COMMISSION MEETING January 27, 2015

Texas Alcoholic Beverage Commission 5806 Mesa Drive

Austin, Texas 78731

José Cuevas, Jr., Presiding Officer Steven M. Weinberg, MD, JD, Member Ida Clement Steen, Member Midland Colleyville San Antonio

TABLE OF CONTENTS

TITLE PAGE

Agenda –TABC Commission Meeting – January 27, 2015..............................1

Minutes – TABC Commission Meeting – November 18, 2014 .……………….. 3

Attachment 1: Commission Report: Executive Director and Agency Activities, Budget Issues, Staff Achievements, Legislative Activities

Attachment 2: Legislative Update Attachment 3: Approve Publication of Notice of Intention to Review

Rule §36.1, State Owned Motor Vehicles Attachment 4: Approve Publication of Notice of Intention to Review

Rule §31.10, Filing a Compliant Attachment 5: Approve Publication of Notice to Review Rule §3.26,

Manufacturer’s Agent’s Warehouse Permit Fee Attachment 6: Approve Publication of Notice to Review Rule §33.32,

Notification of Expired or Suspended Licenses and Permits

Attachment 7: Approve Publication of Proposed Amendment to Rule §35.3, Vehicle Identification

Attachment 8: Approve Publication of Proposed Repeal of Rule §37.1, Payment for the Record on Appeal

Attachment 9: Approve Publication of Proposed Repeal of Rule §41.24, Liquor Prescriptions – Physician’s Permits

Attachment 10: Approve Publications of Proposed Repeal of Rule §41.50, Gross Receipts Tax

Attachment 11: Approve Publication of Proposed Repeal of Rule §41.50, Gross Receipts Tax

Attachment 12: Approve Publication of Proposed Repeal of Current Rule §45.101, Rebates, Coupons and Premium Stamps

Attachment 13: Approve Publication of Proposed New Rule §45.101, Coupons Loyalty Programs

Attachment 14: Approve Publication of Proposed Amendment to Rule §45.103, On-Premises Promotions

Certification of Minutes………………………………………………………………26

AGENDA

REGULAR COMMISSION MEETING

10:00 a.m. – January 27, 2015

Shoal Crossing Event Center 8611 North MoPac Expressway

Austin, TX

José Cuevas, Jr. Presiding Officer-Midland

Steven M. Weinberg, MD, JD Member-Colleyville

Ida Clement Steen Member-San Antonio

Sherry CookExecutive Director

Tuesday, January 27, 2015 10:00 a.m.

Agenda

1. Call to Order José Cuevas, Jr.

2. Approval of Commission Meeting Minutes of November 18, 2014

José Cuevas, Jr.

3. Commission Report: Executive Director and Agency Activities, Budget Issues, Staff Achievements, Legislative Activities

Sherry Cook

4. Legislative Update Ed Swedberg

5. Recognition of TABC Tenured Employees (Licensing Division, Information Resources Division, Enforcement Division, Ports of Entry, Audit & Investigations, Training Division)

Ed Swedberg Amy Harrison Jay Webster Robert Saenz Karen Smithwick Dexter Jones Albert Rodriguez

6. Approve Publication Of Notice of Intention to Review Rule §31.2, State-Owned Motor Vehicles

Martin Wilson

7. Approve Publication of Notice of Intention to Review Rule §31.10, Filing a Complaint

Martin Wilson

8. Approve Publication of Notice of Intention to Review Rule §33.26, Manufacturer’s Agent’s Warehouse Permit Fee

Martin Wilson

9. Approve Publication of Notice to Review Rule §33.32, Notification of Expired or Suspended Licenses and Permits

Martin Wilson

10. Approve Publication of Proposed Amendment to Rule §35.3, Vehicle Identification

Martin Wilson

11. Approve Publication of Proposed Repeal Payment for the Record on Appeal

of Rule §37.1, Martin Wilson

12. Approve Publication of Proposed Repeal of Rule §41.24, Liquor Prescriptions – Physician’s Permits

Martin Wilson

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13. Approve Publications of Proposed Repeal of Rule §41.40, Monthly Report of Medicinal Pharmacy

Martin Wilson

14. Approve Publication of Proposed Repeal of Rule §41.50, Gross Receipts Tax

Martin Wilson

15. Approve Publication of Proposed Repeal of Current Rule §45.101, Rebates, Coupons and Premium Stamps

Martin Wilson

16. Approve Publication of Proposed New Rule §45.101, Coupons Loyalty Programs

Martin Wilson

17. Approve Publication of Proposed Amendment to Rule §45.103, On-Premises Promotions

Martin Wilson

18. Reception Honoring Tenured Employees José Cuevas, Jr.

19. Executive Session to Consult with Legal Counsel Regarding Pending and Anticipated Litigation Against the Agency and to Deliberate on the Appointment, Employment, Evaluation, and Duties of the Positions of Executive Director and General Counsel (Govt. Code §551.071, §551.074)

José Cuevas, Jr.

20. Public Comments José Cuevas, Jr.

21. Next Meeting Date: Tuesday, March 24, 2015 José Cuevas, Jr.

22. Adjournment José Cuevas, Jr.

Note: Items may not necessarily be considered in the order they appear on the agenda. Executive session for advice of Counsel (pursuant to §551.071 of the Government Code) may be called regarding any agenda item. Action

may be taken on any agenda item.

NOTICE OF ASSISTANCE AT PUBLIC MEETINGS

Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services (such as interpreters for persons who are deaf, hearing impaired readers, large print, or Braille) are requested to contact Gloria Darden Reed at (512) 206-3221 (voice) (512) 206-3259 (fax). Relay Texas at 1-800-735-2989 (TTY/TDD), at least three (3) days prior to the meeting so that appropriate arrangements can be made.

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MINUTES

REGULAR COMMISSION MEETING

10:00 a.m. – January 27, 2015

Shoal Crossing Event Center 8611 North MoPac Expressway

Austin, TX 78731

COMMISSION MEETING MINUTES January 27, 2015

The Commissioners of the Texas Alcoholic Beverage Commission (TABC) met in Regular Session on Tuesday, January 27, 2015 at the Shoal Crossing Event Center, 8611 North Mopac Expressway, Austin, Texas.

COMMISSIONERS José Cuevas, Jr. PRESENT: Steven Weinberg, MD, JD

Ida Clement Steen

STAFF PRESENT: Sherry Cook, Executive Director

Mona Appling, Database Administration, Information Resources Division

Donny Betts, Supervisor, Houston Regional Audit Office Brian Bond, Lieutenant, McKinney Area Enforcement Office Gene Bowman, Director, Audit & Investigations Division David Brandon, Assistant Director, Information Resources

Division Kayla Bridgewaters, Education Specialist, Education &

Prevention Division Frank Caldera, Agent, Waco Enforcement Office Mindy Carroll, Director, Education & Prevention Division Todd Carroll, Agent, Wichita Falls Area Enforcement Office Dustin Carter, Quality Assurance Specialist, Ports of Entry

Division Cathleen Cavazos, Lieutenant, Austin Enforcement Division Joe Cavazos, Lieutenant, Houston Enforcement Office Julie Davis, Program Specialist, Education and Prevention

Division Marc Decatur, Major, Houston Regional Enforcement Office Luann Dickerson, Executive Assistant, Executive Division Loretta Doty, Director, Human Resources Division Sheila Doyle, Sergeant, Austin Enforcement District Office

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Shelby Eskew, Director, Business Services Division Jennifer Evans, Accounts Examiner, Licensing Division Joe Fralin, Regional Manager, Ports of Entry- Diana Figueroa, Executive Assistant, Office of Professional

Responsibility Tiffany Forister, Human Resources Specialist, Human

Resources Division Joe Garcia, Sergeant, Arlington Special Investigations Unit Kathy Gersbach, Administrative Assistant, Field Operations

Enforcement Thomas Graham, Director, Tax & Marketing Practices Division Loretta Green, Regional Supervisor, Arlington Licensing

Regional Office Henry Guevara, Lead Investigator, San Antonio Financial

Crimes Unit Nick Gutierrez, Sergeant, San Antonio Special Investigations

Unit Amy Harrison, Director, Licensing Division Emily Helm, General Counsel, Legal Division Gary Henderson, PMO Manager, Information Resources

Division Sandy Higdon, License and Permit Specialist, Licensing

Division Julian Hooper, Tax Compliance Officer, Eagle Pass Port of

Entry Joe Iagnemmo, Web Design Administrator, Information

Resources Division Richard Jauregui, Major, San Antonio Regional Enforcement

Office Jonathan Jergins, Agent, Belton Area Enforcement Office Oliver Johnson, Sergeant, Austin Enforcement District Office Bryant (James) Jones, Sergeant, Lufkin Area Enforcement

Office Dexter Jones, Assistant Chief, Audit & Investigations Division Shaun Jordan, Licensing Supervisor, Austin District Office Joann Joseph, Assistant Director, Licensing Division Larry Karstadt, Auditor, Bryan Area Office Judith Kennison, Deputy General Counsel, Legal Division Victor Kuykendoll, Major, Arlington Enforcement Regional

Office Andrea Maceyra, Supervisor, Tax & Marketing Practices

Division Vanessa Mayo, Assistant Director, Business Services Division Yolanda Mena, Administrative Assistant, San Antonio

