Texas Legislature Begins 2017 Session
Last month, we brought you the preview of THLA’s 2017’s legislative agenda. Here is what has been happening underneath the Capitol dome since the start of this month.
During each legislative session, THLA monitors every bill that is filed at the Legislature to determine whether it would have an impact on the Texas lodging and tourism industry. For those that have a positive or negative impact, we work to ensure that our industry’s interests are protected and promoted. So far, there have been nearly 2,000 bills filed in the Texas House and Senate combined, and there will likely be another 4,000 bills filed by the filing deadline on March 10th. Among the most important bills affecting the lodging industry that have been filed to date are those affecting short term rentals, state tourism funding, the ability of Texas to retain and attract major convention and sporting event business, convention center hotel bills, authority to use the local hotel tax, minimum wage mandates, and property tax legislation.
Below is a brief summary on each of those topics, along with corresponding links to the filed legislation. Every month during the legislative session, this newsletter will bring you an update on the most important bills we are working on. Every week, you can visit this page on THLA’s website to see a complete list of all bills we are tracking, along with links to the Texas Capitol website where you can review the bills’ language and current status. If you would like a full analysis of a particular bill’s implications for the lodging and tourism industry, please do not hesitate to contact THLA staff for more information.
Additionally, in the March issue of this newsletter, after the bill filing deadline has passed, we will include a summary of all the bills we’re actively working and tracking. Finally, at the end of the session in June, THLA will provide its one-of-a-kind summary on all legislations that passed, didn’t pass, and how the passed bills will affect the hotel and lodging industry.
Important bills filed so far:
Retention of Full State Tourism Funding
Every legislative session there is a need to protect the over dedicated portion of the state hotel occupancy tax that is used to promote Texas as a tourism destination. This 1/12th portion of the state hotel occupancy tax represents over $42 million in state tourism funding annually that is part of the state appropriation bill. Protection of this funding covers two major aspects: 1) Ensuring that the tourism promotion function gets all “actual” revenues from the one-twelfth dedication of state hotel tax funding. And, 2) Ensuring that the tourism promotion function gets all unexpended balances from the prior budget year.
Currently, the House version of the budget retains full funding for state tourism of over $40 million annually, but the Senate version of the appropriations bill would cap that funding at $17 million and require matching funds from the lodging industry to make up the difference to get to full funding. At our Converge on the Capitol event next month, we will help send the message of how important state tourism funding is to promoting Texas as a destination, and the ROI for the State that is at risk in economic activity and related state tax revenues if this funding is mitigated or reduced.
Short Term Rentals (STRs): SB 451 & HB 2551
On January 10, Senator Kelly Hancock (R-North Richland Hills) filed SB 451, a bill that would greatly restrict a city or county’s ability to regulate short-term rentals (STRs). As filed, this bill will not allow a city or county to adopt or enforce a local law that prohibits the use of a residential property as an STR. Additionally, SB 451 would require a city or county to treat an STR in the same manner as other residential properties.
The legislation would likely invalidate the existing Austin short term rental ordinance. The Austin ordinance currently prohibits the operation of non-owner occupied short term rental properties in residentially zoned areas. SB 451 would also prohibit other Texas cities and counties from passing their own STR limitations if the local regulation would restrict the location or number of STR properties within residential areas of the city or county.
We will post further updates to SB 451 as the legislative session progresses.
March 1 update: Yesterday, Rep. Tan Parker filed HB 2551 as an identical companion bill to SB 451.
The “Privacy Protection Act”: SB 6
On January 5th, Senator Lois Kolkhorst (R-Brenham) filed SB 6, a bill titled the “Privacy Protection Act,” and more widely known as the “bathroom bill.” The convention and visitors bureaus from Texas’s five major metropolitan areas project a very large negative fiscal impact on convention and sporting event activity within Texas should this legislation pass in its current form, due to its perception as an anti-LGBT law. Experts have estimated that Texas could lose as much as $8 billion in economic activity as a result of potential boycotts of Texas by conventions, sporting events, and lost business expansion. The Texas Association of Business has come out against the legislation on behalf of the greater Texas business community, along with a coalition of the Texas convention and visitor bureaus from the major Texas cities.
Minimum wage and working conditions:
To-date, over ten bills were filed at the Texas Legislature to 1) mandate an increase in the minimum wage statewide, or 2) alternatively to authorize Texas cities and counties to further increase the minimum wage at their own discretion. In addition some of these proposals would either give local governments the ability to eliminate the tip credit, or do away with the tip credit statewide.
Undoubtedly, you’ve seen your colleagues in cities outside of Texas face wage and hour battles of their own. Cities in California and Washington raised their minimum wage to at least $15/hour, and other cities around the nation have recently increased their own minimum wage or are preparing to do so. In Texas, we helped pass an important statewide bill over a decade ago that preempts a local government such as a city or a county from enacting a higher minimum wage or eliminating the tip credit. Texas Hotel & Lodging Association remains committed to the principle of deferring to the federal minimum wage requirements and not having local wages become a political issue for every Texas city and county. We will continue to work with our industry partners such as the Texas Restaurant Association, the Texas Retailers Association, the Texas Travel Industry Association, the Texas Association of Business and others on a broad-based coalition to oppose repeal of this important preemption law.
Property Tax Reform
Property taxes are always a vital concern for THLA at the legislature. THLA monitors all property tax related bills closely to ensure that the bills do not result in an increase in the property tax liability of Texas commercial businesses and that the process for valuation and assessment of property taxes are enhanced to ensure a fair and reasonable approach to determination of property valuations. For a list of the bills filed to date access this link: A number of bills have been filed this session and we will continue to monitor their effect.
Franchise Tax Reform
The franchise tax is Texas's version of a corporate income tax. In 2015, THLA advocated for a reduction in the one percent franchise tax rate to .75 percent (a 25% reduction in the franchise tax rate). This session, there have already been many bills filed that further reduce the rate, allow businesses to deduct a higher amount of their revenues from taxation, or outright elimination of the franchise tax. With a more pessimistic outlook of total state revenues over the next two years, the outcome of further franchise tax reductions seems difficult for this session. However, THLA will continue to advocate for lower franchise tax rates for Texas hotels.