Texas 88th Legislature Summary – Major Issues we are Tracking
88th Legislative Session
The 88th Session of the Texas Legislature is well underway, and THLA has been working hard to advocate for our industry’s priorities. THLA has been active on issues pertaining to short-term rentals, hotel occupancy tax, property tax and more.
The Texas Legislature meets for 140 days during odd number years. The 88th Session of the Texas Legislature convened in January and is set to adjourn on May 29th. Over 8,400 bills were filed this year, a record number for Texas lawmakers. THLA reviewed each measure that was filed and has been tracking more than 500 bills. To date, our lobby team has been instrumental in championing bills that would benefit our industry and have also successfully opposed and amended many bills which would have been a detriment to the hotel industry.
Of the 500 plus bills being tracked by THLA, the most critical relate to short-term rentals, labor and employment, hotel occupancy tax, and property tax.
Much like hotels, short-term rentals (STRs) operate as commercial lodging establishments within cities across Texas, and fairness requires that the law treat hotels and STRs in a similar manner. The Texas Legislature sometimes passes laws that limit the ability of cities to enact certain regulations, this is referred to as “preemption.”
HB 2665, filed by Representative Gary Gates (R-Rosenburg), would have drastically limited the ability of cities to regulate short-term rentals. Hotels are subject to city regulations, and the preemption of local STR ordinances under HB 2665 would have resulted in a regulatory environment which provides an unfair advantage to STRs.
Under the filed version of HB 2665, cities would have been prohibited from regulating the density of STRs or from limiting the number of occupants in STRs. THLA negotiated with the bill’s proponents and reached a comprise to amend HB 2665. The amended version of HB 2665 instead provides for the establishment of a commission to study the issue of the regulation of STRs before the next legislative session in 2025. Representative Gates was amenable to these changes, and the amended version of HB 2665 was substituted for the filed version last week during a hearing before the House Land and Resource Management Committee. The bid to preempt local regulations of STRs is tabled (for now).
Preemption language may be added as an amendment to other moving legislation, and THLA will remain vigilant and watchful until the legislature adjourns on May 29th.
In fact, STR preemption language was considered as a potential amendment to a labor preemption bill THLA is supporting. THLA’s lobby team worked hard and fast to prevent that from occurring.
Labor and Employment
In recent years, various cities across Texas have imposed costly employment regulations on businesses operating within their city limits; regulations which would dictate private hiring practices, mandate paid sick leave, or require predictive scheduling. Hotel operators with properties in multiple cities understand the burden of complying with a patchwork of regulations in each jurisdiction in which they operate.
THLA, along with our business coalition partners, worked to include language in HB 2127 by Representative Dustin Burrows (R-Lubbock) and SB 814 by Senator Brandon Creighton (R-Conroe) to address this issue. HB 2127 and SB 814 would preempt cities from enacting costly employment regulations and would provide regulatory consistency for those operating businesses in more than one city in Texas. HB 2127 has been passed by the House, despite being hotly debated and widely opposed by cities. We anticipate the Senate companion bill, SB 84, is likely to pass as well.
Hotel Occupancy Tax
Over 40 bills were filed relating to hotel occupancy tax this session. Many of them were local bills, only impacting a specific community. However, a number of the hotel occupancy tax bills that were filed attempted to allow cities to use hotel tax revenue for nontraditional uses which would not benefit the tourism and hotel industry. We worked on each bill that would expand the uses of hotel occupancy tax in this way and have been successful in amending many of those bills thus far. As we approach the end of the 88th Legislative Session we will continue to monitor each hotel occupancy tax bill to ensure that the tax remains dedicated to benefiting tourism and the hotel industry.
It’s no small secret that property tax relief has been a top-of-mind priority for the Legislature this session. Lawmakers in Austin are working with a record $33 billion budget surplus, and many have called upon the Legislature to use that surplus for property tax relief. There is little debate at the Capitol that property tax relief is needed. However, the House of Representatives and the Senate have proposed differing approaches on how to bring relief to taxpayers.
The Senate’s proposed plan includes raising the homestead exemption for most homeowners from $40,000 to $70,000. The Senate has also proposed spending $5.38 billion to help lower school property taxes, which would provide some relief to owners of commercial properties as well ($0.07 per $100 of value). On the other hand, the House has proposed spending $12 billion to lower school property taxes, and also proposed a cap on appraisals of 5% for both residential and commercial properties.
The House and the Senate are in a standoff over their differing approaches to property tax relief, and it remains to be seen which proposal will win the day.
THLA Legislative Updates
THLA is hard at work this legislative session offering bills, tracking legislation, and advocating for our industry’s priorities. You may follow our efforts on our website, and we will also continue to provide updates as these issues evolve.
Thank you for all your engagement and support during these critical times of the 88th Legislature!