Licensing Regional Office Mark Menn, Acting Major-District 1, Lubbock Enforcement

Office Marvin Montero, Lieutenant, Enforcement Administration Russell Moore, Agent, San Marcos Area Office Mariann Morelock, Director, Governmental Relations

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GUESTS PRESENT:

Harold Nanos, Captain, Austin Enforcement Division Danny Pavlas, Senior Agent, Waco Enforcement Office Earl Pearson, Assistant Chief, Enforcement Division Andy Peña, Director, Office of Professional Responsibility Nicole Phillips, Supervisor, Houston Regional Audit Office Yvette Price, Supervisor, San Antonio Licensing Regional

Office Eleanor Ramirez, License and Permit Specialist, Licensing

Division Albert Rodriguez, Director, Training Division Julie Ross, Supervisor, Licensing Division Robert Saenz, Chief of Field Operations Karen Smithwick, Director, Ports of Entry Division Melissa Solis-Newton, Program Specialist, San Antonio

Special Investigations Unit Ed Swedberg, Deputy Executive Director Ron Swenson, Captain, Special Investigations Unit Todd Talley, Regional Liaison, Field Operations Tana Travis, Lieutenant, Waco Enforcement Office Jay Webster, Director, Information Resources Division Martin Wilson, Assistant General Counsel, Legal Division Jason Winter, Sergeant, Waco Enforcement Office

Vickie Adams, Strategy Member, Texans Standing Tall Mark Bordas, Region Vice President of State Affairs,

Anheuser-Busch Vic Brooks, Vice President, Republic National Distributing

Company Dormey Carroll Kyle Frazier, Texas Wine and Grape Growers Association Steve Greinert, Consultant, Wholesale Beer Distributors of

Texas Esther Guzman Kyle V Hill, Martin Frost & Hill/HEB Patty Hooper Cheri Huddleston, Legislative Consultant, Glazers Chelsy Hutchinson, Consultant, Republic National Distributin g

Company Kate Karstadt Carrie Lemke Lance Lively, Executive Director, Texas Package Stores

Association Kyle Mauro, Government Relations, Hillco Partners Donna Moore Robert Peeler, Attorney, Anheuser Busch Tyler Rudd, Consultant, California Wine Institute Hayward Rigano, Attorney Marcus Schwartz, Attorney, Gardere

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Beverly Joann Sivek Cody Sivek Scott Stewart, Executive Director, Texas Distilled Spirits

Association Angel Tomasino, Attorney, PLLC Randy Yarbrough, Consultant, Wholesale Beer Distributors of

Texas

CALL TO ORDER

The meeting of the Texas Alcoholic Beverage Commission was called to order at 10:07 a.m. by Presiding Officer José Cuevas.

APPROVAL OF COMMISSION MINUTES OF NOVEMBER 18, 2014

Presiding Officer Cuevas called for approval of the Commission meeting minutes of November 18, 2014. Commissioner Steven Weinberg so moved to approve the minutes as written. Commissioner Ida Clement Steen seconded. The motion carried.

COMMISSION REPORT: EXECUTIVE DIRECTOR AND AGENCY ACTIVITIES, BUDGET ISSUES, STAFF ACHIEVEMENTS, LEGISLATIVE ACTIVITES

Presiding Officer Cuevas called upon Executive Director Sherry Cook to present the Commission Report: Executive Director and Agency Activities, Budget Issues and Staff Achievements, and Legislative Activities.

After welcoming the Commissioners back to Austin, Executive Director Sherry Cook welcomed the friends and family present to support the tenured employees being recognized for their years of service. She expressed that she is honored and privileged to work with these valued employees every day.

Executive Director Cook began with a briefing on the 84th Legislative Session currently in progress and stated Deputy Executive Administrator Swedberg will provide a more detailed update. She stated that the regular session began on January 13, 2015 and is scheduled to end June 1, 2015. She advised that March 13, 2015 is the deadline for bills to be filed.

Executive Director Cook stated that HB1 has been filed, which relates to the agency’s budget and the recommendations made by the Legislative Budget Board (LBB). She stated last summer Exceptional Item Requests were presented based on the existing baseline, with the recommendations made by the LBB; the Exceptional Items requests have been modified. She reviewed the FY 2016-17 Legislative Appropriations Request slide and noted that the original LBB recommendations took out too much money from the Hardware/Software Maintenance contracts which was added back and adjusted on the FY 16-17 LAR. She stated the previous request contained requests for operational shorts falls (funding) within the budget. She advised an updated request in which those line items are no longer present due to the method in which the LBB approached their recommendations. She stated the existing FTE Cap

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is 646.8, and the recommended for FY 16-17 is 615. The LBB recommendations removed 31.8 FTS’s, however funding remained. She referred to this as “right-sizing” the agency, which is why a request for operational funding to operate is no longer needed. She stated the first exceptional item has not changed and relates to the Career Ladder/Retention 10%. She added TABC continues to face significant challenges in hiring and retaining qualified civilian personnel which is compounded by civilian employees being paid 14% to 20% less than other state agencies. She stated the agency fails to attract a sufficient pool of qualified applicants at that entry level to even proceed to interviews due to the low pay levels offered. She added that once employees are trained (typically 2-3 years) higher paying opportunities at other state agencies lure employees away, making it difficult to retain employees. She noted that TABC employees, their spouses or children are very restricted in obtaining employment to supplement household income due to the fact that they cannot seek employment by any business that holds a TABC license.

Executive Director Cook added although the “right-sizing” approach is a good one because it trues-up the budget; however the true-up went too deep by eliminating 13 positions (4 field licensing processors, 5 field auditors, and 4 POE tax compliance officers) currently filled today, by employees that provide core services necessary in meeting the agency’s mission. She stated more complex investigations are being conducted and additional auditing staff is needed to focus on marketing practices investigations. She noted that recently 6 marketing practices investigations yielded almost 2 million in fines. She added there was a 59% increase of product entering the State, which requires additional staff in Label Approvals to meet the demand. To complete the “right-sizing”, necessary resources and funding are being requested to meet the growing challenges generated by the sheer growth within this industry which include 3 MIU Field Auditor positions and 1 Label Approval position. Therefore, the second exceptional item includes 17 employees of which 13 are currently filled and totals $1.4 million for the biennium.

Executive Director Cook stated the third exceptional item falls under the Public Safety Programs category and includes funding for 4 field enforcement agent positions that were eliminated (which are currently filled) and 2 new field agent positions. These positions impact the community and public safety and are critical to the Agency in accomplishing its mission. Also included in the exceptional item are the costs of 183 radios for officer safety, to call for and respond to assistance in the local communities. The final item included in this exceptional item is the cost of 20 new vehicles which will begin the replacement of the older vehicle fleet reaching the 120,000 mile level. She stated implementation of the Comptroller’s recommendation of operating vehicles to 100,000 miles will be observed going forward. She added the maintenance of the older fleet has proven to be costly and the new fleet will reduce maintenance costs and increase fuel efficiency. She stated the addition of these vehicles will not make the replacement whole but it will make the replacement whole for the next few bienniums and then a natural replacement cycle can begin. She concluded that exceptional Item #3 includes 6 FTEs and equipment totaling $2.9 million.

Executive Director Cook stated over the past year, the agency has undertaken a significant organizational and cultural change in order to better fight the problem of organized criminal activity taking place within a sizeable number of licensed locations. She added criminals seem to engage in their illegal businesses in locations where

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alcoholic beverages are consumed. She stated TABC has been ramping up its investigative and enforcement efforts to cancel the licenses of those who engage in criminal cartel and gang activities such as narcotics trafficking, money laundering, fraud, and human trafficking in licensed locations. She added partnerships with other federal, state and local law enforcement agencies accomplish these efforts. She noted the last 18 months the SIU and FCU pilot programs focused on organized criminal activity have been established with huge success. She added for the current biennium, two new LBB performance measures were added for TABC which dealt with joint activities targeting organized crime. She stated additionally, a new rider for FY16-17 has been added which requires TABC to annually report to the LBB activities related to organized criminal activity conducted by SIU and FCU, both of which have been done - using existing resources and why additional positions are being requested. Currently, there are 65 open cases and 20 administrative cancellations due to organized criminal activity in licensed locations and a strong message is being sent that Texas won’t tolerate this behavior. She added based on the success of the unit and a growing demand for its services, six investigators positions are being requested with a targeted focus on organized criminal activity within licensed locations. Exceptional Item #4 includes 6 public safety positions (1 sergeant and 5 agents) and totals $1.2 million for the biennium. She stated that the agency’s LAR packet will include an appendix with data gathered that supports all the exception items being requested.

Executive Director Cook reviewed the 5th exception item which related to Information Technology improvements and gave an overview of the technology projects successfully implemented by using baseline appropriations and grants over the past several years. Funding for in-flight projects to automate the new product label submission and approval process and the local distributor tax stamp distribution and tracking process was also achieved. She added there are two remaining critical projects which are beyond the funds available within existing appropriations. One project relates to Information Security Upgrades, which will harden the agency’s infrastructure in order to further minimize the risk of loss or theft of licensee private information and also funding for a security specialist position. She added the second project, Excise Tax Automation, will update the manually-intensive processes currently used to review, reconcile and audit the reports and tax filings provided by alcoholic beverage industry members. She remarked that the agency currently collects over $200 million per year in alcoholic beverage excise taxes for the State’s treasury using these processes. She stated exceptional item 5 includes one additional FTE and totals $1.2 million for the biennium.

