional $25,000 is due on March 15, 2009. For the fiscal years beginning on September 1, 2009, and beyond, the total inactive license fee will be due on September 1 of each year.
The amendment is adopted on an emergency basis to ensure that the Commission has sufficient operating funds to continue regulation of the racing industry. As of February 2009, the Texas Racing Commission is facing a revenue shortfall for the current fiscal year of $677,833, or approximately 14% of the agency's total appropriation amount for agency operations. The agency has taken immediate steps to address the situation including implementing budget reductions and requesting a Governor's Emergency and Deficiency Grant in the amount of $250,000. However, these steps may not provide the agency with enough cash on hand to continue operations.
The agency is funded solely through general revenue-dedicated appropriations from racing industry fees, fines, and a portion of pari-mutuel wagering revenue from "outstanding tickets"--the uncashed winning tickets of racetrack patrons. The outstanding tickets revenue, which is collected quarterly and makes up approximately $1.7 million, or 31%, of the agency's $5.5 million operating budget, has been an unpredictable and declining source of funding for the agency for the past several years. While staff anticipated a further decline in this revenue from the amounts collected in Fiscal Year 2008, the decline in the quarterly installment due in December 2008 was substantially greater than projected. This situation, combined with a loss of revenue due to the impact of Hurricanes Dolly and Ike on horse and greyhound racetracks, has culminated in the unforeseeable cash flow shortfall.
If the Commission did not adopt this rule on an emergency basis, the earliest that the rule could take effect through the normal adoption process would be on May 3, 2009. However, the agency does not currently have enough operating funds on hand to pay staff on May 1 for the work to be performed during April, and does not project receiving enough from existing revenue sources to make up the difference. Without sufficient operating funds, the Commission risks having to lay off staff and cease the regulation of all live racing. This presents an imminent peril to the public welfare, for the cessation of live racing would endanger a large component of the Texas agricultural economy by preventing the payout of the purses and Accredited Texas Bred funds on which it depends. In 2008, Texas racetracks paid $38.6 million in purses and the Accredited Texas Bred fund paid $4.7 million in incentive awards. Owners and breeders use these funds to pay their trainers, jockeys, grooms, kennelmen, and veterinarians, among others, to care for and prepare their animals to race. Without these funds, these workers would be without employment and, depending upon the financial wherewithal of the individual owner or breeder, the care of the race animals could be placed in jeopardy. Racetrack association staff will also be adversely affected; without live racing, there will be no need for the racetracks to employ officials such as the racing director, starter, track superintendent, paddock judge, clerk of scales, and outriders. The Commission has approximately 14,000 occupational licensees who would be directly affected by the loss of pari-mutuel racing, and racing supports many individuals, such as breeders, who are not licensed by the Commission but nevertheless depend upon the industry for all or part of their livelihoods.
The Commission notes that the affected members of the industry did receive prior notice of the rule proposal and an opportunity to provide public comment to the Commission. The Commission's Working Group on Funding met on February 11, 2009, to discuss the rule. Representatives of five of the six inactive licensees were present at the meeting and were given an opportunity to comment. The remaining licensee was notified of that meeting and given a personal briefing by Commission staff.
The amendment is adopted pursuant to Government Code, §2001.034, which provides for the adoption of administrative rules on an emergency basis, without notice and comment, if the adopting agency finds that an imminent peril to the public health, safety, or welfare requires adoption of the rules on less than 30 days' notice. The amendment is also under Texas Revised Civil Statutes, Article 179e, §3.02, which authorizes the Commission to make rules relating exclusively to horse and greyhound racing, and §5.01, which requires the Commission to set fees by rule in amounts reasonable and necessary to cover the Commission's costs of regulating, overseeing, and licensing live and simulcast racing at racetracks.
The amendment implements Texas Civil Statutes, Article 179e.
§309.8.Racetrack License Fees.
(a) - (b) (No change.)
(c) Annual License Fee.
[(1) Active License Fee for State Fiscal
Year Ending August 31, 2007. An association that is licensed and that
is conducting live racing or simulcasting shall pay an annual active
license fee. The fee is due to the Commission on April 16, 2007, for
the State fiscal year ending August 31, 2007. The active license fee
for a greyhound racing association is $80,000. The active license
fee for a horse racing association is:]
[(A) for a Class 1 racetrack, $27,500;]
[(B) for a Class 2 racetrack, $15,000; and]
[(C) for a Class 3 or 4 racetrack, $5,000.]
(1) [(2)] Active License Fee
for State Fiscal Years Beginning September 1, 2007, and thereafter.
An association that is licensed and that is conducting live racing
or simulcasting shall pay an annual active license fee. The fee is
due to the Commission on January 31 of each State fiscal year. The
active license fee for a greyhound racing association is $175,000.
The active license fee for a horse racing association is:
(A) for a Class 1 racetrack, $45,000;
(B) for a Class 2 racetrack, $15,000; and
(C) for a Class 3 or 4 racetrack, $5,000.
(2) [(3)] Inactive License Fee
for State Fiscal Year Ending August 31, 2009 [2007].
An association that is licensed but is not conducting live racing
or simulcasting shall pay an inactive license fee in two separate
payments. The fee is due to the Commission on September
1, 2008 and March 15, 2009 [April 16, 2007], for
the State fiscal year ending August 31, 2009 [2007].
The total inactive license fee for a greyhound racing association
is $150,000 to be paid $125,000 on September 1, 2008 and $25,000
on March 15, 2009 [$125,000]. The total inactive
license fee for a horse racing association is:
(A) $150,000 for a Class 1 racetrack, to
be paid $125,000 on September 1, 2008 and $25,000 on March 15, 2009 [
$125,000];
(B) $100,000 for a Class 2 racetrack, to
be paid $75,000 on September 1, 2008 and $25,000 on March 15, 2009 [
$55,000]; and
(C) $50,000 for a Class 3 or 4 racetrack,
to be paid $25,000 on September 1, 2008 and $25,000 on March 15, 2009 [
$25,000].
(3) [(4)] Inactive License Fee
for State Fiscal Years Beginning September 1, 2009 [2007],
and thereafter. An association that is licensed but is not conducting
live racing or simulcasting shall pay an inactive license fee. The
fee is due to the Commission on September 1 of each year. The inactive
license fee for a greyhound racing association is $150,000 [
$125,000]. The inactive license fee for a horse racing association is:
(A) for a Class 1 racetrack, $150,000 [$125,000];
(B) for a Class 2 racetrack, $100,000 [$75,000]; and
(C) for a Class 3 or 4 racetrack, $50,000 [$25,000].
(d) - (e) (No change.)
This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on February 27, 2009.
TRD-200900897
Mark Fenner
General Counsel
Texas Racing Commission
Effective Date: February 27, 2009
Expiration Date: June 26, 2009
For further information, please call: (512) 833-6699