2023 Texas Legislative Session- Our Issues
Local hotel occupancy tax legislation THLA intends to pursue in 2023.
THLA intends to offer legislation to clarify various ambiguous language in Chapters 351 and 352 of the Tax Code.
Full funding for State tourism promotion.
Every legislative session, THLA advocates securing full state funding for tourism promotion from the 1/12th dedicated portion of the state hotel occupancy tax. This 1/12th portion now represents over $60 million in state tourism funding annually and is allocated through the State appropriation bill (HB 1 / SB 1).
In 2021, THLA again worked with our industry partners to ensure the state tourism promotional program was fully funded. The State Budget passed with a full appropriation of $69.5 million for the biennium ($33.9 million for 2022, $35.6 million for 2023).
With the inclusion of a rider that allows access to prior unexpended balances, there is a total of about $140 million that is available over the next two years for the promotion of Texas as a tourism destination. This full appropriation, which represents about a $10 million increase over the prior biennium, was achieved despite a significant drop in hotel tax collections in 2020 and 2021.
Statewide short-term rental (STR) preemption.
In 2019, for the third consecutive session, THLA opposed broad-based short-term rental preemption. In 2019, the filed bill would have prohibited cities from imposing any location or density requirements against short-term rental properties.
If this bill had passed in the form supported by the proponents, it would have created a completely unlevel playing field for lodging operators: providing short-term rental operators with unlimited power to locate short-term rental properties in residential areas while traditional lodging operators have no such power to locate in the same areas.
During the bill’s consideration process, THLA worked with the bill sponsor to come up with a compromise version of the bill that the lodging industry could have supported. Unfortunately, this version was opposed by some of the bill’s proponents who were not willing to compromise on the bill’s provisions.
In late 2019, a Texas Court of Appeals ruled on the City of Austin’s ban on non-owner occupied STRs (known as “Type 2 STRs”) in a decision titled, Zaatari v. City of Austin. In the Zaatari decision, the Court essentially found the City of Austin’s ban on Type 2 STRs was unconstitutionally retroactive because the City’s ordinance takes away a “fundamental and settled property right” to rent the real estate in a short-term manner. This decision has not been appealed to the Texas Supreme Court, but most legal experts agree that the City’s argument would not likely be received favorably by that conservative court.
In 2021, the STR issue did not surface in that legislative session.
We anticipate STR proponents will support a bill in 2023 that would provide for a statewide preemption of local governments from regulating the location of short-term rental properties.
THLA will work with the major hotel brands and the STR industry’s proponents on potential compromise language that will retain the powers of cities to provide reasonable zoning regulation as to the location, number, and density of STRs, in addition to the power to permit.
Bills filed by other entities and supported by THLA.
THLA provides technical and lobbying support for allied and affiliate entities seeking legislation that will positively affect our industry every legislative session. Although it is still early in the planning process for the 2023 session, THLA is already aware of the following items we will be supporting.
- Support efforts to pass a resolution to amend the Texas Constitution to allow casino gambling.
- Support legislative authority for The Woodlands Township (a special district rather than a municipality) to establish a TPID.
- Expand the Texas Comptroller’s hotel tax tracking program to require all counties to report how they use hotel tax revenue, and also expand the reporting by both cities and counties to include every category of hotel tax use and provide a monetary incentive for such reporting.
- Support the ASSET bill that will create uniformity in employment conditions such as benefits, scheduling, paid leave, etc.
- Support using state revenues to buy down local school district property taxes.
- Support the expansion of the Major Events Trust Fund (MERP) and the Events Trust Fund (ERP) for new, well-qualified events.
- Support the expansion of the Qualified Hotel Project (QHP) state entitlement program to provide economic incentives for certain hotel development.
- Support extension of the QHP time period for rebates for pandemic-impacted QHP participants.
- Potentially support additional local hotel tax legislation if supported locally and if the legislation contains necessary limits to protect CVB funding and protections on use.
- Support Texas Motion Picture Alliance’s objectives to get more funding for film production in Texas.
- Support Texans for the Arts (TFA) objectives to get more funding for Texas artists.
Oppose repeal of the 30-day hotel tax exemption.
Every legislative session, THLA fights proposals to eliminate the exemption for “permanent residents” also known as the 30-day exemption. This exemption makes guests who stay over 30 consecutive days completely exempt from state and local hotel tax.
Smaller cities, counties, and local chambers have partnered to seek a repeal of this exemption in order to increase local hotel tax revenues. They argue that the exemption was not intended to help big corporate entities such as oil companies, railroads, and airlines from paying the hotel tax for rooms that they keep long-term for changing guests during that 30-day period.
THLA argues that the exemption for 30 days has been in existence as long as the hotel tax and there is nothing to suggest that state law did suggest that corporate entities could not use the exemption. THLA also argues that repealing the exemption is tantamount to a tax increase, and we have joined with oil, railroad, and airline lobbyists to make this argument at the legislature.
Oppose proposals to use local hotel tax for non-tourism purposes.
