THLA is gearing up for a busy legislative session set to kick off in January, and our legislative affairs committee recently convened to set our priorities and agenda for the upcoming year.
Texas Hotel & Lodging Association is your source for information on legislative news affecting the Texas lodging industry. The Texas Legislature convenes on January 10, 2017, and the pre-filing of bills has already begun.
THLA analyzes every bill filed (last session there were over 6,000 of them) for how a given bill may affect Texas lodging operators. If a bill positively affects our industry, THLA supports it. And if the bill would have a negative impact, we work with the bill's sponsors to amend the language.
Over the past decade, 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 15 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 assessed by cities & counties.
- A limit on the number of years a city can audit a hotel for hotel occupancy taxes.
- A 51% Reduction in the mixed beverage gross receipts tax paid by Hotels, saving hotels millions of dollars annually in operating costs for serving mixed beverages.
- A 25% reduction in the state franchise tax.
- Authority to create tourism public improvement districts (TPIDs) in five Texas cities.
- Substantial state funding for beach restoration and preservation (rebate of 1/3 of the state hotel tax to coastal cities: South Padre, Galveston, Port Aransas, and Corpus Christi).
- Partnered with the Texas Travel Industry Association on a “Uniform School Start Date” law, ensuring a full summer travel.
- New uses for local hotel tax revenue with return-on-investment requirements, and protection of a percentage of hotel occupancy tax funds allocated for marketing hotel activity.
THLA successfully opposed bills that are adverse to our industry. Examples include:
- Every state hotel tax increase that was opposed by the industry.
- Detrimental surcharges and fees against hotel nights.
- Burdensome facility, personnel & operational requirements.
- Non-tourism uses of the local hotel tax (education, pollution, daycare, city infrastructure).
- Union and “living wage” mandate bills.
This legislative session, our agenda will primarily focus on the following issues:
- Opposing statewide Short-Term Rental (STR) preemption.
- State hotel occupancy tax data publication.
- Clarifying the definition of “meetings” for hotel occupancy tax purposes.
- Clarify that preexisting contract retain constitutional protections when cities implement new hotel tax rates.
- Clarify Venue Tax Definition.
- Sporting facilities eligible for hotel tax revenue funding.
- Oppose repeal of the 30 Day Hotel Tax Exemption.
- Oppose Proposals to Use Local Hotel Tax for Non-Tourism Purposes.
- Support Retention of Full State Tourism Funding.
- Support Retention of State Tourism PID Authority.
- Support Retention of Lower Mixed Beverage Tax Rate.
- Support Retention of State Event Trust Fund Authority.
- Support retention of Uniform school start date.
- Oppose Bills that Include Unreasonable Facility Requirements for Hotels.
- Oppose Bills that Include Unreasonable Personnel Requirements for Hotels.
Continuing Updates from THLA
THLA will continue to update you during the legislative session.
We will be send regular updates on the status of our legislative program, along with summaries of all the bills we are tracking. Additionally, we will roll out a new alert system, called VoterVoice, that will provide immediate alerts in real-time to you on important issues the legislature is considering.
THLA is proud to be the lodging industry’s voice at the Texas Capitol. Please contact us regarding any question or comments on our legislative program.
During the 2016 legislative session, THLA's agenda will primarily focus on the following issues:
There are over 550,000 STR transactions annually by Airbnb in Texas, and Airbnb’s growth has doubled year-over-year for the past four years. Currently, Airbnb does not take responsibility to collect state or local hotel tax in Texas.
We anticipate that Airbnb will back a bill that will likely impose a duty on short term rental websites to collect state and local hotel tax. In exchange, the bill would provide for a state wide preemption of local governments from regulating the location of short term rental properties.
Such legislation risks long term collection of hotel taxes, as an increasing number of short term rental property owners use Airbnb to secure leads for renters for major city events and then stop using the site once they build up a clientele who can book directly with them and save the commission and the taxes.
Additionally, the legislation would also likely invalidate the existing Austin short term rental ordinance that prohibits non-owner occupied short term rental properties in residential areas, and would prohibit other Texas cities from passing their own ordinances. Over half of the short term rentals in Texas occur in Austin. Texas Public Policy Foundation has also sued the City of Austin to try to invalidate the Austin Short Term Rental ordinance.
