BILL ANALYSIS Senate Research Center C.S.S.B. 2779 89R24308 CJD-F By: Birdwell Economic Development 4/16/2025 Committee Report (Substituted) AUTHOR'S / SPONSOR'S STATEMENT OF INTENT Interested parties assert that communities in Texas have been inappropriately withholding hotel occupancy tax (HOT) revenue from statutorily authorized usage by entities entitled to portions of that revenue. In withholding that revenue, some communities are imposing requirements on the entities able to use that revenue in ways that do not align with the statutory provisions that dictate in what manner HOT revenue can be used. For instance, some cities condition the disbursement of HOT revenue so that certain factors are met, such as the hiring of personnel based on their representation of certain populations. Accordingly, this bill would prohibit HOT revenue from being expended in a manner or by a program or activity that discriminates or gives preference on the basis of race, color, disability, sex, religion, age, or national origin. Additionally, current statute requires a portion of HOT revenue to be directed towards the cleaning and maintaining of public beaches in certain eligible coastal municipalities. In the case of Galveston, a park board has been created by ordinance and statute to carry out that function. However, the City of Galveston has not funded the park board at 100 percent of collected HOT revenue required for these purposes, leaving the potential for the park board to not receive the amount necessary to carry out much-needed beach cleaning and maintenance. Withholding HOT revenue is in contradiction to Texas statute. If left unfunded, critical park board services would negatively impact residents, tourism and the environment. As a result, this bill would adjust statute to direct the current statutory two percent allocation of HOT revenue directly to the park board, instead of the city pass-through mechanism currently in place. In doing so, the bill upholds the condition that the city dedicate a portion of HOT towards beach cleaning and patrol to draw down the current state reimbursement for nourishing, cleaning, and patrolling beaches. (Original Author's/Sponsor's Statement of Intent) C.S.S.B. 2779 amends current law relating to the allocation and use of certain hotel occupancy tax revenues. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 156.2511, Tax Code, by amending Subsection (b) and adding Subsections (a-1) and (b-1), as follows: (a-1) Requires an eligible coastal municipality that receives a warrant issued under Subsection (a) (relating to a warrant drawn on the general revenue fund) to transfer the full amount of the warrant to the park board of trustees created by the municipality not later than the last day of the calendar month immediately following the date the municipality received the warrant. (b) Provides that money received under Section 156.2511 (Allocation of Certain Revenue), Tax Code, is authorized to be used only to clean and maintain public beaches in the eligible coastal municipality, rather than provides that an eligible coastal municipality is authorized to use money received under this section only to clean and maintain public beaches in that municipality. (b-1) Provides that the Comptroller of Public Accounts of the State of Texas (comptroller) is authorized to issue a warrant under this section only if the eligible coastal municipality has: (1) allocated at least one percent of the tax imposed by the municipality under Chapter 351 (Municipal Hotel Occupancy Taxes) to clean and maintain public beaches in the municipality; (2) either applied for state funds under Subchapter C (Maintenance of the Public Beaches), Chapter 61 (Use and Maintenance of Public Beaches), Natural Resources Code, or made available to the comptroller the same information required to be contained in an application under Section 61.069 (Contents of Application), Natural Resources Code; and (3) on the request of the comptroller, submitted to the comptroller financial data necessary to demonstrate that the municipality has satisfied the requirements of Subdivision (1) and a signed attestation stating that the municipality has satisfied the requirements of this subsection. SECTION 2. Amends Section 351.101, Tax Code, by adding Subsection (b-1) to prohibit revenue derived from the tax authorized by this chapter, notwithstanding Subsection (a) (relating to authorizing revenue from the municipal hotel occupancy tax to be used only to promote tourism and the convention and hotel industry), from being expended in a manner or by a program or activity that discriminates or prioritizes on the basis of race, color, disability, sex, religion, age, or national origin. SECTION 3. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center C.S.S.B. 2779
89R24308 CJD-F By: Birdwell
Economic Development
4/16/2025
Committee Report (Substituted)
Senate Research Center
C.S.S.B. 2779
89R24308 CJD-F
By: Birdwell
Economic Development
4/16/2025
Committee Report (Substituted)
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Interested parties assert that communities in Texas have been inappropriately withholding hotel occupancy tax (HOT) revenue from statutorily authorized usage by entities entitled to portions of that revenue. In withholding that revenue, some communities are imposing requirements on the entities able to use that revenue in ways that do not align with the statutory provisions that dictate in what manner HOT revenue can be used. For instance, some cities condition the disbursement of HOT revenue so that certain factors are met, such as the hiring of personnel based on their representation of certain populations. Accordingly, this bill would prohibit HOT revenue from being expended in a manner or by a program or activity that discriminates or gives preference on the basis of race, color, disability, sex, religion, age, or national origin.
