LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 19, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2501 by Marchant (Relating to the exception from the hotel occupancy tax for a permanent resident.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2501, As Introduced: positive impact of $6,091,249 through the * * biennium ending August 31, 2003, if the effective date of the bill * * is July 1, 2001; and a positive impact of $5,465,166 through the * * biennium ending August 31, 2003, if the effective date of the bill * * is September 1, 2001. * ************************************************************************** The following table assumes an effective date of July 1, 2001: All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Revenue Revenue * * Gain/(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss) * * from General from Hotel from Cities from Counties * * Revenue Fund Occupancy Tax * * 0001 Deposits * * Account * * 5003 * * 2001 $418,916 $38,084 $539,000 $37,000 * * 2002 2,722,500 247,500 3,505,000 238,000 * * 2003 2,949,833 268,167 3,797,000 257,000 * * 2004 3,195,500 290,500 4,113,000 279,000 * * 2005 3,461,333 314,667 4,456,000 302,000 * * 2006 3,750,083 340,917 4,827,000 327,000 * *************************************************************************** The following table assumes an effective date of September 1, 2001: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Revenue Revenue * * Gain/(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss) * * from General from Hotel from Cities from Counties * * Revenue Fund Occupancy Tax * * 0001 Deposits * * Account * * 5003 * * 2002 $2,515,333 $228,667 $3,238,000 $220,000 * * 2003 2,949,833 268,167 3,797,000 257,000 * * 2004 3,195,500 290,500 4,113,000 279,000 * * 2005 3,461,333 314,667 4,456,000 302,000 * * 2006 3,750,083 340,917 4,827,000 327,000 * *************************************************************************** Fiscal Analysis The bill would amend Chapter 156 of the Tax Code to clarify that an individual, not a person, with the right to use or possess a hotel room for at least 30 consecutive days with no interruption of payment, would not be required to pay the hotel occupancy tax. A person other than an individual could not claim exemption from the tax. The bill would take effect on the first day of the calendar month following enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2001. Methodology Under current law, a person with the right to use or possess a hotel room for at least 30 consecutive days with no interruption of payment is not required to pay the hotel occupancy tax. The term "person" may include individuals as well as businesses. Therefore, a business renting blocks of hotel rooms for use by its employees for more than 30 consecutive days is not required to pay the hotel occupancy tax under current law. Examples of such businesses include, but are not limited to, airlines, trucking companies, and railroads. Data were collected from Comptroller tax files on gross and taxable hotel receipts to estimate the value of exemptions from the hotel tax. Data were collected from public and private sources to estimate the number of units rented by businesses for more than 30 consecutive days. The current state hotel occupancy tax rate was applied to the average unit cost to estimate the potential gain to the General Revenue Fund 0001 and the Department of Economic Development Account 5003. Local fiscal implications were estimated proportionally. This analysis assumes a "person other than an individual" refers to an entity other than a natural person. Local Government Impact Local units of government would have a corresponding fiscal impact, as indicated in the tables above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD