Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1853 by Simmons (Relating to the authority of certain municipalities to pledge certain tax revenue for the payment of obligations related to certain projects.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1853, As Introduced: an impact of $0 through the biennium ending August 31, 2019.
However, there would be a negative impact of ($650,000) through the biennium ending August 31, 2021.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018
$0
2019
$0
2020
($250,000)
2021
($400,000)
2022
($420,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
2018
$0
2019
$0
2020
($250,000)
2021
($400,000)
2022
($420,000)
Fiscal Analysis
The bill would amend Section 351.102 of the Tax Code regarding the pledge of municipal hotel tax revenue to certain bonds and entitlement of certain municipalities to state tax revenue associated with certain hotel projects.
The bill would amend Subsections (b), (c) and (d) and add new Subsection (e) to extend the application of the section to a municipality with a population of at least 95,000 that borders Lake Lewisville. Such a municipality would be authorized to use funds received under this chapter for a multipurpose conference and events center.
This 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 September 1, 2017.
Methodology
The City of Lewisville currently has plans for a 150 room hotel expected to be operational in January 2020. The city 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 Sections 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 a qualified hotel project.
The bill also would authorize the City of Denton to receive rebates of state sales tax and state hotel tax associated with a convention center hotel. The City of Denton currently has no plans for such a project.
This estimate is based on the planned room size of the prospective hotel, an assumed average nightly room rate and annual average occupancy rate, an incremental gain in room nights sold in the state, and the ratio of state sales tax to hotel tax revenues paid to the owners of the extant qualified hotel projects.
In fiscal 2016, a total of $12,135,272 in state tax revenue was allocated for qualified hotel projects in the cities of Dallas, Fort Worth and San Antonio.
Local Government Impact
The bill also would authorize the City of Denton and the city of Lewisville to receive rebates of state sales tax and state hotel tax associated with a convention center hotel.