Executive Director Cook reviewed the 6th and last exception item, which did not change from the last request, the Centralized Accounting and Payroll/Personnel System (CAPPS). She stated TABC requires an appropriation for staff augmentation support during the planned transition to the Comptroller’s CAPPS system in FY16/17. During this migration, several staff members in critical skill areas (payroll, and information technology) will be required to work extensively on the configuration and testing of the CAPPS system to support TABC systems and processes. She added the agency is thinly staffed in these areas and requires staff augmentation to support day-to-day operations. She concluded the final item includes 1 FTE and totals $238,244 for the biennium.

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Executive Director Cook stated 30 FTE’s are being requested in which 17 are already filled with current staff and are needed; data has also been collected to support the funds requests for the additional FTE positions. She added the previous average of vacancies went from 70 to now averaging between 35-40.

Executive Director Cook advised the Commissioners that the LBB made several rider revisions, one being to the Texas Wine and Marketing Assistance Program. She stated in the past, $250K for each year in the biennium was requested and transferred to the Department of Agriculture for a Wine Marketing Program. This rider has been struck and replaced by a new rider that just simply allows the transfer. She stated the $500K for the biennia has been put into the agency’s base budget. She also stated that a new rider has been added that specifies what information the LBB would like reported annually for the Organized Criminal Activity and Financial criminal activities conducted by TABC.

Executive Director Cook informed the Commissioners that a Capital Budget Expenditures rider was struck. She noted when it was added last session; it was believed that it would provide a vehicle to spend grant funding if the agency exceeded its capital authority. She explained that it was understood by the agency that the 45 day clock began the day the request to spend grant funding was submitted to the LBB, which we learned is not the case. She stated the clock doesn't begin until the Board receives the information, and during the back and forth discussion process the clock starts over each time. She ended by stating the rider is being requested again with different language exempting the agency from Article IX for certain things.

Executive Director Cook stated that a rider was struck that related to authorizing the agency to expend funds for educational type materials to include PSA’s. The LBB informed the agency that it already has this authority. She stated research is still being conducted to determine the language for the rider request.

Executive Director Cook gave an overview of Revenue Collections Compared to Appropriations FY 16-17. She stated there is a rider in the General Appropriations Act that requires the agency to cover its appropriations through fees, fines and surcharges and the total revenue collected which includes excise taxes, fees, fines and surcharges $568,414,137. She explained that the excise tax collected alone makes up $430,430,440 of that amount. The chart below further shows a breakdown of the revenue collected compared to appropriations for FY 16-17:

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She further explained Column C (in the chart above) is what is required to raise to cover TABC’s appropriations and it is believed the intent of Rider 7 was for TABC to be self-funded in-order to regulate a very complicated industry to ensure a stable and orderly marketplace, for public safety and public health. She added, during the 82nd legislative session a surcharge increase was supported during the economic downturn so TABC could receive adequate funding to support its mission. She stated revenue at the time was enough to cover the base budget plus requested exceptional items while still leaving money on the table. However, due to the economic crisis those additional funds were used elsewhere and in order to cover the cost of the exceptional items at that time, industry agreed to raise surcharges to fund the agency’s exceptional items. She explained Column D represents our baseline budget to include direct and indirect costs and Column E includes Column D in addition to the exceptional item request. She noted approximately $4M remains; however, the agency is only requesting funds driving its concerns and supporting its mission as presented.

Executive Director Cook began her review of the Fiscal Services Revenue report and stated that as of the end of December 2014, across the board, the agency revenue was up in most categories. She noted administrative fees are slightly down which is reflected by a $71,992 deficit; however, in January’s report this deficit will be non-existent due to Pisano week. She added that a complete report will be included in the January 2015 Administrator’s report. She explained that for Unassigned Revenue, which is where the money is stored during the License application process, there is money there that will be diverted to the Audits category once the application goes further along the process. She stated that the Other Miscellaneous revenue is expected to level out for FY2015; however, the Cigarette Tax revenue is not expected to rebound as cigarette taxes on the Mexico side have increased making it unnecessary for people to cross to buy cigarettes.

Executive Director Cook gave an overview of Trends Related to Complaint Behavior. She stated that sale to intox can generally be found within Retailers who are classed as bars or sexually oriented businesses, and they account for 69 percent (351 of 508) of all sales to intoxicated persons. She noted an additional 21 percent (106 of 508) of sale to intox were attributable to restaurants and brewpubs. She advised that the first five years of operation is where the maximum danger for sale to intox by new businesses occurs. She stated that TABC’s education of and presence at new businesses is imperative to drive compliant behavior, especially during the first two years of operation. She added this supports the need for Education and why a reduction in staff already in place would negatively impact the task of enforcing compliant behavior.

Executive Director Cook reviewed the TABC Administrative Actions Resulting from Public Safety Offenses slide and stated that efforts have continued to detect and deter public safety offenses. She added after dropping in FY 2012, the volume of administrative actions initiated for public safety offenses by agency personnel has steadily increased, returning that volume to near its historic level. Both enforcement agents and auditors are responsible for initiating these administrative actions. She stated during the first four months of the current fiscal year, minor stings were the largest single source of the administrative actions initiated for public safety offenses, followed in almost equal proportions to one another (each 16 - 17 percent of the total) by open inspections, non-inspection investigative activities, and undercover operations. She added the adoption of cases from other police agencies also

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contributed to the total, but this source has been less of a factor in recent years and the number of public safety actions based on adoption is now less than half of what it was even three years ago.

She explained that the types of administrative actions initiated for public safety offenses, due to the nature of these offenses, took the form of administrative cases. She added there were also four summary suspensions for especially violent breaches of the peace (shootings, stabbings, etc.) during the period of September to December FY15 and 73 warnings issued, mostly for far less violent breaches of the peace, failure to report breaches of the peace, and various on-premises promotions.

She stated that members of almost all retail classes have been among those cited for public safety offenses during the current fiscal year, as has a winery and a handful of temporary license/permit holders. She added the groups most frequently cited for public safety offenses during the current fiscal year were retailers licensed to sell beer and/or wine for off-premises consumption (39 percent of the total), mixed beverage permittees of various classes (36 percent), and retailers licensed for on-premises sales of beer and/or wine (13 percent).

Executive Director Cook ended her presentation by stating that the agency continues to fill its vacant positions, and at the end December 2014 there were 45 vacancies and 21 of those positions were in mid-process of being filled.

She concluded by stating that many of the slides reviewed will be shared during testimony with the Senate Finance and House appropriations to support the requests being made, and to reiterate how TABC pays for its own function and can cover the costs of the requests made. She added the agency serves a necessary public safety need and it drives the economic overall growth and stability of the State. She mentioned that packets are due at the Capital on February 6th for Senate Finance and she will ensure the Commissioners get copies before they are submitted.

Commissioner Weinberg inquired whether there were any bills being introduced related to licensing WYOBs or SOBs. Executive Director Cook stated that yes; House Bill 148 has been filed. Deputy Executive Director Ed Swedberg added it was introduced by Representative Jose Menendez. Commissioner Weinberg noted that the data presented shows licensed SOB locations seem to have issues and he imagines unlicensed establishments have significant issues. Executive Director Cook agreed that was the case. She inquired whether the Commissioners had any additional questions or comments.

Commissioner Weinberg commented that he has always been concerned that positions being “floated” for budgeting restraints or positions that are slow to fill have the possibility of being eliminated. He also stated having 45 vacancies is great and is the lowest it’s been in a while; he wants to see that number ideally drop to 25 vacancies.

Commissioner Weinberg also noted that the grant money received for radios initiated from the Governor’s Office and he inquired whether additional grant funds could be requested. Executive Director Cook stated that the grant money from the Governor’s office was re-directed to the Border to address border security issues but there may be JAG money available that is being sought after. She added the Education and Prevention Division is always looking out for grant funds that are available.

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Commissioner Weinberg questioned Deputy Executive Director Swedberg where the POE positions cut were located. Deputy Executive Director Swedberg responded that the numbers of positions eliminated are generic and not tied to a specific location. Commissioner Weinberg inquired if temporaries were still being utilized to fill TCO positions. Deputy Executive Director Swedberg stated they are, specifically at the seaports because that works best with the business model and those positions require people for short periods of time during high surge operations. He added using temps has been a successful model in the terms of the revenue being generated and has offset expenses. Commissioner Weinberg commented the model appears to be working well.

Presiding Officer Cuevas commended the staff for the work they put into the budget and he stated the LBB did a good job in their approach to “right-sizing” the agency and building the needed funds into the budget.

Presiding Officer Cuevas stated the numbers show that Texas continues to grow as an alcohol industry and he inquired of Executive Director Cook where TABC stood in comparison to California. Executive Director Cook responded that she did not have a definitive answer; however, Texas and California tend to swap positions. She added that she would include the alcohol industry information for the top 5 states and where Texas stands in the upcoming January Administrator’s report.

Administrator Cook will provide alcohol industry information for the top 5 states and where Texas stands in the January Administrator’s Report.

