By: Nilesh Patel, Brian Sullivan & Justin Bragiel
We are now more than halfway into the 2021 Texas Legislative Session, committee hearings are in full swing and the action is heating up.
March 12 marked the 60th day of the 2021 Session, the deadline for most bills to be filed. THLA attorneys are actively negotiating legislation, testifying in committees, and visiting with lawmakers so that our industry’s voice is heard.
Here is a summary of some of the major issues we have been working on these past eleven weeks:
Maintain Funding for Tourism Promotion in the State Budget
Every legislative session, the hotel and travel industries advocate to protect the 1/12th dedicated portion of the state hotel occupancy tax that is used to promote Texas as a travel destination as part of the state appropriations bill.
Historically, this 1/12th dedication of state hotel occupancy tax revenue has remained dedicated to promoting tourism under state law and could not be spent for any other purpose. The resulting investments made in promoting Texas as a tourism destination have led to a more than 8-to-1 return on investment (ROI) for the State of Texas.
Texas needs tourism activity. According to data maintained by the Office of the Governor, tourism spending in Texas is over $74 billion annually. Tourism directly supports over 677,000 Texas jobs. This number nearly doubles if indirect employment is included.
As Texas continues to rebuild after the COVID-19 pandemic and recent winter storms, it is more important than ever to continue promoting Texas as a tourism and travel destination.
Currently, the state budget bill allocates the full 1/12th dedicated portion of the state hotel tax in the state budget for tourism promotion. We are asking members of the Legislature to keep this full funding in place as the budget bill moves towards passage in both the House and Senate.
Preserving the Dedicated Nature of Local Hotel Occupancy Taxes
State law has always required that local hotel occupancy taxes be dedicated revenues that directly enhance and promote tourism and the convention and hotel industry. This standard has benefited Texas communities by generating significant economic activity from travel, tourism, and hotel stays. Legislative proposals to use local hotel tax revenue for general city purposes harms our communities’ ability to generate more economic activity from tourism and hotel activity.
Hotels currently fund important local government activities through property tax exactions, sales tax revenues, and alcoholic beverage tax revenues—all of which are undedicated, general use funding sources for local governments.
We ask our state legislative leaders to continue to support the dedicated nature of local hotel occupancy taxes and oppose any legislation that would change the dedicated nature of these funds. Local hotel occupancy taxes should not be used for general government functions.
Deduction of PPP Loan Amount from Franchise Tax Liability
The U.S. Congress approved the Paycheck Protection Program (PPP) last year so businesses could use forgivable loans to pay employees as COVID-19 caused a severe decrease in economic activity. Congress later passed additional legislation clarifying that any portion of a PPP loan that qualifies for loan forgiveness “shall be excluded from gross income” for federal tax purposes. However, without similar legislation passed at the state level, the forgivable PPP loans will be counted as revenue for purposes of the Texas franchise tax.
Representative Charlie Geren and Senator Kelly Hancock are the lead authors of legislation—HB 1195 and SB 372, respectively—that exempts forgiven PPP loans from revenue for purposes of the Texas franchise tax.
Our industry continues to utilize every available resource and tool to preserve jobs and economic activity through this pandemic. We strongly support this legislation that helps avert an unintended tax burden on hotels to ensure that our industry can make a strong recovery in 2021 and beyond.
Other Issues We’re Working On
Tourism Public Improvement District (TPID) Clarification Bill. THLA is supporting SB 804 filed by Sen. Jose Menendez that clarifies how cities should perform the calculation for showing continued support for a Tourism Public Improvement District (TPID) when new hotel properties are added into the District.
Firearms related bills. Three bills were filed that specifically pertain to allowing guests to bring concealed handguns into their hotel rooms: SB 20, SB 637, and HB 1856. These bills would prohibit a hotel from enforcing a policy that prohibits hotel guests to carry a concealed handgun from the guest’s vehicle to the guest’s hotel room.
Wages and employee benefits. We are supportive of SB 551 filed by Senator Donna Campbell that seeks to prohibit a local government from setting local employment benefit regulations for the private sector. THLA believes that consistent employment regulations across the state will keep our economy strong by reducing administrative burden for hospitality employers and allowing hotels to focus on investing in their employees and businesses.
Minimum Wage. In Texas, the minimum wage is tied to the federal minimum wage, which is currently set at $7.25 per hour. However, there have been several bills filed this legislative session that would raise the minimum wage to the greater of $15 per hour or what is required by the Federal Minimum Wage Act. THLA opposes any such immediate raise in the minimum wage.
Major Events Reimbursement Program. The funds from this program assist Texas communities with paying costs related to preparing for or conducting an event. Various projected state and local tax gains directly attributable to an event are deposited into a dedicated fund to cover allowable expenses. There have been nine bills filed this session that seek to add events such as SXSW, Texas Grand Prix race, the LPGA Championship, and others to the list of major events eligible for inclusion in the program.
COVID-19 Liability. HB 2782 shields businesses from liability for injury or death from COVID-19 except in cases of gross negligence or wilful misconduct. THLA has been advocating in favor of this bill to ensure that hotels do not become subject to abusive, mass litigation tactics when they have been operating in a prudent manner throughout the pandemic.
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 by regularly viewing the bills we are tracking.
We will also continue to send legislative news via our monthly Industry Update and in separate email alerts. Thank you for all of your engagement and support during these critical times of the 87th Texas Legislature!