The proposed legislation would likely prohibit most other city regulations on short term rentals other than very basic nuisance and safety regulations.
There is also a parallel effort by Airbnb to negotiate with big city Mayors to make “voluntary payments” of local hotel tax in exchange for some or all of the following:
- No local regulation of the location of short term rental properties.
- No transparency in the amount or source of the STR business from individual properties: “just trust us” approach to voluntary payments.
- No local opposition to state preemption bill.
Similar state preemption legislation recently passed in Arizona and is being battled in a number of other states across the nation.
Preemption Legislation may also or in the alternative be in form of an omnibus city preemption bill that only allows very basic levels of city regulation of transportation network companies (TNC), and plastic bags restrictions.
In Texas, most information about the sales data of individual businesses is treated as confidential under state law. For example, the amount of sales tax or franchise tax that is remitted by an individual business is not subject to disclosure to the general public.
However, regarding state hotel occupancy taxes, current law does not prohibit the State of Texas from publishing individual hotels’ hotel tax data on a public website. Currently, the Texas Comptroller makes this state hotel tax information available publicly on its website.
THLA’s draft bill amends state law to prevent a state governmental entity from publicly posting individual hotels’ state hotel occupancy tax data on a public website. The general public will retain the right to receive this hotel tax information through a public information request. This limitation is consistent with the Texas State Comptroller’s treatment of sales tax information regarding virtually all other types of individual businesses and how such transactions are treated in all other states in the nation. This will protect hotel businesses from being inundated with solicitations and unwanted transactional intrusions, while preserving a means for transparency.
Under the longstanding provisions of the Tax Code, every expenditure of the local hotel tax must directly enhance and promote tourism and the convention and hotel industry. See Tax Code § 351.101(b). For example, a convention center facility funded by local hotel occupancy tax must meet this requirement. Existing law further defines the term “convention center” as, “facilities that are primarily used to host conventions and meetings.” The term “convention center” is specifically defined to include civic centers, civic center buildings, auditoriums, exhibition halls, and coliseums that are owned by the municipality or other governmental entity or that are managed in whole or part by the municipality.” See Tex. Tax Code § 351.001(2). However, there is no definition in the hotel tax chapter for the term “meetings.”
It would be beneficial for there to be clarity as to what types of gatherings would constitute “meetings” within the definition of the term “convention center” under the hotel tax law. Based on the requirement that every expenditure of hotel tax must directly promote tourism and the hotel and convention industry, this amendment adds a definition for the term “meetings” as “gatherings that directly promote tourism and the convention and hotel industry.” This provides a clear definition that is consistent with the standard applicable to all hotel tax expenditures.
Occasionally, when a city or county implements a new hotel tax or increases its existing hotel tax rate, and a question arises as to whether the new tax rate applies to a prior private contract between a hotel and a hotel customer. The Contract Clause of the U.S. Constitution generally prohibits a city or county from enforcing this new tax rate on the preexisting contract right. The Texas Comptroller already has this principle codified in agency regulation for the state hotel tax, and the sales tax chapter of the Code includes similar language exempting out prior contracts from the application of a state hotel tax or state sales tax increase.
Our proposal clarifies the application of increases in the local hotel tax to prior contracts to be consistent with the existing interpretation of U.S. Constitutional Law, and will prevent potential conflicts between private contracts and government regulations.
Under existing law, Chapter 334 of the Local Gov’t Code defines a “venue” to include a facility used for “one or more professional or amateur sports events, community events, or other sports events, including rodeos, livestock shows, agricultural expositions, promotional events, and other civic or charitable events.”
Additionally, existing law has expanded over the years to allow additional types of facilities associated with a convention center project. Current law allows the venue to include a “convention center, convention center facility as defined by Section 351.001(2) or 352.001(2), Tax Code, or related improvement such as a civic center hotel, theater, opera house, music hall, rehearsal hall, park, zoological park, museum, aquarium, or plaza located in the vicinity of a convention center or facility owned by a municipality or a county.”
Venue projects funded by the hotel occupancy tax fund venues that are likely to have a tourism and hotel activity impact due to the events offered at the facility. However, it is understood that an otherwise eligible hotel tax venue project may have incidental uses for community, and other civic or charitable events. The below change more clearly clarifies this authority.
