Austin, Texas
March 20, 2017

Honorable Craig Estes, Chair, Senate Committee on Natural Resources & Economic Development
Ursula Parks, Director, Legislative Budget Board
SB797 by Perry (Relating to the authority of certain municipalities to pledge certain tax revenue for the payment of obligations related to hotel projects.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB797, As Introduced: an impact of $0 through the biennium ending August 31, 2019.

However, there would be a negative impact of ($1,100,000) through the biennium ending August 31, 2021.

Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018 $0
2019 $0
2020 ($430,000)
2021 ($670,000)
2022 ($700,000)

Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
2018 $0
2019 $0
2020 ($430,000)
2021 ($670,000)
2022 ($700,000)

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 200,000 but not more than 300,000 that contains a component institution of the Texas Tech University System.
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.


The City of Lubbock currently has plans for a 300 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.
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 City of Lubbock would be entitled to the state tax revenue associated with a qualified hotel project in the city.

Source Agencies:
304 Comptroller of Public Accounts
LBB Staff: