Require Continued Repayment of General Revenue by the Texas Racing Commission

The Texas Racing Commission (or its successor agency) should repay general revenue appropriations received for fiscal 1988 through 1991.


Background
The Texas Racing Commission (TRC) is currently funded from fees related to the regulation of pari-mutuel racing of horses and greyhounds. During fiscal 1988 through 1991, TRC received general revenue appropriations to be used for expenses until fees genera ted were sufficient to support the agency. As of the 1992-93 biennium, the agency received no general revenue appropriations and is currently funded solely from fees.

According to Art. 179e, Sec . 3.09(b) of the Texas Racing Act, any amount of general revenue appropriated for the administration and enforcement of the act shall be reimbursed from the Texas Racing Commission Fund (Fund 597) within one year of the appropriation, with 12 percent inter est per year. To date, TRC has repaid $498,438 for 1988 expenditures. As of September 1, 1992, TRC is obligated to reimburse the General Revenue Fund $8,067,425 for appropriations in fiscal 1989 through 1991, plus $2,447,674 interest. 1~ A rider in TRC s ge neral appropriations (HB 1, I-231, Rider 7) reappropriates any remaining balance in Fund 597 to the beginning of fiscal 1992 and 1993. The fund cash balance as of August 31, 1992, was $2,592,054, which can be reappropriated to fiscal 1993. 2~ Further obligations will not be incurred; however, the interest will continue to accrue each day the general fund is not reimbursed.

The Commission has stated that it should not be required to repay the remaining obligations, arguing that the debt has been offset by in come received from racing. However, this is not consistent with the provisions of the law or of legislative intent in this area. (As a member of the Commission, the Comptroller voted against this decision.) The Commission should continue making periodic pa yments until the start-up debt is eliminated.


Recommendation
The Texas Racing Commission (TRC), or its successor agency, should repay the General Revenue Fund at least $250,000 per fiscal year until the principal and interest debt is repaid. (In a separa te recommendation in this report, the Texas Performance Review proposes creation of a new Texas Gaming Commission, including TRC functions.)


Implications
Under current law, TRC has an obligation to repay the General Revenue Fund and should make every attempt to repay its obligations either from current appropriations or from reappropriated fund balances. This minimum amount should not significantly impact t he current schedule of fees or current operations. The agency should aggressively pursue all available avenues to increase revenues in order to satisfy its statutory mandates.


Fiscal Impact
Payments of $250,000 per year will not immediately retire the debt as intended in the statute; however, this amount would be a good-faith attempt to reimburse TRC s outstanding obligations. The payment amount can be funded from current and projected fund balances. If the fund balances are not reappropriated, the payment amount must be funded from current appropriations.

Fiscal Gain to the Change in
Year General Revenue Fund 001 FTEs

1994 $250,000 0
1995 250,000 0
1996 250,000 0
1997 250,000 0
1998 250,000 0



Endnotes
1 Texas Racing Commission, 1992 Annual Financial Report (Austin, Texas, December 1992), p. 17.
2 Comptroller of Public Accounts, Annual Cash Report, Volume II, Revenue and Expenditures of State Funds for the Year Ended August 31, 1992 (Austin, Texas, 1992), p. 732.