Presiding Officer Cuevas mentioned that he recalls that about 8 years ago TABC had issues with high Sale to Intox incidents. He noted those numbers seem high again and he inquired what was being done to approach those cases now compared to back then. Executive Director Cook requested that Chief Robert Saenz respond to that question.

Chief Saenz responded that as opposed to immediately arresting the intoxicated patrons like in the past, the current approach is to ensure the intoxicated individuals are escorted home safely by a sober adult. He added charges are being filed against the bartenders who are over-serving alcohol. He stated better efforts are being made to work with the DA’s office to ensure necessary arrests are made. He added more focus is being made to ensure intoxicated patrons are getting home with a designated driver and not driving drunk and when necessary the intoxicated patrons are cited for public intoxication. Presiding Officer Cuevas stated he agrees with that approach.

Executive Director Cook’s report is supported by a PowerPoint presentation. (Attachment 1)

LEGISLATIVE UPDATE

Presiding Officer Cuevas called upon Deputy Executive Director Ed Swedberg to come forward to present the Legislative Update.

Deputy Executive Director Swedberg stated that with only two weeks into the legislative process there was not much activity on the alcoholic code to report; however, he wanted to give an overview of how issues are being tracked thus far. He

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advised that as the legislative process progresses the Commissioners would be kept informed with ad hoc reports and status updates.

Deputy Executive Director Swedberg gave an overview of the TABC Tracking Process.

Deputy Executive Director Swedberg stated that the final LAR is due February 6, 2015 and the staff has worked closely with the LBB to ensure revisions that impact the agency’s mission are included. He added that testimony in front of the legislative committees will also occur in February. He stated Telicon, the online subscriber service, is used to track bills by searching for key words that affect the agency and he advised the Commissioners that Marian Morelock, Director of Communications is the lead for tracking legislative issues. He added that the LBB will also advise the agency of Fiscal Note Requests that should be attached to bills that impact alcoholic beverage code or the agency. He stated TABC serves as a resource to members and staffers when they have inquiries and requests on proposed legislation and our input helps them make good decisions. He added industry information is provided when needed and the agency works with the Governor’s office, the Comptroller’s office and other entities when our expertise and input is requested.

He stated the following methods are used to coordinate and approve items during the tracking process:

• Government Relations • Tracking Spreadsheets • Business Services Director/Assistant Director • Weekly Core Team Meetings • Subject Matter Experts • Division Directors • Executive Director/Deputy Executive Director

Deputy Executive Director Swedberg stated the outcome of the tracking process results in:

• Updated LAR package/Committee testimony • ABEST Fiscal Note Inputs • Code Clean-up Recommendations • Information on AB Code, • Feedback on Proposed Legislation (Resource Rules and Agency Practices

Only, facts/neutral information is given)

Deputy Executive Director Swedberg concluded the process being used to track issues works well and the approach can be adapted during the session as needed.

Deputy Executive Director Swedberg revisited HB148 introduced by Representative Jose Menendez as it relates to the consumption of alcoholic beverages on certain premises; he stated the legislation calls for a creation of a specific Public Consumption permit, which currently does not exist. He added currently permits exist for those who serve and sell alcoholic beverages, and this permit would allow for the consumption of alcoholic beverages on commercial locations. He noted the criteria for allowing such a permit would be that it has to be a commercial entity at a commercial location available to the public where the consumption of alcohol would occur on the premises. He added other criteria for those entities not currently licensed under the authority of the agency and they must operate during non-allowed hours for current entities. He stated future Public Consumption permit holders would require them to

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perform similar to current licensees and be held to those specific requirements. He stated HB148 is being discussed in detail and foreseeing the impact it would have on TABC.

Executive Director Cook commented that Senate Bill 1 was introduced as it impacts TABC’s budget. She added the Commissioners will be kept informed of any developments. Deputy Executive Director Swedberg stated that Director Eskew analyzed SB1 and determined it is no different than HB1 which is good news.

Deputy Executive Director Swedberg reviewed HB482 which was introduced by Representative Charlie Geren as it relates to allowing the holder of a brewpub license to sell ale and malt liquor to certain wholesalers. He stated that statute currently requires that brewpubs can only sell their product to only X permit holders (sell within County). He added this is a clean-up bill and would allow brewpub license holders to sell to licensees that hold an X permit which is a distributor of malt liquor and ale products.

Deputy Executive Director Swedberg reviewed HB688 filed by Representative Roland Gutierrez which proposes that the number of TABC Board members consist of 5 members instead of the current 3 positions.

Deputy Executive Director Swedberg stated SB326 filed by Representative Craig Estes proposes a change to the code and relates to the amount of wine certain wineries may sell directly to consumers. He added it effectively removes the current cap on the direct sale to consumers from 35,000 annually to no cap.

Deputy Executive Director Swedberg advised the Commissioners that 132 bills are being tracked, 4 are high priority, 24 are medium priority (i.e., minor impact on alcoholic beverage code) and 104 are low priority (i.e., impacting law enforcement authorities, budget and tax). He added currently there are 1218 total Bills and JRs filed which is about a 50% over the 83rd regular session. He stated since November, TABC leadership staff has formally visited with 21 legislative members and staff with additional visits planned with new Senate committee members. He stated Lt. Governor Patrick has announced his committee assignments and focus will be made on meeting the new members of the Senate Finance and Senate Business and Commerce Committees. He noted there are six committee members who are “double hitters” and sit on both the Senate Finance and Senate Business and Commerce Committees and additional efforts will be made to meet with those members. He stated members for the House Appropriations and House Licensing and Administrative Procedures committees have yet to be determined, but added once those members are determined appropriate outreach to those members will be made.

Deputy Executive Director Swedberg inquired whether the Commissioners had questions or comments regarding his presentation.

Commissioners Weinberg stated like last year he would like to receive updates on bills impacting TABC at and between Commission meetings. Deputy Executive Director Swedberg responded that the Commissioners would be kept updated on bills impacting TABC.

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Commissioner Weinberg commented that although the TABC agency serves as a resource only to legislative members and staffers, he remarked the Commissioners are not only a resource but can speak on behalf of TABC and are available to assist when testimony begins. Presiding Officer Cuevas thanked Deputy Executive Director Swedberg for his presentation and stated the agency’s function is to enforce what the legislature passes and give them good information so they can make good decisions. He ended by stating TABC is ultimately here to serve Texas.

Deputy Executive Director’s Swedberg’s report is supported by a PowerPoint presentation. (Attachment 2)

RECOGNITION OF TABC TENURED EMPLOYEES (Licensing Division, Information Resources Division, Enforcement Division, Ports of Entry, Audit & Investigations, Training Division)

Presiding Officer Cuevas called upon Deputy Executive Director Ed Swedberg to come forward to present the next agenda item, “Recognition of TABC Tenured Employees”.

Deputy Executive Director Ed Swedberg presented the following tenure awards:

John “Jay” Webster - 35 Years, Information Resources DivisionJay Webster began his career with the TABC in January 1980 as the agency’s first computer programmer. During his career at TABC, he has held positions of Programmer, Systems Analyst, Project Manager, Information Resources Manager, and currently IT Director. He has directed or managed numerous information technology initiatives including the migration to IBM mainframe computing, the introduction of desktop personal computing, and the deployment of internet access throughout the agency, the transformation to Versa

Regulation and online licensing solution, and the transition of server support to the statewide data center services contractor. Jay has represented the agency on numerous statewide IT task forces, steering committees, and advisory boards including serving six years as Treasurer for the Texas Association of State Systems for Computing and Communications. Jay graduated with a Bachelor of Business Administration in Management Information Systems from what is now Texas State University. He and his wife, Lisa, have one daughter, Kendyl.

Amy Harrison - 25 Years, Licensing DivisionAmy Harrison, Director of Licensing, began her employment with the TABC on Jan. 1, 1990. She came to the commission when legislation transferred the regulation of bingo from the Comptroller’s Office to the TABC. Amy was the Supervisor of Bingo Licensing until 1994 at which time bingo regulation transferred to the Lottery Commission. Amy, choosing to stay with the TABC, served in various positions until 2004 when she promoted to the Director of Licensing. Amy is a graduate of Sul Ross State University. While attending

college and immediately following graduation, Amy worked at the Capital, for her father, State Representative Dudley Harrison. Amy worked for the Comptroller’s office from 1985 until her transfer to TABC holding positions that include Tax Specialist, Special Enforcement Liaison and Supervisor regulating amusement machines and bingo. Amy has served in various volunteer positions within her neighborhood, church, schools and county. Amy and her spouse, Mac Schmidt has 2 children, Sara (23) and Clayton (20). They also have 7 dogs, (Lilly, Lilman, Chloe, Fergie, Yeti, Annie and Grady), as well as a cat (Indie), a deer (Dottie Quad) and a goat (Todd).

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Director Amy Harrison presented the tenure awards to the Licensing Division Recipients.

Jennifer Evans - 30 Years Jennifer Evans joined the TABC in March of 1984 as a Clerk Typist and has held many titles including Administrative Technician, Program Administrator, Licensing Supervisor of Applications and Accounts Examiner. Jennifer’s years of experience in various jobs and knowledge make her one of Licensing’s most valued resources. Jennifer grew up here at the TABC in the Licensing Division and is grateful for the many good friends she has made over the years. Jennifer and her husband, Jim, have been together for 22 years. Jennifer has a

daughter, a son, and a grand pup named Gatsby.