Additionally, existing law has expanded over the years to allow additional types of facilities associated with a convention center project. For example, current law allows the venue to include a “convention center, convention center facility as defined by Section 351.001(2) or 352.001(2), Tax Code, or related improvement such as a civic center hotel, theater, opera house, music hall, rehearsal hall, park, zoological park, museum, aquarium, or plaza located in the vicinity of a convention center or facility owned by a municipality or a county.”
Our proposal clarifies that the above bolded language refers to “convention center facilities” in the vicinity of a facility owned by a municipality or county.
Under current law, certain cities may expend hotel tax revenue on certain sporting facilities used for the sports of baseball, softball, soccer, flag football, and rodeos. Many more sporting events have a positive impact on the tourism economy, and more communities could benefit from having their facility funded with hotel occupancy tax revenue.
Under current law, certain cities may expend hotel tax revenue on certain sporting facilities used for the sports of baseball, softball, soccer, flag football, and rodeos. This legislative proposal removes the restriction on the types of sporting events that make a facility eligible for hotel tax revenue funding. This proposal simply makes all sports eligible if they have the required statutory impact on tourism and hotel activity.
Every legislative session, THLA has to fight back proposals to eliminate the exemption for “permanent residents” also known as the 30 day exemption. This exemption makes guests who stay over 30 days completely exempt from state and local hotel tax.
Smaller cities, counties, sometimes seek repeal of this exemption in order to increase local 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 guests which switch out.
THLA argues that the exemption for 30 days has been in existence as long as the hotel tax and there is nothing to suggest in the law 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.
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 use of local hotel tax for street repairs, daycare, economic development, job training, education, etc. THLA opposes all such measures.
Where there is an agreed to bill with area hoteliers for a special use of hotel tax, THLA seeks to secure a legislative provision that protects the funding for marketing of the area by the CVB and often includes some types of measures on ROI for proposed hotel tax use category.
Every legislative session there is a need to protect the following sources for the over $42 million in state tourism funding annually.
Protection of this funding covers two major aspects:
Ensuring that the tourism promotion function gets all “actual” revenues from the one-twelfth dedication of state hotel tax funding. Without such a rider, tourism could not be limited to the projected appropriation amount which is often much lower.
Ensuring that the tourism promotion function gets all unexpended balances from the prior budget year.
Currently, the City of Dallas is the only Texas city that has fully implemented a local tourism public improvement district. This district has had over a $15 ROI in room nights for every $1 they have expended in incentives to attract increased convention and group hotel activity.
Last legislative session, THLA passed a bill that allowed four other cities upon petition of over 60 percent of its area hoteliers to propose a tourism public improvement district. The newly authorized areas include the City of Fort Worth, Arlington, Austin, and San Antonio. It is a top priority of THLA to retain this discretionary authority for the Texas lodging industry.
Two legislative sessions ago, THLA partnered with the Texas Restaurant Association to secure a 51 percent reduction of the state mixed beverage tax for Texas hotels. Retaining the current mixed beverage tax rate that offers these continued savings is a top priority.
The State Event Fund provides a source for matching funds for the costs of city wide events that have a substantial tourism impact (e.g.; Super Bowl, Final Four, NASCAR, etc.). The state funding comes from the uptick in state taxes that are directly attributable from these specific events.
Each session there are critics of this program that seek to reduce or repeal this authority. It is a top priority to retain the program, its current level of matching funds, and to ensure that the administration of the program is efficient for participants.
THLA leads a coalition of affected industries on the ETF issue. We anticipate continue taking a leadership position on ETF protection in 2017.
Texas public schools are required to start no earlier than the fourth Monday in August, pursuant to legislation that THLA helped to pass in 2001. Before the passage of this legislation, Texas schools were starting their school year as early as the first week of August, dramatically cutting short the full summer travel period for Texas families. There are proposals that will likely appear this session to again try to repeal the uniform school start date requirement in order to give Texas school districts complete local control in when to start the school year. With our partners such as TTIA, THLA will oppose any proposal that would negatively affect the uniform school start date and compromise a full summer travel period for Texas families.
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 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.