Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB3794 by Parker (Relating to the definition of eligible central municipality for purposes of the municipal hotel occupancy tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3794, As Introduced: an impact of $0 through the biennium ending August 31, 2019.
However, there would be a negative impact of ($1,260,000) through the biennium ending August 31, 2021.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018
$0
2019
$0
2020
($450,000)
2021
($810,000)
2022
($850,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
2018
$0
2019
$0
2020
($450,000)
2021
($810,000)
2022
($850,000)
Fiscal Analysis
The bill would amend Chapter 351 of the Tax Code, regarding municipal hotel occupancy taxes, to expand the definition of an eligible central municipality to include a municipality (1) with a population of 5,900 or less that employs a full-time police and fire department; (2) that is located partially in one county with a population of 660,000 or more and partially in a county with a population of 1,800,000 or more; (3) that is located adjacent to a county with a population of 780,000 or more; and (4) that has adopted a capital improvement plan for the construction or expansion of a convention center facility.
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 September 1, 2017.
Methodology
The municipality that is intended to be added to the definition of eligible central municipality is the city of Roanoke. Designation as an eligible central municipality would entitle Roanoke to state sales tax and state hotel tax associated with a qualified hotel project under Section 151.429(h) of the Tax Code via Section 351.102(b)& (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 the qualified hotel project without the necessity of an appropriation.
The city of Roanoke currently has plans for a 300 room convention center hotel expected to be operational in February of 2020.
This estimate is based on the planned room size of the prospective hotel, assumed average nightly room rates 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 City of Roanoke would be entitled to state sales tax and state hotel tax associated with a qualified hotel project.