Honorable Dan Patrick, Lieutenant Governor, Senate
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB529 by Sparks (Relating to the entitlement of certain municipalities to receive tax revenue from certain establishments located near a hotel and convention center project.), As Passed 2nd House
Estimated Two-year Net Impact to General Revenue Related Funds for SB529, As Passed 2nd House: an impact of $0 through the biennium ending August 31, 2027.
However, there would be an impact of ($1,232,000) in the biennium ending August 31, 2029.
Similar fiscal impacts would continue for 10 years after the date of entitlement.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
$0
2027
$0
2028
($342,000)
2029
($890,000)
2030
($926,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
2026
$0
2027
$0
2028
($342,000)
2029
($890,000)
2030
($926,000)
Fiscal Analysis
The bill would amend Section 351.155 of the Tax Code to add (c-1), allowing a municipality described by Section 351.152(12) that has a population of 130,000 or more to pledge or commit revenue under the section for two qualified projects.
The bill would amend Section 351.157 to add Subsection (b-1) to make Section 351.157 apply to a municipality described by Section 351.155 (12).
Methodology
Midland would be entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax. Midland would be entitled to receive the revenue derived from the state sales and use taxes, and local mixed beverage taxes generated, paid, and collected from a qualified establishment. Midland would be entitled to receive the revenue until the tenth anniversary of the date the qualified hotel to which the entitlement relates is open for initial occupancy. The bill would allow the city of Midland to develop more than one qualified project.
The city of Midland has plans for two qualified hotels, but due to Section 351.157(e), which requires a municipality to commence a project before September 1, 2027, to receive additional entitlements from restaurants, bars, retail establishments, swimming pools and swimming facilities as provided under Section 351.157, the city could only avail itself of the tax rebates under section 351.157 for one of their projects should eligibility be acquired through this legislation. The estimate is based on a projected opening date of August 31, 2027, for one project, September 1, 2028, for the other, a comparison and review of revenues paid to the owners of extant qualified hotel projects, and estimated attributes of such prospective hotel.
Local Government Impact
The bill's provisions would affect the city of Midland.