Additionally, current statute requires a portion of HOT revenue to be directed towards the cleaning and maintaining of public beaches in certain eligible coastal municipalities. In the case of Galveston, a park board has been created by ordinance and statute to carry out that function. However, the City of Galveston has not funded the park board at 100 percent of collected HOT revenue required for these purposes, leaving the potential for the park board to not receive the amount necessary to carry out much-needed beach cleaning and maintenance. Withholding HOT revenue is in contradiction to Texas statute. If left unfunded, critical park board services would negatively impact residents, tourism and the environment. As a result, this bill would adjust statute to direct the current statutory two percent allocation of HOT revenue directly to the park board, instead of the city pass-through mechanism currently in place. In doing so, the bill upholds the condition that the city dedicate a portion of HOT towards beach cleaning and patrol to draw down the current state reimbursement for nourishing, cleaning, and patrolling beaches.
(Original Author's/Sponsor's Statement of Intent)
C.S.S.B. 2779 amends current law relating to the allocation and use of certain hotel occupancy tax revenues.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 156.2511, Tax Code, by amending Subsection (b) and adding Subsections (a-1) and (b-1), as follows:
(a-1) Requires an eligible coastal municipality that receives a warrant issued under Subsection (a) (relating to a warrant drawn on the general revenue fund) to transfer the full amount of the warrant to the park board of trustees created by the municipality not later than the last day of the calendar month immediately following the date the municipality received the warrant.
(b) Provides that money received under Section 156.2511 (Allocation of Certain Revenue), Tax Code, is authorized to be used only to clean and maintain public beaches in the eligible coastal municipality, rather than provides that an eligible coastal municipality is authorized to use money received under this section only to clean and maintain public beaches in that municipality.
(b-1) Provides that the Comptroller of Public Accounts of the State of Texas (comptroller) is authorized to issue a warrant under this section only if the eligible coastal municipality has:
(1) allocated at least one percent of the tax imposed by the municipality under Chapter 351 (Municipal Hotel Occupancy Taxes) to clean and maintain public beaches in the municipality;
(2) either applied for state funds under Subchapter C (Maintenance of the Public Beaches), Chapter 61 (Use and Maintenance of Public Beaches), Natural Resources Code, or made available to the comptroller the same information required to be contained in an application under Section 61.069 (Contents of Application), Natural Resources Code; and
(3) on the request of the comptroller, submitted to the comptroller financial data necessary to demonstrate that the municipality has satisfied the requirements of Subdivision (1) and a signed attestation stating that the municipality has satisfied the requirements of this subsection.
SECTION 2. Amends Section 351.101, Tax Code, by adding Subsection (b-1) to prohibit revenue derived from the tax authorized by this chapter, notwithstanding Subsection (a) (relating to authorizing revenue from the municipal hotel occupancy tax to be used only to promote tourism and the convention and hotel industry), from being expended in a manner or by a program or activity that discriminates or prioritizes on the basis of race, color, disability, sex, religion, age, or national origin.
SECTION 3. Effective date: September 1, 2025.