Cassandra “Sandy” Higdon - 30 YearsSandy Higdon began her long career with TABC on August 15, 1983, as a File Clerk in the Licensing Division. She has held various positions and job titles during her tenure and has become a valuable subject matter expert particularly with how licensing processes legal cases. Sandy retired December 15, 2012, with 29 years of service. After 14 months of retirement, Sandy returned to her work home in Licensing as a License and Permit Specialist for District 4. Sandy has been married for over 33 years. She and her husband, Gary, have lived in

Elgin for over 21 years. She has two grown daughters, Elizabeth, age 30, and Victoria, age 21 and an 8-year-old grandson, Tylor.

Yolanda Mena - 25 Years Yolanda Mena joined TABC on April 1, 1987 as a Clerk I, with the San Antonio Office in the Enforcement Division, where she was assigned to the front desk. In May 1990, Yolanda resigned from TABC and moved back with her family to Palestine, TX. She rejoined TABC in May 1992, in the San Antonio District Office as a Secretary I in the Enforcement Division. In April 1994, she promoted and transferred to the San Antonio Compliance Division as an Administrative Technician I. On August 15, 2013, she transferred to the

Licensing Division. Yolanda has had the pleasure of working for all the Divisions (Auditing, Enforcement, & Licensing) in the San Antonio District Office. One of Yolanda’s most recent accomplishments was assisting in the coordination of the National Conference of State Liquor Administrators (NCSLA) held in San Antonio. Yolanda is dedicated to her family and loves to spend time with her grandchildren.

Eleanor Ramirez - 20 Years Eleanor Ramirez began her career with TABC in San Antonio on September 26, 1994, as a Secretary. She became a Licensing Technician in April 1999 and that June she was promoted to Administrative Technician. She became an Accounts Examiner in September 2001, and in October 2006, she transferred to the San Marcos Office where she still works today. Eleanor was nominated for TABC Employee of the Year Award in 2011 and she receives praise from the public for her customer service. Eleanor attended San Antonio College and

served as Vice President and Secretary for the San Fernando Water Board from 1990 to 1992. She currently is a member of the Pastoral Council at Our Lady of Wisdom Catholic Church at Texas State University and is Secretary of the nonprofit Nosotros La Gente that promotes the community and helps low income families. Eleanor has two sons, Daniel and Eloy, two granddaughters Samantha and Payton and a Chihuahua Darlin.

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Director Jay Webster presented the tenure awards to the Information Resources Division Recipients. Ozie Farr was not present to receive his award.

Mona Appling - 40 YearsMona Appling began her career at the TABC in September 1974 as a Clerk I in the Licensing Division. When the Commission acquired its first mainframe computer she was promoted to Programmer. Over the last 40 years, Mona has held several technical titles within the Information Resources Division. She has been involved in two data center relocations, two mainframe system conversions, several database migrations and the most recent Versa Systems upgrade. Mona has been recognized with several ‘Certificates of Merit’ and

was the TABC Civilian Employee of the Year in 2006. During her career, she has represented the agency in a variety of organizations and user groups. Mona and husband John reside in Austin and enjoy spending time with family, especially their two grandchildren.

Ozie Farr - 25 Years Ozie Farr is a System Support Specialist IV. He began his career with TABC on March 1, 1989. He worked 10 years and 3 months in the TABC mailroom before transferring to the Information Resources Division in 1999. Ozie has been with the agency 25 years and 10 months. Ozie has been married for almost 40 years, has 3 children, 7 grandchildren, and a grand-puppy.

Chief of Field Operations Robert Saenz presented the tenure awards to the Enforcement Division recipients. Lt. Linscombe was not present to receive his award.

Larry Linscombe, Jr. - 25 YearsLieutenant Larry Linscombe Jr. began employment with TABC on July 1, 1989 as an Agent Trainee in the Galveston District Office. He served as an Agent in the Galveston District Office and later the Brazoria County Outpost Office. Lieutenant Linscombe was promoted to Sergeant in the Amarillo District Office in October 2005, and served in Amarillo and in Richmond. In November 2009, he was promoted to the position of Lieutenant and serves in the Corpus Christi and Victoria offices. Lieutenant Linscombe has been recognized throughout his

career with TABC for his source and subterfuge owner investigations and now shares his knowledge and techniques with those he supervises. Lieutenant Linscombe received his Bachelor’s Degree in Humanities from the University of Houston/Clear Lake in May 2005. He holds a Master Peace Officer Certification and an Instructors Certification from TCOLE and is currently recognized as a Certified Fraud Investigator. He has two grown daughters, Kristine and Lacie and four grandchildren.

Russell Moore - 25 Years Senior Agent Russell Moore began employment with TABC on September 1, 1989, as an Agent Trainee in the Galveston office. While in Galveston, he spent two of five years assigned to a county wide Narcotics Taskforce made up of local, state and federal agencies. He worked a brief stint in the San Antonio District Office before eventually landing in the San Marcos outpost where he has been assigned for the past 19 years of his career. Russell previously worked for the Hays County Sheriff’s Office bringing with him supervisory experience. He

earned a Bachelor of Science Degree with a Major in Criminal Justice and a Minor in Psychology from what is now Texas State University and holds a TCOLE Master Peace

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Officers Certification. He is a previous recipient of the Agent of the Year award. During his tenure, he worked the Governors inaugural detail with Commissioner Allen Shivers. He has enjoyed his law enforcement career here at TABC with the support of his wife of 25 years, Donna.

Danny Pavlas - 25 YearsAgent Danny Pavlas began employment with TABC on September 1, 1989, as an Agent Trainee in the San Angelo District Office. He transferred to the Waco District Office in 1992 where he is still currently assigned. Before employment with TABC, Danny served as a patrolman with the West P.D. from 1985 to 1987. He was then employed with the Hillsboro P.D. where he served as Sergeant before coming to TABC. Danny holds a TCOLE Master Peace Officer Certification and Instructor Certification. He has been a TABC Firearms

Instructor since 1993, and is a Patrol Rifle Instructor. He is a TABC Fitness Coordinator, and is a member of the TABC Special Response Team. Danny lives in West with his wife Rhonda, their 10-year-old niece Christina, and 8-year-old son J.R. He also has a 23-year-old daughter, Kalyn and a 20-year-old son, Ethan.

Wytana “Tana” Travis - 25 YearsLieutenant Tana Travis began her career with TABC on June 27, 1989. After completing the Harris County Sheriff’s Department Academy, she was stationed in the Amarillo District office. In 1995, Lieutenant Travis transferred to the Fort Worth office where she spent the next 13 years as a Field Agent, Field Training Officer, and Education Agent and assisted with licensing. In June 2008, she promoted to Sergeant in the DFW area and in May of 2012, was promoted to Lieutenant in the Houston Office. She recently transferred to the

Waco District Office to be closer to family. Lieutenant Travis began her career with the State of Texas in 1987 with the Texas Board of Pardons and Paroles. She holds a TCOLE Master Peace Officer Certification and Instructor Certification. In addition to her service with TABC, Lieutenant Travis is the Vice President of the TABC Retired Officers Association and has acquired many items from TABC’s history which are displayed in the Waco and Arlington offices. Lieutenant Travis has one daughter, Taylor, and a 3-month-old grandson, Kannon.

Jay “Todd” Carroll - 20 YearsSenior Agent Todd Carroll began employment with TABC on July 14, 1994 as an Agent Trainee in the Dallas Office. Todd transferred to the Wichita Falls Office in 1996 where he remains stationed to this date. Todd served three years in the United States Navy. Upon discharge from the Navy, Agent Carroll obtained his peace officers license and began working at the Vernon Police Department. While working at the Vernon Police Department, he was promoted

to sergeant. Todd received the Texans Caring for Texans award in 2009. He has volunteered his time to the Boys and Girls Club in Burkburnett, coaching several sports. Todd has been married to his wife Dormey Carroll for 25 years. They have three children Ashley, Colten, and Dalten. They also enjoy three grandchildren Abby, Brayzley, and Jaxon.

Marvin Montero, Jr.-20 Years Lieutenant Marvin Montero began his career with TABC in July 1994, as an Agent Trainee in the Dallas Office before transferring to the Ft. Worth Office. He finally made his way back to the Waco area as the Outpost Agent in the Belton Office. He was promoted to Lieutenant in July 2013. He is retired from the US Army Reserve with a combined total of 25 years (active and reserve) service. During his military career, he served our country as a non-commissioned officer

and commissioned officer before retiring as a Special Agent/Chief Warrant Officer in the US Army Criminal Investigations. During his time in the military, he was selected to serve as the Personal Security Advisor to the 15th Chairman of the Joint Chiefs of Staff and Personal

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Security Officer for Nadal Hussain. Lieutenant Montero holds a TCOLE Master Peace Officer Certification and Instructor Certification. He resides in Waco with his wife of 23 years, Christina, his son Logan and daughter Mallory.

Director Karen Smithwick presented the tenure award to the Ports of Entry Division Recipients. Mrs. Corralez and Mr. Espinoza were not present to receive their award.

