Page 246 - City of Colleyville FY22 Adopted Budget

Hotel Occupancy Tax

Fund

FY 2022 Operating Budget

Fund Description

The Hotel Occupancy Tax was created in 1959 by the Texas Legislature, allowing the State to
levy a 3% tax on all lodging revenues in Texas. In the early 1970’s, the Legislature authorized
municipalities to levy similar tax on lodging revenues, now equivalent to up to 2%. However,
use of this revenue is specifically restricted to costs benefitting the hotel and tourism industry,
and further subdivided into nine categories:

 Convention and visitor centers,
 Convention registration,
 General advertising for the City,
 Promotion of the arts,
 Historical restoration and preservation,
 Sporting events in counties with under one million in population,
 Enhancing or upgrading existing sports facilities or fields (certain cities only),
 Tourist transportation systems, and
 Signage directing the public to sights and attractions

While Colleyville has had expenses that are eligible for hotel occupancy tax funding, the City
did not have a hotel within its limits until 2017. When the City began collecting tax revenues,
those dollars were used on non-recurring improvements to eligible facilities and costs related
to special events. However, FY 2021 represented a shift in the use of this funding from non-
recurring expenses to some operational expenses that qualify under the Texas Local
Government Code, such as Colleyville Center operations and some personnel expenses. FY
2022 continues this shift, helping to alleviate reliance on General Fund revenue for these
qualifying expenses.

Core Services funded from the Hotel Tax Fund

With the emphasis of hotel tax revenues funding operations that benefit the tourism industry,
City staff identified a few key areas of City operations that work toward that goal:

1. Advertising and Promoting City Events and Amenities
Colleyville prides itself on hosting events and amenities that showcase the City’s
businesses and attractions. Among these events are our Car Show, which attracts over
300 cars from all over the State, Concerts in the Plaza, Colleyville’s Fourth of July

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