Honorable Troy Fraser, Chair, Senate Committee on Natural Resources & Economic Development
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1915 by Herrero (Relating to the allocation of state hotel occupancy tax revenue to certain barrier island coastal municipalities.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HB1915, As Engrossed: a negative impact of ($7,872,000) through the biennium ending August 31, 2017.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
($3,467,000)
2017
($4,405,000)
2018
($4,644,000)
2019
($4,890,000)
2020
($5,149,000)
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from City of Port Aransas
Probable Revenue Gain/(Loss) from City of Corpus Christi
2016
($3,467,000)
$593,000
$2,874,000
2017
($4,405,000)
$753,000
$3,652,000
2018
($4,644,000)
$794,000
$3,850,000
2019
($4,890,000)
$836,000
$4,054,000
2020
($5,149,000)
$880,000
$4,269,000
Fiscal Analysis
The bill would amend Section 156.2512 of the Tax Code, regarding the allocation of state hotel occupancy revenue to certain barrier island coastal municipalities. The bill would increase the rate of the state hotel occupancy tax that eligible barrier island municipalities receive from one percent to two percent for all such municipalities, excluding revenue derived from the collection of taxes from a qualified hotel project.
Additionally, the definition of an eligible barrier island coastal municipality would be amended to include a municipality the boundaries of which include an institution of higher education that is part of the Texas Coastal Ocean Observation Network under Section 33.065 of the Natural Resources Code. That provision would add the city of Corpus Christi as an eligible barrier island municipality, joining Port Aransas and South Padre Island.
The bill would take effect October 1, 2015.
Methodology
The bill's provisions would add Corpus Christi as an eligible barrier island municipality, and state tax revenue from all hotels located in Corpus Christi would be subject to allocation to the city based on a tax rate of two percent. The bill's provisions also would increase the current allocation to Port Aransas to be based on a tax rate of two percent rather than one percent. Data on taxable hotel receipts was multiplied by the applicable tax rate, or in the case of Port Aransas the increment to the applicable tax rate, that would be the basis of allocation of state tax revenue to each city to estimate the loss to the General Revenue Fund and the gains to the cities. The fiscal impact was then adjusted for the bill's effective date of October 1, 2015, and extrapolated through 2020.
Local Government Impact
The fiscal impact to local government is illustrated in the above table.