Every legislative session there are proposals by individual local governments to use local hotel tax for general government purposes that have little to nothing to do with tourism promotion. These bills have included provisions that would allow local hotel tax to be used for street repairs, daycare, economic development, job training, education, etc. THLA opposes all such measures.
Where there is an agreed-to local hotel tax bill that is proposed by the local DMOs and area hoteliers for special use of hotel tax, THLA seeks to secure a legislative provision that protects the funding for marketing of the area by the destination marketing organization and includes some type of return-on-investment requirement for the proposed hotel tax use category, a limit on the percentage of funds that can be used for that purpose, and a documentation requirement related to the actual ROI.
Texas is the only state in the country that has CVB funding protections and ROI requirements on new uses of the local hotel tax.
Support retention of Tourism PID authority.
A Tourism Public Improvement District (TPID) allows area hotels to petition a city for the power to create a tourism district to generate supplemental funding for marketing and sales efforts. The first Tourism Public Improvement District in Texas was established in Dallas and was so successful that it resulted in a subsequent THLA bill that allowed four additional Texas cities to create a tourism PID (Arlington, Fort Worth, San Antonio, and Austin).
Prior to the 2019 legislation session, a number of other Texas cities approached THLA about obtaining similar legislative authority. Accordingly, bills were filed for six individual cities to allow the creation of a TPID in their city: Amarillo, Denton, Frisco, Irving, Waco, and Nacogdoches. THLA also supported HB 1136 which will allow all Texas cities to petition their city council for the creation of a TPID.
In 2019, all of the proposed TPID bills passed the Legislature, ultimately authorizing all Texas cities to consider the creation of a TPID if it is supported by at least 60% of affected hotel owners. Retention of this legislative authority is vital for the future success of the lodging industry.
Oppose bills that include unreasonable facility requirements for hotels and oppose bills that include unreasonable personnel requirements for hotels.
Every session there are proposals that apply to commercial facilities that would be burdensome and costly to implement without sufficient counter benefits. THLA weighs each such proposal and opposes any measures that are unreasonable and a net negative.
Every session there are proposals that apply to the staffing of hotels and other businesses that would be burdensome and costly to implement without sufficient counter benefits. THLA weighs each such proposal and opposes any measures that are unreasonable and a net negative.
Legislation to monitor and report on.
- Social issue bills.
- Employment, workers comp, benefit mandates, unemployment insurance, etc.
- Business regulatory issues.
- Franchise tax bills.
- Property tax appraisal and rate bills.
- Economic development bills.
- Alcoholic beverage law changes.
- Hurricane/disaster bills.
- Guest safety and firearms bills.
- Insurance issues.
- Homelessness legislation.
- Bills affecting litigation against hotels.
History of THLA State Advocacy Program
Over the past two decades, THLA has expanded its legislative program from being primarily defensive to being a strong and proactive agenda of legislation that our trade association initiates. THLA offers and seeks passage typically on a package of two to five positive bills impacting the lodging industry every legislative session.
With a 100 % passage rate over the last 23 years, this proactive legislation has resulted in THLA passing the following state initiatives:
- Record Levels of State Tourism Funding to promote Texas for tourism and hotel activity
- Over 30 percent increase to the State Per Diem Rates
- A Cap on total Hotel Tax Rates by cities & counties
- A Cap on Hotel Tax Audits: A Cap on the # of Years back Cities Can Audit hotel taxes. The cap matches the existing 4-year cap that the State can go back in a state tax audit.
- 51 % Reduction in the Mixed Beverage Tax absorbed by Hotels, saving hotels millions of dollars annually in operating costs for serving mixed beverages
- 25 % Reductions in the state franchise tax.
- Authority for Tourism Public Improvement Districts to be created in all Texas cities
- Substantial State Funding for Beach Restoration/Preservation (a rebate of 1/3 of the state hotel tax to coastal cities: South Padre, Galveston, Port A., and Corpus Christi).
- New Uses for Local Hotel Tax with ROI requirements and protection of a percentage of HOT funds to the DMO for marketing hotel activity.
- Passed amendments to state law to prevent pandemic relief from being subject to the state franchise tax.
- Passed pandemic tort claims immunity to stop pandemic-related lawsuits.
THLA has also killed: 100 % of the bills that the lodging industry has opposed. Examples include:
- Every state hotel tax increase that was opposed by the industry
- Detrimental Surcharges and fees against hotel nights. For example, THLA single-handedly killed a proposed $1 per night surcharge against hotel room nights. If passed, would have cost hotels $122 million in annual surcharges. Since the time that this bill was proposed, would have cost over 2.4 billion in added surcharges against the lodging industry.
- The burdensome facility, personnel & operational requirements.
- Non-tourism uses of the local hotel tax (education, pollution, daycare, city infrastructure)
- Union and Living Wage Mandate Bills
Governmental Affairs Events
THLA has also increased the number and effectiveness of our advocacy-related events. We created the Converge on the Capitol, now with over 400 participants.
THLA also created annual legislative summits, which are local events featuring Q&As with state legislators. These events rotate throughout Texas’s large cities.
Additionally, THLA works with local hotel associations to hold mayoral and city council candidate forums that focus on hotel industry issues.