LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 8, 1999 TO: Honorable Frank Madla, Chair, Senate Committee on Intergovernmental Relations FROM: John Keel, Director, Legislative Budget Board IN RE: HB 1655 by Luna, Vilma (Relating to the rate and allocation of the hotel occupancy tax in certain municipalities.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1655, As Engrossed: positive impact of $0 through the biennium * * ending August 31, 2001. * * * * No fiscal implication to the State is anticipated. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $0 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 0 * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) from * * Municipality of Corpus Christi * * 2000 $1,648,000 * * 2001 1,735,000 * * 2002 1,848,000 * * 2003 1,957,000 * * 2004 2,082,000 * ***************************************************** Fiscal Analysis The bill would amend Chapter 351 of the Tax Code to allow a municipality with a population of more than 250,000 and a border on the Gulf of Mexico to impose a hotel tax not to exceed 9 percent. Incremental tax revenues attributable to a rate greater than 7 percent would be used to develop a municipally-owned convention center. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect 90 days after adjournment. Methodology Based on the location and population restrictions, this bill only would apply to the municipality of Corpus Christi. The hotel tax rate in the City of Corpus Christi currently is 7 percent. Data on hotel tax collections for the City of Corpus Christi were gathered from the Texas Department of Economic Development. Collections were adjusted to reflect the potential maximum increase in the tax rate. The difference between collections at the current rate of 7 percent and the proposed rate cap of 9 percent would represent the potential maximum revenue gain to the City of Corpus Christi. Local Government Impact The impact on the municipality of Corpus Christi was estimated proportionately. Source Agencies: 304 Comptroller of Public Accounts, 480 Department of Economic Development LBB Staff: JK, TL, BB, WP