LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 13, 2025 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3066 by Leach (Relating to the entitlement of certain municipalities to certain tax revenue associated with hotel and convention center projects.), As Introduced There would be no fiscal impact to the state in the biennium ending August 31, 2027. Passage of the bill would increase the period of time that Allen would be entitled to retain certain state tax revenue associated with a qualified hotel project from 10 years to 20 years. As a result the fiscal impact of foregone state revenue would be ($108,636,000) through fiscal year 2049. The bill would amend Section 351.158 of the Tax Code to entitle a municipality described by Section 351.152(46) to receive revenue provided by Sections 351.156 and 351.157 until the 20th anniversary of the date a qualified hotel to which an entitlement relates is open for initial occupancy.The bill would require the Comptroller, on the 40th anniversary of the date a hotel designated as a qualified hotel by a municipality described by Section 351.152(46) as part of a qualified project to which section 351.162 applies is open for initial occupancy, to determine the total state tax revenue received by the municipality from the qualified project under Section 351.156 and 351.157 and the amount of revenue received by state between the 20th and 40th anniversary of the same sources from which the municipality received revenue under Sections 351.156 and 351.157. If the amount received by the municipality under sections 351.156 and 351.157 exceeds the amount received by the state between the 20th and 40th anniversary of the initial opening date of the qualified hotel, the municipality would be required to remit the difference to the comptroller from certain municipal revenues.The bill's provisions would affect the city of Allen.Allen is currently entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax. Section 351.157(d) provides, in relevant part, that a municipality to which the section applies is entitled to receive the revenue derived from the state sales and use taxes, and local mixed beverage taxes generated, paid, and collected from a qualified establishment. Allen would be entitled to receive the revenue until the twentieth anniversary of the date the qualified hotel to which the entitlement relates is open for initial occupancy.The city of Allen has plans for a qualified hotel, but due to Section 351.157(e), which requires a municipality to commence a project before September 1, 2027, to receive additional entitlements from restaurants, bars, retail establishments, swimming pools and swimming facilities as provided under Section 351.157, the city could only avail itself of the tax rebates under section 351.156, including during the additional 10 years of entitlement provided by the bill. The estimate is based on a projected opening date of September 1, 2029, or state fiscal year 2030, a comparison and review of revenues paid to the owners of extant qualified hotel projects, and estimated attributes of such prospective hotel.The difference in the state revenue that the city of Allen would receive by the 20th anniversary of the initial opening date of the qualified hotel and the revenue that state would collect between the 20th and 40th anniversary of the initial opening date of the qualified hotel is unknown; however, assuming any positive average rate of inflation after the 20th anniversary, no revenue would be expected due to the state under added Subsection (b-1) of Section 351.162.The city of Allen would receive funds described by Section 351.156 until the 20th anniversary of the initial opening date of their qualified hotel, with total revenue forgone by the state estimated to total $182,027,000 by fiscal 2049. This is $108,636,000 over what the city is estimated to receive under the current 10-year entitlement period as described by Section 351.158 of the Tax Code.It is assumed that any administrative costs associated with the bill could be absorbed using existing resources. Local Government ImpactThe bill would increase the period of time that Allen would be entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax from 10 years to 20 years. Source Agencies: b > td > 304 Comptroller of Public Accounts LBB Staff: b > td > JMc, KK, SD, BRI
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 13, 2025
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB3066 by Leach (Relating to the entitlement of certain municipalities to certain tax revenue associated with hotel and convention center projects.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB3066 by Leach (Relating to the entitlement of certain municipalities to certain tax revenue associated with hotel and convention center projects.), As Introduced
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB3066 by Leach (Relating to the entitlement of certain municipalities to certain tax revenue associated with hotel and convention center projects.), As Introduced
HB3066 by Leach (Relating to the entitlement of certain municipalities to certain tax revenue associated with hotel and convention center projects.), As Introduced
There would be no fiscal impact to the state in the biennium ending August 31, 2027. Passage of the bill would increase the period of time that Allen would be entitled to retain certain state tax revenue associated with a qualified hotel project from 10 years to 20 years. As a result the fiscal impact of foregone state revenue would be ($108,636,000) through fiscal year 2049.
There would be no fiscal impact to the state in the biennium ending August 31, 2027. Passage of the bill would increase the period of time that Allen would be entitled to retain certain state tax revenue associated with a qualified hotel project from 10 years to 20 years. As a result the fiscal impact of foregone state revenue would be ($108,636,000) through fiscal year 2049.
Passage of the bill would increase the period of time that Allen would be entitled to retain certain state tax revenue associated with a qualified hotel project from 10 years to 20 years. As a result the fiscal impact of foregone state revenue would be ($108,636,000) through fiscal year 2049.
The bill would amend Section 351.158 of the Tax Code to entitle a municipality described by Section 351.152(46) to receive revenue provided by Sections 351.156 and 351.157 until the 20th anniversary of the date a qualified hotel to which an entitlement relates is open for initial occupancy.The bill would require the Comptroller, on the 40th anniversary of the date a hotel designated as a qualified hotel by a municipality described by Section 351.152(46) as part of a qualified project to which section 351.162 applies is open for initial occupancy, to determine the total state tax revenue received by the municipality from the qualified project under Section 351.156 and 351.157 and the amount of revenue received by state between the 20th and 40th anniversary of the same sources from which the municipality received revenue under Sections 351.156 and 351.157. If the amount received by the municipality under sections 351.156 and 351.157 exceeds the amount received by the state between the 20th and 40th anniversary of the initial opening date of the qualified hotel, the municipality would be required to remit the difference to the comptroller from certain municipal revenues.The bill's provisions would affect the city of Allen.Allen is currently entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax. Section 351.157(d) provides, in relevant part, that a municipality to which the section applies is entitled to receive the revenue derived from the state sales and use taxes, and local mixed beverage taxes generated, paid, and collected from a qualified establishment. Allen would be entitled to receive the revenue until the twentieth anniversary of the date the qualified hotel to which the entitlement relates is open for initial occupancy.The city of Allen has plans for a qualified hotel, but due to Section 351.157(e), which requires a municipality to commence a project before September 1, 2027, to receive additional entitlements from restaurants, bars, retail establishments, swimming pools and swimming facilities as provided under Section 351.157, the city could only avail itself of the tax rebates under section 351.156, including during the additional 10 years of entitlement provided by the bill. The estimate is based on a projected opening date of September 1, 2029, or state fiscal year 2030, a comparison and review of revenues paid to the owners of extant qualified hotel projects, and estimated attributes of such prospective hotel.The difference in the state revenue that the city of Allen would receive by the 20th anniversary of the initial opening date of the qualified hotel and the revenue that state would collect between the 20th and 40th anniversary of the initial opening date of the qualified hotel is unknown; however, assuming any positive average rate of inflation after the 20th anniversary, no revenue would be expected due to the state under added Subsection (b-1) of Section 351.162.The city of Allen would receive funds described by Section 351.156 until the 20th anniversary of the initial opening date of their qualified hotel, with total revenue forgone by the state estimated to total $182,027,000 by fiscal 2049. This is $108,636,000 over what the city is estimated to receive under the current 10-year entitlement period as described by Section 351.158 of the Tax Code.It is assumed that any administrative costs associated with the bill could be absorbed using existing resources.
Local Government Impact
The bill would increase the period of time that Allen would be entitled to receive from the qualified hotel and each restaurant, bar, and retail establishment located in or connected to the hotel or the related qualified convention center facility, the state sales and use tax and the state hotel occupancy tax from 10 years to 20 years.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI