LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 4, 2025 TO: Honorable Phil King, Chair, Senate Committee on Economic Development FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1592 by Blanco (relating to the collection of state and local hotel occupancy taxes and assessments related to hotels by an accommodations intermediary.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for SB1592, Committee Report 1st House, Substituted: a positive impact of $524,000 through the biennium ending August 31, 2027. There would be a positive impact of $5,950,000 in the biennium ending August 31, 2029. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2026($2,264,000)2027$2,788,0002028$2,911,0002029$3,039,0002030$3,172,000All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20252026$247,000($2,511,000)4.02027$3,079,000($291,000)4.02028$3,202,000($291,000)4.02029$3,330,000($291,000)4.02030$3,463,000($291,000)4.0 Fiscal AnalysisThe bill would require an accommodations intermediary to collect state hotel tax on each booking charge. An accommodations intermediary, as defined by the bill, that has already entered into a written agreement with the Comptroller to pay hotel taxes on each booking would be exempt from the provisions of the bill.The bill would require the Comptroller's office to 1) adopt a form an accommodations intermediary must use to report the taxes collected under Chapters 156, 351, and 352 of the Tax Code and for the Comptroller to comply with the requirements of Sections 151.429(h), 351.102, and Subchapter C of Chapter 351, 2) make available to accommodation intermediaries certain information regarding Project Finance Zones and Qualified Projects under Sections 351.1015, 151.429(h), 351.102, Subchapter C of Chapter 351 of the Tax Code, and 3) make available to accommodation intermediaries the rate of the Hotel Occupancy Tax imposed under Chapter 156, and the rate of tax imposed by each municipality or political subdivision that imposes a tax on the rental of a room or space in a hotel pursuant to Chapters 351 or 352 of the Tax Code.The bill would require an accommodations intermediary to collect municipal hotel tax on each booking charge. An accommodations intermediary that has already entered into a written agreement with a municipality with written notice of agreement to the Comptroller to pay municipal hotel taxes on each booking would be exempt from the provisions of the bill. An accommodations intermediary would be required to report and remit all local hotel taxes to the Comptroller, who would be required to remit the tax into a trust account for each municipality and send the municipality's share of the taxes (the Comptroller would deduct 1 percent of the taxes for a state service charge) a minimum of 12 times per fiscal year to the municipality.The bill would amend Chapter 352 of the Tax Code, regarding County Hotel Occupational Taxes, to require an accommodations intermediary to collect municipal hotel tax on each booking charge. An accommodations intermediary that has already entered into a written agreement with a county or other political subdivision with written notice of agreement to the Comptroller to pay county or other political subdivision hotel taxes on each booking would be exempt from the provisions of the bill. An accommodations intermediary would be required to report and remit all local hotel taxes to the Comptroller, who would be required to remit the tax into a trust account for each county or other political subdivision, and send the county's or other political subdivision's share of the taxes (the Comptroller would deduct 1 percent of the taxes for a state service charge) a minimum of 12 times per fiscal year to the county.The bill would allow governing bodies to require an accommodations intermediary to collect assessments levied against hotels for public improvement districts if certain requirements are met.The bill would require each municipality, county, or other political subdivision that imposes a hotel occupancy tax to provide notice of the rate of that tax to the comptroller by December 1, 2025. This section of the bill would take effect September 1, 2025.All other sections of the bill would take effect June 1, 2026.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 4, 2025
TO: Honorable Phil King, Chair, Senate Committee on Economic Development FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1592 by Blanco (relating to the collection of state and local hotel occupancy taxes and assessments related to hotels by an accommodations intermediary.), Committee Report 1st House, Substituted
TO: Honorable Phil King, Chair, Senate Committee on Economic Development
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB1592 by Blanco (relating to the collection of state and local hotel occupancy taxes and assessments related to hotels by an accommodations intermediary.), Committee Report 1st House, Substituted
Honorable Phil King, Chair, Senate Committee on Economic Development
Honorable Phil King, Chair, Senate Committee on Economic Development
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB1592 by Blanco (relating to the collection of state and local hotel occupancy taxes and assessments related to hotels by an accommodations intermediary.), Committee Report 1st House, Substituted
SB1592 by Blanco (relating to the collection of state and local hotel occupancy taxes and assessments related to hotels by an accommodations intermediary.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB1592, Committee Report 1st House, Substituted: a positive impact of $524,000 through the biennium ending August 31, 2027. There would be a positive impact of $5,950,000 in the biennium ending August 31, 2029.
Estimated Two-year Net Impact to General Revenue Related Funds for SB1592, Committee Report 1st House, Substituted: a positive impact of $524,000 through the biennium ending August 31, 2027. There would be a positive impact of $5,950,000 in the biennium ending August 31, 2029.
