LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION

April 8, 2011

TO:	Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM:	John S O'Brien, Director, Legislative Budget Board
IN RE:	SB349 by Eltife (Relating to the hotel occupancy tax rate in certain municipalities.), As Engrossed

Estimated Two-year Net Impact to General Revenue Related Funds for SB349, As Engrossed: an impact of $0 through the biennium ending August 31, 2013.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2012	$0
2013	$0
2014	$0
2015	$0
2016	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue Gain/(Loss) from City of Longview	Probable Revenue Gain/(Loss) from City of Tyler
2012	$370,000	$470,000
2013	$424,000	$539,000
2014	$445,000	$566,000
2015	$467,000	$594,000
2016	$490,000	$624,000

Fiscal Analysis

The bill would amend Chapter 351 of the Tax Code, regarding municipal hotel occupancy taxes.

The bill would set the maximum allowable municipal hotel occupancy tax rate at 9 percent of the price
paid for a room for a municipality with a population greater than 95,000 located in a county with a
population greater than 200,000 that borders Lake Palestine.

The bill would set the maximum allowable municipal hotel occupancy tax rate at 9 percent of the price paid for a room for a municipality with a population of at least 80,000 that is partially located in a county that borders the state of Louisiana and has a population of at least 60,000.

The bill would take effect immediately, assuming it receives the requisite two thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2011.

Methodology

According to the Comptroller of Public Accounts, the cities of Longview and Tyler would be the only eligible municipalities that would meet the criteria in the bill.
 
For the purpose of this estimate, the Comptroller gathered data on hotel receipts for Longview and Tyler subject to the state hotel occupancy tax from tax files, and multiplied the receipts by 2 percent (the difference between the current 7 percent rate the cities can levy under the Chapter's general provisions and the maximum rate should the bill become law) to determine the maximum potential gains to the cities.
 
The Comptroller reports the fiscal implications for Longview and Tyler cannot be determined as the tax rates that might be set by the cities and the timing of any changes are unknown. However, for illustrative purposes this analysis shows the fiscal impact should Longview and Tyler adopt the maximum 9 percent municipal hotel occupancy tax rate at the earliest date permissible.

Local Government Impact

The fiscal impact to local government is illustrated in the above table.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JOB, KKR, SD, AG