84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the allocation of state hotel occupancy tax revenue to certain barrier island coastal municipalities.
A fiscal note dated April 21, 2015 anticipates a negative two-year net impact to General Revenue Related Funds of $7,872,000 from CSHB 1915 through the biennium ending August 31, 2017.
House Bill 1915 would amend Section 153.2512 of the Tax Code regarding the allocation of revenue from the state hotel occupancy tax to certain municipalities.
The bill would change the meaning of an eligible barrier island coastal municipality to add that the boundaries of the municipality include an institution of higher education that is part of the Texas Coastal Ocean Observation Network (Texas A&M Corpus Christi).
House Bill 1915 would also change the way the money received under this section could be used, by adding that it could be used to clean and maintain bay shores owned by the municipality or leased by the municipality from the state.
House Bill 1915 would provide that all eligible barrier island coastal municipalities receive two percent from the state hotel occupancy tax received from hotels located in an eligible barrier island coastal municipality (as opposed to some of these municipalities one percent, and others two, currently).
The bill would make the section not apply to revenue derived from the collection of taxes paid by persons for the use or possession of or for the right to the use or possession of a room or space at a qualified hotel project.
Note: This bill has many similarities with HB 3052, which concerns Quintana and the Village of Surfside Beach.
Vote Recommendation Notes
No amendments have been introduced on the House floor and no changes have been made to the bill in Senate committee. We continue to remain neutral.
The second chamber sponsor is Senator Juan "Chuy" Hinojosa.
House Bill 1915 would enable Corpus Christi to qualify as an eligible barrier island coastal municipality to receive a portion of revenues from the state hotel occupancy tax collected in hotels located on barrier islands in such municipalities, as well as enable Port Aransas to receive two percent, instead of one percent currently.
Under current law, different eligible municipalities receive either one or two percent. House Bill 1915 would change current law to provide that all eligible municipalities receive the same rate of two percent.
Because House Bill 1915 aims at applying the law equally, and does not appear to favor certain municipalities above others with the same issue, we will remain neutral on this bill.
Nevertheless, the use of the hotel occupancy tax to fund the maintenance of beaches and bay shores, as well as to fight erosion in these municipalities, because they rely heavily on tourism, is questionable. What it concretely does is impose that any person who stays at a hotel in these municipalities, regardless of the reason, pays to fight erosion of and maintain the beaches in this municipality regardless of whether they take advantage of the beaches or not. Fighting erosion of and maintaining beaches and bay shores could be done instead by asking a voluntary fee of those that come for and use beaches. Repealing the hotel occupancy tax would also have the benefit of encouraging individuals to stay longer in hotels and to spend more of their money -- that would have otherwise been paid in taxes -- within the local economy. Such a situation would benefit tourists, municipalities and their communities, and would also favor a limited government and the free market system.