HB 3113

84(R) - 2015
House Ways & Means
House Ways & Means

Vote Recommendation

  • Negative
  • Neutral
  • Neutral
  • Negative
  • Neutral

Bill Caption

Relating to the authority of certain municipalities to pledge revenue from the municipal hotel occupancy tax for the payment of obligations related to hotel projects.

Fiscal Notes

A fiscal note dated April 20, 2015 anticipates a two-year net impact to General Revenue Related Funds from CSHB 3113 of $0 through the biennium ending August 31, 2017.

The fiscal note adds that the cities of Tyler and Round Rock would be entitled to state sales tax and state hotel tax associated with a qualified hotel project under Section 151.429(h) of the Tax Code via Section 351.102(b) and (c) of the Tax Code. Such funds must be deposited in a suspense account outside the state treasury to be paid to the owner of the qualified hotel project.

Bill Analysis

House Bill 3113 would amend Section 351.102(b) of the Tax Code regarding the pledge for bonds of revenues from municipal hotel occupancy taxes to add "a municipality with a population of 96,000 or more that is located in a county that borders Lake Palestine or contains the headwaters of the San Gabriel River" to the list of municipalities that can pledge revenues from the municipal occupancy tax from certain hotel projects for the payment of certain bonds or certain other obligations.

In addition to having to be located on land owned by the municipality, the hotel project from which the revenues would come could be located on land that will be owned by the municipality.

House Bill 3113 would add to the list of uses for which such bonds or obligations have been issued, by adding meeting spaces, public spaces, including open public spaces used for connectivity, plazas, and street and water and sewer infrastructure.

Vote Recommendation Notes

House Bill 3113 seeks to expand the kind of municipalities that are able to pledge revenues from municipal hotel occupancy taxes for the payment of bonds and obligations, as well as the uses for which these bonds and obligations are issued.

According to the fiscal note, the bill could benefit the cities of Tyler and Round Rock that would also benefit from sales tax and state hotel occupancy tax rebates, refunds or payments that could also be pledged for the payment of bonds and other obligations (Section 351.102(c) of the Tax Code). House Bill 3113 would hence also extend certain tax privileges to an additional category of municipalities.

While such rebates and revenue pledges already exist, this is problematic in several ways.

A tax should be low and broad-based enough that only necessary revenues are levied - and no more - and it doesn't impede private enterprise from starting new projects. In this case, taxes that have not yet been levied are pledged for the payment of bonds or obligations that are issued to pay for projects from which tax revenues are pledged... with no guaranty that the tax revenues would indeed be able to completely repay the bonds or the obligations.

Moreover, the role of a limited government is not to raise taxes to pay for projects that could be carried out by private businesses in a free market system. The statement of purpose for the bill states that it seeks to provide an "additional economic development tool to strengthen tourism." The best "tools" tourism could benefit from are to let it to private businesses to take the risk or not to invest in tourist attractions such as convention centers if demand is there, and to repeal the hotel occupancy tax. Tourists would be able to spend more of their money in hotel nights, in tourist attractions, or in the local economy, if they so wish. 

We oppose House Bill 3113.