General Revenue-Related Funds, Five- Year Impact:
2026 ($2,264,000)
2027 $2,788,000
2028 $2,911,000
2029 $3,039,000
2030 $3,172,000
All Funds, Five-Year Impact:
2026 $247,000 ($2,511,000) 4.0
2027 $3,079,000 ($291,000) 4.0
2028 $3,202,000 ($291,000) 4.0
2029 $3,330,000 ($291,000) 4.0
2030 $3,463,000 ($291,000) 4.0
Fiscal Analysis
The bill would require an accommodations intermediary to collect state hotel tax on each booking charge. An accommodations intermediary, as defined by the bill, that has already entered into a written agreement with the Comptroller to pay hotel taxes on each booking would be exempt from the provisions of the bill.The bill would require the Comptroller's office to 1) adopt a form an accommodations intermediary must use to report the taxes collected under Chapters 156, 351, and 352 of the Tax Code and for the Comptroller to comply with the requirements of Sections 151.429(h), 351.102, and Subchapter C of Chapter 351, 2) make available to accommodation intermediaries certain information regarding Project Finance Zones and Qualified Projects under Sections 351.1015, 151.429(h), 351.102, Subchapter C of Chapter 351 of the Tax Code, and 3) make available to accommodation intermediaries the rate of the Hotel Occupancy Tax imposed under Chapter 156, and the rate of tax imposed by each municipality or political subdivision that imposes a tax on the rental of a room or space in a hotel pursuant to Chapters 351 or 352 of the Tax Code.The bill would require an accommodations intermediary to collect municipal hotel tax on each booking charge. An accommodations intermediary that has already entered into a written agreement with a municipality with written notice of agreement to the Comptroller to pay municipal hotel taxes on each booking would be exempt from the provisions of the bill. An accommodations intermediary would be required to report and remit all local hotel taxes to the Comptroller, who would be required to remit the tax into a trust account for each municipality and send the municipality's share of the taxes (the Comptroller would deduct 1 percent of the taxes for a state service charge) a minimum of 12 times per fiscal year to the municipality.The bill would amend Chapter 352 of the Tax Code, regarding County Hotel Occupational Taxes, to require an accommodations intermediary to collect municipal hotel tax on each booking charge. An accommodations intermediary that has already entered into a written agreement with a county or other political subdivision with written notice of agreement to the Comptroller to pay county or other political subdivision hotel taxes on each booking would be exempt from the provisions of the bill. An accommodations intermediary would be required to report and remit all local hotel taxes to the Comptroller, who would be required to remit the tax into a trust account for each county or other political subdivision, and send the county's or other political subdivision's share of the taxes (the Comptroller would deduct 1 percent of the taxes for a state service charge) a minimum of 12 times per fiscal year to the county.The bill would allow governing bodies to require an accommodations intermediary to collect assessments levied against hotels for public improvement districts if certain requirements are met.The bill would require each municipality, county, or other political subdivision that imposes a hotel occupancy tax to provide notice of the rate of that tax to the comptroller by December 1, 2025. This section of the bill would take effect September 1, 2025.All other sections of the bill would take effect June 1, 2026.
Methodology
Under current law, the state collects and administers the state hotel occupancy tax only. The state does not collect nor administer the hotel occupancy taxes levied in this state by municipalities, counties, and other jurisdictions.The bill would require the Comptroller to administer local hotel tax collections associated with the bill's provisions. This would include promulgation of local hotel tax report forms, specifically for use by accommodations intermediaries, provision of maps and database for applicable local hotel tax rates by location, deposit of taxes collected in numerous suspense accounts outside of the treasury, and remittance of taxes to the local entities at least 12 times during the fiscal year.Prior to sending any money to the local entity the Comptroller would deduct and deposit to the General Revenue Fund an amount equal to one percent of the amount of the taxes collected from booking charges associated with this bill's provisions.The bill would require a booking intermediary to collect any taxes imposed by a municipality under Chapter 352 of the Tax Code. Chapter 352 of the Tax Code authorizes hotel taxation by counties. Municipalities do not impose taxes under this chapter. This estimate does not include any potential revenue attributable to administration of county hotel taxes.Administrative costs include staffing costs related to hiring four (4) Account Examiner III FTE's to handle the administration of the additional tax including, overpayments, non-processed items, reconciliations and tax payer assistance.
The bill would require a booking intermediary to collect any taxes imposed by a municipality under Chapter 352 of the Tax Code. Chapter 352 of the Tax Code authorizes hotel taxation by counties. Municipalities do not impose taxes under this chapter. This estimate does not include any potential revenue attributable to administration of county hotel taxes.Administrative costs include staffing costs related to hiring four (4) Account Examiner III FTE's to handle the administration of the additional tax including, overpayments, non-processed items, reconciliations and tax payer assistance.
Technology
According to the Comptroller's office, there would be a one-time technology cost of $2,200,000 for an estimated 14,800 programming hours that would be necessary to implement multiple applications of a new tax.
Local Government Impact
The bill would require an accommodations intermediary to collect local hotel taxes on each booking charge, beginning June 1, 2026, with 1 percent of collections retained by the state for a state service charge for collecting the tax on behalf of units of local government.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, RStu, SD, BRI
JMc, RStu, SD, BRI