Lorena Corralez - 20 Years Lorena Corralez began employment with TABC on January 17, 1995, as an Inspector I stationed at the Presidio Bridge. Lorena has served her entire career at the Presidio Port of Entry with the El Paso Ports of Entry District. Before beginning her employment with TABC, she worked for United Exports Trading Association for seven years. She is married and enjoys traveling with her husband Alejo.

Edmundo Espinoza, Jr. - 20 YearsEdmundo Espinoza Jr. started with the agency on August 8, 1994. A lifelong resident of El Paso, Texas, Edmundo started working for TABC as an Inspector I in the El Paso Port of Entry. Edmundo graduated from Western Technical Institute in 1991 with an Associate’s Degree in Refrigeration. He has two children, Joshua 19 and Maya 14.

Julian Hooper - 20 YearsJulian Hooper began employment with TABC on April 11, 1994, as a TCO I in the El Paso Port of Entry. He spent 5 months in El Paso prior to being offered a transfer to Eagle Pass where he is from originally. Two years later he was promoted to TCO II and is currently a TCO III. Julian previously worked with Alamo Lumber Company before beginning his career with TABC. He received his Associates in Applied Science in Criminal Justice from South West Texas Jr.

College in Uvalde in 1984. He is a member of the A.C.T.S. movement at St. Joseph’s Church. Julian lives in Eagle Pass with his wife Pati and their 20 year old son Julian Alexander.

Assistant Chief of Field Operations Dexter Jones presented the tenure awards to the Special Investigations Unit recipient.

Nicolas “Nick” Gutierrez III - 25 Years Sergeant Nick Gutierrez has been employed with TABC since September 1989 and has spent most of his career in San Antonio. During his time with TABC, he has been assigned to various special assignments. He worked as a Source Accident Investigator from 2002 to 2004; he was assigned as the TABC liaison to the DEA High Intensity Drug Trafficking Area unit from 2004 to 2005 and was assigned to the FBI Joint Terrorism Task Force from 2005 to 2014. He was promoted to the rank of Sergeant within the TABC Special

Investigations Unit in August 2014. Prior to TABC, he served in the United States Marine Corp as a Sergeant/Wire Officer from 1982 to 1988. He also served as a Deputy Constable in Bexar County for five years. Sergeant Gutierrez attended college at Wayland Baptist University and San Antonio College. He also holds a TCOLE Master Peace Officer Certification, has Top Secret Clearance and holds a certification from the FBI in Domestic Human Intelligence Collection.

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Assistant Chief of Field Operations Dexter Jones presented the tenure award to the Field Operations Audit Unit recipient.

Larry Karstadt - 25 YearsLarry Karstadt began his career with the agency in 1976 as an Auditor in the Houston Auditing District. He later transferred to the Bryan Audit Office. With the transfer of the gross receipts tax to the Comptroller in 1994, he ventured into the private sector founding his own company, Brazos Consulting and Licensing. His company handled TABC licensing applications and provided seller training classes. In 2007, he sold his licensing business and accepted a position with the agency in the Bryan Audit Office. Larry graduated from what

is now known as Texas State University with a Bachelor’s of Business Administration in Accounting. His family consists of his wife Kate, 28-year-old daughter Jessica, 26-year-old daughter Hannah, and 17-year-old daughter Kelly.

Director Albert Rodriguez presented the tenure award to the Training Division Recipient. Lt. Darnell was not present to receive his award.

Darryl Darnell - 25 YearsLieutenant Darryl Darnell began employment with TABC on September 1, 1989, as an Agent Trainee in the Houston District Office. He served as Agent in Houston until 1994 when he transferred to the Wharton Outpost. As an Agent, he served as the President for TABC Officer’s Association on two different occasions. In November 2009, he was promoted to the rank of Lieutenant and served as an Inspector stationed at Austin Headquarters. In 2011, Lieutenant Darnell became the Regional Liaison for Region 1 of the Field Operations

Division. He currently serves as a Training Lieutenant in the Training Division. Prior to Lieutenant Darnell’s employment with TABC, he was employed by the Houston Police Department as a Patrol Officer from April 1983 until he joined TABC. In 1995, Lieutenant Darnell received the Enforcement Division Employee of the Year Award. Lieutenant Darnell graduated from Spring Branch High School in 1982. He holds a TCOLE Master Peace Officer Certification and an Instructor Certificate. Lieutenant Darnell lives in Georgetown, Texas and has one daughter, Ashley Darnell.

Director Amy Harrison wanted to say some final words regarding the tenure awards. She stated on behalf of those honored who have worked at TABC for so many years, or have retired and returned to TABC that it speaks volumes about the leadership and demonstrates that TABC is a great place to work. Commissioner Weinberg remarked that he is impressed with the tenure of the employees recognized, and that the success of the agency is because of the continuity of its employees. Commissioner Steen added that she acknowledges the family atmosphere of the agency and the talent of the employees recognized today. Presiding Officer Cuevas also wanted to express his gratitude to the tenured employees, especially those serving in the military for their dedication and constant efforts to make TABC an outstanding agency.

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Deputy Executive Director Ed Swedberg, Director Amy Harrison, Commissioner Steven Weinberg, 2014 Tenure Recipient Yolanda Mena, Presiding Officer José Cuevas, Commissioner Ida Clement

Steen, and Executive Director Sherry Cook

Assistant Chief Dexter Jones, Deputy Executive Director Ed Swedberg, Commissioner Steven Weinberg, 2014 Tenure Recipient Larry Karstadt and his wife Kate Karstadt, Presiding Officer José

Cuevas, Commissioner Ida Clement Steen, and Executive Director Sherry Cook

Chief Robert Saenz, Deputy Executive Director Ed Swedberg, Commissioner Steven Weinberg, 2014 Tenure Recipient Lt. Marvin Montero, Presiding Officer José Cuevas,

Commissioner Ida Clement Steen, and Executive Director Sherry Cook

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Chief Robert Saenz, Deputy Executive Director Ed Swedberg, Commissioner Steven Weinberg, 2014 Tenure Recipient Lt. Tana Travis, Presiding Officer José Cuevas, Commissioner Ida Clement

Steen, and Executive Director Sherry Cook

Presiding Officer Cuevas called upon Assistant General Counsel Martin Wilson for the presentation of agenda Item 6.

At the request of Assistant General Counsel Martin Wilson, Presiding Officer Cuevas combined agenda items 6-9.

Assistant General Counsel Martin Wilson stated agenda items 6-9 are Notices for Intention to Publish the outlined rules and come from the Rule Review that is mandated by the government code. He stated the rules have been reviewed; however, still need to be posted to the Texas Register and give the public an opportunity to review and comment on the rules on whether the rules should be adopted or changed. He added if no comments are received the rules can be published with no other procedures.

Approve Publication Of Notice of Intention to Review Rule §31.2, State-Owned Motor Vehicles

Assistant General Counsel Martin Wilson explained that Rule §31.2 regards the inscription and assignment of state owned motor vehicles and was adopted in 2009.

Approve Publication of Notice of Intention to Review Rule §31.10, Filing a Complaint

Assistant General Counsel Martin Wilson stated Rule §31.10 implements Alcoholic Beverage Code 5.53 which requires the agency to have a rule that describes the complaint process, this rule was adopted in 2008.

Approve Publication of Notice of Intention to Review Rule §33.26, Manufacturer’s Agent’s Warehouse Permit Fee

Assistant General Counsel Martin Wilson explained that Rule §33.26 implements Beverage Code 55.02 which mandates a fee for Manufacturer’s Agent’s Warehousing Permits and this rule was in adopted in 2008.

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Approve Publication of Notice to Review Rule §33.32, Notification of Expired or Suspended Licenses and Permits

Assistant General Counsel Martin Wilson stated this rule requires the Commission to notify wholesalers of expired or suspended licenses or permits and provide such notification by publication on the TABC website and this rule was adopted in 1999.

Assistant General Counsel Martin Wilson requested that the rules be published for Notice of Intention.

Presiding Officer called for a motion on agenda items 6-9. Commissioner Weinberg moved to approve Publication of Notice of Intention to Review Rule §31.2, State-Owned Motor Vehicles; Publication of Notice of Intention to Review Rule §31.10, Filing a Complaint; Publication of Notice of Intention to Review Rule §33.26, Manufacturer’s Agent’s Warehouse Permit Fee; and Publication of Notice to Review Rule §33.32, Notification of Expired or Suspended Licenses and Permits. Commissioner Steen seconded the motion and the motion passes.

Presiding Officer Cuevas called upon Assistant General Counsel Martin Wilson for the presentation of agenda Item 10.

At the request of Assistant General Counsel Martin Wilson, Presiding Officer Cuevas combined agenda items 10-14.

Approve Publication of Proposed Amendment to Rule §35.3, Vehicle Identification

Assistant General Counsel Martin Wilson explained that Rule §35.3, Vehicle Identification requires Wholesalers to have their permit number on their vehicles. He added the rule was amended to clarify that Brewpub licensees, as of last session, had the ability to distribute their products to retailers and they should abide by the same rules as wholesalers. Approve Publication of Proposed Repeal of Rule §37.1, Payment for the Record on Appeal

Assistant General Counsel Martin Wilson stated that Rule §37.1 is requested to be repealed as there isn’t any cost associated with preparing a record. He added if a party requests a transcript of a hearing that goes through the normal judicial process.

Approve Publication of Proposed Repeal of Rule §41.24, Liquor Prescriptions -Physician’s Permits

Assistant General Counsel Martin Wilson explained that Rule §41.24 is no longer necessary as TABC no longer issues Physicians Permits.

Approve Publication of Proposed Repeal of Rule §41.40, Monthly Report of Medicinal Pharmacy

Assistant General Counsel Martin Wilson reviewed Rule §41.40 for repeal and stated the rule required recordkeeping for pharmacy and medicinal permits which TABC no longer issues.

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Approve Publication of Proposed Repeal of Rule §41.50, Gross Receipts Tax

Assistant General Counsel Martin Wilson reviewed Rule §41.50 and stated since the management of Gross Receipts Tax was transferred to the Comptroller’s Office this rule has no more applicability.

Assistant General Counsel Martin Wilson requested that the rules be published for Proposed Amendment and Proposal for Repeal as previously specified.

Presiding Officer called for a motion on the agenda items 10-14. Commissioner Weinberg moved to Approve Publication of Proposed Amendment to Rule §35.3, Vehicle Identification; Publication of Proposed Repeal of Rule §37.1, Payment for the Record on Appeal; Publication of Proposed Repeal of Rule §41.24, Liquor Prescriptions - Physician’s Permits; Publication of Proposed Repeal of Rule §41.40, Monthly Report of Medicinal Pharmacy; and Publication of Proposed Repeal of Rule §41.50, Gross Receipts Tax. Commissioner Steen seconded the motion and the motion passes.

Presiding Officer Cuevas called upon Assistant General Counsel Martin Wilson for the presentation of agenda Item 15.

At the request of Assistant General Counsel Martin Wilson, Presiding Officer Cuevas combined agenda items 15-16.

Approve Publication of Proposed Repeal of Current Rule §45.101, Rebates, Coupons and Premium Stamps (Item 15)

Approve Publication of Proposed New Rule §45.101, Coupons and Loyalty Programs (Item 16)

Assistant General Counsel Martin Wilson reviewed agenda Item 15, Rule §45.101 and stated that due to such extensive revisions it is requested that current rule be repealed and a new rule be proposed in its place, which is agenda Item 16. He noted that major issues arose with the existing rule during the Rule Review process. He stated it is being proposed that amended Rule §45.101 be published for comment to allow retailers to issue coupons. He added currently there is no restriction on retailers issuing coupons in the alcoholic code; however that restriction was in TABC rules but the restriction is no longer deemed necessary. He added the proposed rule would remove the reference to Premium Stamps and replace with it Loyalty Programs to allow retailers to offer loyalty programs. He stated the restriction for loyalty programs is that when redeeming a reward at an establishment with on-premise consumption, it is limited to one per day per customer and the coupon for loyalty programs has to be for one drink per day. He concluded those restrictions match up with the agency’s public safety considerations and on-premise promotion rules. He added the proposed revised rule also allows loyalty programs by manufacturers and wholesalers who are able to sell directly to consumers.

Assistant General Counsel Martin Wilson requested the Repeal of Current Rule §45.101 and Publication of Proposed New Rule §45.101.

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Presiding Officer called for a motion on the agenda items 15-16. Commissioner Weinberg moved to Approve Publication of Proposed Repeal of Current Rule §45.101, Rebates, Coupons and Premium Stamps and Publication of Proposed New Rule §45.101, Coupons and Loyalty Programs. Commissioner Steen seconded the motion and the motion passes.

Presiding Officer Cuevas called upon Assistant General Counsel Martin Wilson for the presentation of the next agenda Item 17.

Approve Publication of Proposed Amendment to Rule §45.103, On-Premises Promotions

Assistant General Counsel Martin Wilson reviewed agenda Item 17, Rule §45.103 and stated this rule was prompted by recent legislation that allows certain manufacturers to sell directly to consumers on-premises, currently distillers, small brewers and wineries are doing this and some are allowed to serve for free. He stated that the On-Premise Promotion rule is one of the primary public safety rules and currently applies to retailers. He added since other establishments are able to sell directly to consumers for on-premise consumption they too should be required to abide by this rule.

Presiding Officer called for a motion on the agenda item 17. Commissioner Weinberg moved to Approve Publication of Proposed Amendment to Rule §45.103, On-Premises Promotions. Commissioner Steen seconded the motion and the motion passes.

RECEPTION TO HONOR TABC TENURED EMPLOYEES

Presiding Officer Cuevas announced that a reception to honor TABC tenured employees will be held in the foyer. He added that Executive Session will be convened following the reception.

Presiding Officer Cuevas adjourned the meeting at 12:00 p.m. for the Reception Honoring Tenured Employees.

EXECUTIVE SESSION TO CONSULT WITH LEGAL COUNSEL REGARDING PENDING AND ANTICIPATED LITIGATION AGAINST THE AGENCY AND TO DELIBERATE ON THE APPOINTMENT, EMPLOYMENT, EVALUATION, AND DUTIES OF THE POSITIONS OF EXECUTIVE DIRECTOR AND GENERAL COUNSEL (GOVT. CODE §551.071, §551.074)

Presiding Officer Cuevas announced that the regular open session of the Texas Alcoholic Beverage Commission will be recessed at this time 12:29 p.m., January 27, 2015 and an Executive session will be held to consult with legal counsel regarding pending and anticipated litigation against the agency and to deliberate on the appointment, employment, evaluation, and duties of the positions of executive director and general counsel (Govt. Code §551.071, §551.074).

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Presiding Officer Cuevas announced that the Texas Alcoholic Commission has concluded its Executive session and is now in open regular session. The date is January 27, 2015 and the time is 1:17 p.m. No final action, decision or vote was made in executive session.

PUBLIC COMMENTS

Presiding Officer Cuevas opened the floor for additional comments before the Commission. No one came forward to address the Commission.

NEXT MEETING DATE: Tuesday, March 24, 2015

ADJOURN

Presiding Officer José Cuevas called for a motion to adjourn. Commissioner Weinberg made a motion to adjourn. Commissioner Steen seconded the motion. The motion was made and seconded. The motion passes. Presiding Officer José Cuevas announced that the meeting was adjourned at 1:18 p.m.

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Attachment 1

Commission Report: Executive Director and Agency Activities,

Budget Issues, Staff Achievements, Legislative Activities

           

 

 

                

                              

                        

                              

 

7/14/2017

Commission Meeting January 27, 2015 Executive Report Sherry Cook

84th Legislative Session

Session Begins

– Deadline for filing bills and joint resolutions other than localbills, emergency appropriations, and bills that have beendeclared an emergency by the governor

• Tuesday, January 13, 2015 (1st day) – 84th Legislature convenes at noon

• Friday, March 13, 2015 (60th day)

• Monday, June 1, 2015 (140th day) – Last day of 84th Regular Session; corrections only in house and

senate

Session Ends

1

  

 

      

     

          

                                                 

     

                                    

     

              

         

        

                

     

                                            

 

7/14/2017

Legislative Appropriations Request FY2016‐17

Biennial FY 2016 FY 2017 Total

General Revenue Base $47,169,916 $46,708,245 $93,878,161

Technical Adjustment ‐ Hardware/Software Acquisitions $221,274 $263,161 $484,435

I. Career Ladder / Retention Plan $1,749,561 $1,753,671 $3,503,232

II. Economic Development Programs 4 Field Licensing Processors ‐ LBB Right Size $160,510 $151,134 $311,644 5 Field Auditors ‐ LBB Right Size 226,633 243,699 470,332 3 Field Auditors ‐ Additional for MIU 135,980 146,219 282,199 4 POE ‐ Tax Compliance Officers ‐ LBB Right Size 133,373 133,373 266,746 1 Label Approval 41,896 39,552 81,448

Total, Exceptional Item #2 $698,392 $713,977 $1,412,369

III. Public Safety Programs 4 Field Enforcement Agents ‐ LBB Right Size $412,024 $260,924 $672,948 2 Field Enforcement Agents ‐ Additional for Enforcement 206,012 130,462 336,474 Radios (183 Mobile APX Radios) 470,382 1,018,750 1,489,132 Vehicles (20 @ $24,000) 240,000 240,000 480,000

Total, Exceptional Item #3 $1,328,418 $1,650,136 $2,978,554

IV. Organized Criminal Activity Program 6 Field Special Investigation Agents $708,234 $476,384 $1,184,618

V. Information Technology Improvements 1 Security Specialist $73,254 $71,504 $144,758 Security 242,000 247,000 489,000 Excise Tax Automation 480,000 105,000 585,000

Total, Exceptional Item #5 $795,254 $423,504 $1,218,758

VI. Centralized Accounting and Payroll/Personnel System (CAPPS) (1 FTE) $105,967 $132,277 $238,244

Total, TABC Exceptional Items $5,385,826 $5,149,949 $10,535,775

Total, TABC General Revenue Request FY 16‐17 $52,777,016 $52,121,355 $104,898,371 Total, TABC Indirect Costs FY 16‐17 $14,315,097 $14,635,163 $28,950,260 Total, TABC Cost FY 16‐17 $67,092,113 $66,756,518 $133,848,631 Total, TABC Estimated Revenue FY 16‐17 $76,301,921 $61,681,767 $137,983,688 Total, Estimated Reserve ‐ FY 16‐17 $9,209,808 ‐$5,074,751 $4,135,057

Rider Changes

2

 

                                                          

                                                                      

                                                                                             

                                                          

 

7/14/2017

Rider Changes

Capital Budget Expenditures from Grant Awards. To maximize the use of grant funding and to fulfill grant requirements for the receipt and expenditure of grant funds, the Texas Alcoholic Beverage Commission is hereby exempt from the capital budget rider provision limitations contained in Article IX of this Act when gifts, grants, inter‐local funds and federal funds are received in excess of the amount identified in the agency's capital rider and such funds are designated by the donor, grantee, state entity or federal agency solely for the purchase of specific capital items. Amounts expended from these funding sources shall not count towards the limitations imposed by capital budget provisions elsewhere in this Act. Upon receipt of such funds, the Texas Alcoholic Beverage Commission shall notify the Legislative Budget Board and the Governor of the amount received and the items to be purchased as approved by the donor, grantee, state entity or federal agency.

Rider Changes

3

              

   

     

 

     

                       

       

       

                                        

C

7/14/2017

Revenue Collections Compared to Appropriations FY 16‐17 GAA Rider 7 requires TABC to collect revenue from fees, fines and surcharges to cover appropriations.

E

D

B

A

$0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000

$568,414,137

$137,983,688

$123,312,856

$133,848,631

GAA Rider 7

$430,430,449

Total Revenue Excise Tax, Fees, Fines, & Surcharges

Total Excise Tax Collected

LBB Recommended

With the exceptional items funded (E), TABC remains under GAA (C) mandates

leaving $4.1 M in GR.

Total Base & Except Items Request

1/22/2015 Texas Alcoholic Beverage Commission 7

4

         

            

   

           

            

7/14/2017

TRENDS

TABC Administrative Actions TABC Administrative Actions Resulting from Public Safety Offenses Resulting from Public Safety Offenses

FY 2010 ‐ FY 2014 September ‐ December 2,505

2,126 2,237

2,493 1,000 2,5392,600

2,500 800

2,400

2,300 600

2,200 400 2,100

200 2,000

1,900 0

747 783 697

613

830 859

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Methods by which Public Safety Offenses

Minor Sting 384 - 45%

Open Inspection 143 - 17% Non-Inspection

Investigative Activities 142 - 17%

Other UC 141 - 16%

Adopted from Another Agency

Exterior Surveillance

Were Discovered FY 2015: September - December

Total = 859

2 - 0% 47 - 5%

5

7/14/2017

Questions?

6

Attachment 2

Legislative Update

  

    

 

      

   

7/14/2017

TABC Update Eighty‐Fourth Legislature

Ed Swedberg Deputy Executive Director

1/27/2015

1

Legislative Update

• TABC Tracking Process • Legislation of Interest • By the Numbers • Committees

1

    

 

 

   

     

   

 

   

          

   

     

 

        

        

     

        

   

            

                     

                                     

                     

                       

   

7/14/2017

TABC Tracking Process INPUTS OUTPUTS COORDINATION/

APPROVAL

Government Relations

Tracking Spreadsheets

Business Services Dir/ADir

Weekly Core Team Meetings

Subject Matter Experts

Division Directors

ED / DED

LBB – Introduced Budget and LAR Update Guidance

Telicon – Filed Bills

LBB – Fiscal Note Request

Industry Information

Member / Staffer Inquiries and Requests

Other

Updated LAR Package and Committee Testimony

ABEST – Fiscal Note Inputs

Feedback on Proposed Legislation (Resource Only)

Code Clean‐Up Recommendations

Information on AB Code, Rules and Agency Practices

Legislation of Interest

Bill # Author Caption

HB 148 Menendez, Jose (D) Relating to the consumption of alcoholic beverages on certain premises.

HB 482 Geren, Charlie (R) Relating to allowing the holder of a brewpub license to sell ale and malt liquor to certain wholesalers.

HB 688 Gutierrez, Roland (D) Relating to the members of the Texas Alcohol and Beverage Commission.

SB 326 Estes, Craig (R) Relating to the amount of wine certain wineries may sell directly to consumers.

2

                

      

         

   

   

   

   

   

   

   

 

 

 

 

 

 

               

               

                 

                                   

                   

7/14/2017

By the Numbers • Bills Currently Tracked by TABC = 132

– High Priority = 4 – Medium Priority = 24 – Low Priority = 104

• Total Bills and JRs Filed this Session = 1218 – 900 House and 318 Senate – About a 50% Increase over 83rd Regular Session

• Since November, TABC Leadership has Formally Visited 21 Members and Staff

Committees Senate Finance Senate Business and

Commerce House

Appropriations House Licensing and

Administrative Procedures

Nelson, Jane (Chair) Eltife, Kevin (Chair) TBD TBD

Hinojosa, Juan (Vice Chair)

Creighton, Brandon (Vice Chair)

Bettencourt, Paul Ellis, Rodney

Eltife, Kevin Huffines, Don

Hancock, Kelly Schwertner, Charles

Huffman, Joan Seliger, Kel

Kolkhorst, Lois Taylor, Larry

Nichols, Robert Watson, Kirk

Schwertner, Charles Whitmire, John

Seliger, Kel

Taylor, Larry

Uresti, Carlos

Watson, Kirk

West, Royce

Whitmire, John

Committee Carryovers from 83rd Legislative Session are Shown in Red

3

Attachment 3

Approve Publication of Notice of Intention to Review Rule §31.2, State-

Owned Motor Vehicles

Agenda Item 6: Approve Publication of Notice oflntention to Review Rule §31.2, StateOwned Motor Vehicles

The Texas Alcoholic Beverage Commission files this notice of its intent to review 16 Texas

Administrative Code §31.2, State-Owned Motor Vehicles, in accordance with Texas

Government Code §2001.039. An assessment will be made by the Commission as to whether

the reasons for adopting the rule continue to exist. The review will examine whether the rule is

obsolete, whether the rule reflects current legal and policy considerations, and whether the rule

reflects current procedures of the Commission.

Comments on the review may be submitted in writing to Martin Wilson, Assistant General

Counsel, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127,

or by facsimile transmission to (512) 206-3280. They may also be submitted electronically

through the commission's public website at http://www.tabc.state.tx.us/laws/proposed_rules.asp.

Comments will be accepted for 30 days following publication in the Texas Register.

The staff of the commission will hold a public hearing to receive oral comments on the review

on Friday, February 27, 2015 at 1:30 p.m. in the commission meeting room at the commission's

headquarters, which is located at 5806 Mesa Drive in Austin, Texas.

§31.2 State-owned Motor Vehicles.

(a) Exemption from inscription requirements for state-owned vehicles. (1) This subsection implements §721.003, Transportation Code, relating to exemption

from inscription requirement for certain state-owned vehicles, which requires the commission to adopt a rule to be exempt from the inscription requirements of Chapter 721.

(2) The primary use of the state-owned vehicles for which an exemption is sought is the transportation of commission employees engaged in the prevention, detection, investigation and enforcement of criminal and regulatory violations of the Alcoholic Beverage Code.

(3) Not printing inscriptions on commission vehicles will: increase effectiveness of enforcement and compliance operations and activities; increase the safety of commission employees engaged in enforcement and compliance operations and activities; and, decrease the risk of damage to state-owned vehicles and property.

(b) Assignment of Vehicles. (1) This subsection implements §2171.1045, Government Code, relating to the

restrictions on assignment of state vehicles. (2) Vehicles are assigned to commission executive staff whose essential agency

duties and functions require them to have vehicles available on a regular or frequent basis to provide state-wide oversight, management and supervision of agency staff.

(3) Pool vehicles are maintained at headquarters to reduce the cost to the state for travel required by qualified agency staff whose essential duties and functions require regular or periodic travel by vehicle.

Page 1 of 2

http://www.tabc.state.tx.us/laws/proposed_rules.asp

( 4) Vehicles are assigned to field operation employees whose essential agency duties and functions require daily and extensive use of vehicles and the cost to the state of providing a state-owned vehicle is less than the cost of reimbursing employees for the use of personal vehicles.

Page 2 of 2

Attachment 4

Approve Publication of Notice of Intention to Review Rule §31.10,

Filing a Compliant

Agenda Item 7: Approve Publication of Notice of Intention to Review Rule §31.10, Filing a Complaint

The Texas Alcoholic Beverage Commission files this notice of its intent to review 16 Texas Administrative Code §31.10, Filing a Complaint, in accordance with Texas Government Code §2001.039. An assessment will be made by the Commission as to whether the reasons for adopting the rule continue to exist. The review will examine whether the rule is obsolete, whether the rule reflects current legal and policy considerations, and whether the rule reflects current procedures of the Commission.

Comments on the review may be submitted in writing to Martin Wilson, Assistant General Counsel, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127, or by facsimile transmission to (512) 206-3280. They may also be submitted electronically through the commission's public website at http://www.tabc.state.tx.us/laws/proposed_rules.asp. Comments will be accepted for 30 days following publication in the Texas Register.

The staff of the commission will hold a public hearing to receive oral comments on the review on Friday, February 27, 2015 at 1 :30 p.m. in the commission meeting room at the commission's headquarters, which is located at 5806 Mesa Drive in Austin, Texas.

§31.10 Filing a Complaint.

(a) This