Senate Bill No. 2189 proposes amendments to the Texas Tax Code regarding the hotel occupancy tax in certain coastal municipalities with populations of 5,000 or less that have a state highway ferry system. The bill allows these municipalities to increase their hotel occupancy tax rate beyond the standard limit of seven percent, up to a maximum of eight percent, provided that a majority of voters approve this increase in a dedicated election. This provision is set to expire on December 31, 2035.

Additionally, the bill mandates that municipalities collecting this tax at the increased rate must allocate a portion of the revenue for specific purposes, including the maintenance and improvement of public facilities that attract tourists, such as parks and civic centers. It also introduces new provisions allowing municipalities to use revenue from the increased tax rate for beautification projects and improvements to main streets, with restrictions on the amount spent from this revenue compared to other funding sources. These new provisions, along with the ability to increase the tax rate, will also expire on December 31, 2035. The bill is set to take effect immediately upon receiving a two-thirds vote from both houses or on September 1, 2025, if that threshold is not met.

Statutes affected:
Introduced: Tax Code 351.003, Tax Code 351.105 (Tax Code 351)