OFFICE OF THE ATTORNEY GENERAL STATE OF TF.XAS
JOHN CORNYN
September 1, 1999
The Honorable Patrick B. Haggerty Opinion No. E-01 05
Chair, Committee on Corrections
Texas House of Representatives Re: Allocation ofrevenue by amunicipality from
P.O. Box 2910 hotel occupancy tax (RQ-0064)
Austin, Texas 78768-2910
Dear Representative Haggerty:
You ask this offrce to interpret two phrases in section 35 1.103 of the Tax Code, namely
“consistent with the other limitations of this section” in section 351.103(b) and “the applicable
provisions of this section” in section 35 1.103(e).
A brief description of the relevant provisions, and of the controversy which leads to your
question, is necessary to place the question in context. Section 351.103 of the Tax Code reads in
relevant part:
(a) At least 50 percent of the hotel occupancy tax revenue
collected by a municipality with a population of 200,000 or greater
must be allocated for the purposes provided by Section 35 1.101 (a)(3)
.
(b) Subsection (a) does not apply to a municipality in a fiscal year
of the municipality if the total amount of hotel occupancy tax
collected by the municipality in the most recent calendar year that
ends at least 90 days before the date the fiscal year begins exceeds
$2 million. A municipality excepted from the application of
Subsection (a) by this subsection shall allocate hotel occupancy tax
revenue by ordinance, consistent with the other limitations of this
section
(e) A municipality may use hotel occupancy tax revenue
collected by the municipality for a purpose provided by Section
The Honorable Patrick B. Haggerty - Page 2 UC-0105)
351.101(a)(l) only if the municipality complies with the applicable
provisions of this section.
TEX. TAX CODE ANN. $35 1.103 (Vernon 1992 & Supp. 1999) (emphasis added).
Section 351.101(a)(l) and section 351,101(a)(3), as referenced in section 351.103, provide
that permissible uses for hotel occupancy tax revenue are “the acquisition of sites for and the
construction, improvement, enlarging, equipping, repairing, operation, and maintenance of
convention center facilities ,“,id. $ 351.101(a)(l) (Vernon Supp. 1999), and “advertising and
conducting solicitations and promotional programs to attract tourists and convention delegates or
registrants to the municipality or its vicinity.” Id. 5 351,101(a)(3). Pursuant to section 351.103(a),
then, a municipality subject to it would have to spend at least 50 percent of hotel occupancy tax
revenue on advertising and promotion of tourism and conventions.
The El Paso Hotel/Motel Association argues that the City of El Paso is required by section
351.103 to allocate 50 percent of its occupancy tax revenue to section 351.101(a)(3) purposes. See
Letter from Hemy P. King, Executive Director, El Paso Hotel/Motel Association, Inc., to
Honorable Pat Haggerty, State Representative, District 78 (Apr. 15, 1999) (on file with Opinion
Committee) [hereinafter King Letter of 4/15/99]. The City of El Paso, on the contrary, avers that
it is exempted from the requirements of subsection (a) of section 35 1.103, and is not required to
allocate the funds in that manner. See Letter from Myles S. Hall, Assistant City Attorney, City of
El Paso, to Honorable John Comyn, Attorney General (June 11, 1999) (on file with Opinion
Committee) [hereinafter Hall Letter of 6/l l/99]. In our view, the City’s argument is correct.
We note as a preliminary matter that there appears to be general agreement that the City of
El Paso meets the requirement of section 351.103(b) that its total hotel occupancy tax proceeds for
the most recent calendar year exceed $2 million. See King Letter of 4/15/99 (“The City of El Paso
collects about $4 million in Occupancy taxes annually.“); Hall Letter of 6/l l/99, at 3 (“The City of
El Paso, Texas meets the criteria described in the first sentence of Subsection@) of Texas Tax Code
Section 35 1.103.“). Our analysis, therefore, proceeds on this assumption.
You ask us first to interpret the phrase “consistent with the other limitations of this section.”
In the context of the sentence in section 351.103(b), the meaning of that phrase is clear and
unambiguous: the “other limitations” are the limitations other than that of subsection (a), which
limitation by the plain language of subsection (b) does not apply in the relevant case. Any other
construction intended to include the subsection (a) restriction among the “other limitations” both
violates the plain sense of subsection (b), and renders that subsection a nullity. We are charged, both
by the maxims of construction generally and by sections 3 11.011 and 3 11.021 of the Code
Construction Act, not to construe statutes in such a manner. See TEX. GOV’T CODE ANN.
5 311 .Ol l(a) (Vernon 1998) (words to be read in context and construed according to grammar and
common usage); id. 5 311.021(2) (entire statute intended to be effective).
The Honorable Patrick B. Haggerty - Page 3 (JC-0105)
You ask further about the meaning of the phrase “the applicable provisions of this section”
in section 35 1.103(e), which requires a municipality that wishes to expend occupancy tax revenues
on convention center facilities to comply with the applicable provisions of section 35 1.103. TEX.
TAX CODE ANN. $ 351.103(e) (Vernon Supp. 1999). Again the statutory language answers the
question. By the statute’s own terms, if a municipality takes in sufficient occupancy tax revenues
in a calendar year, subsection (a) “does not apply” to it. Id. 5 351.103(b) (Vernon 1992). For such
a city, then, subsection (a) is not an applicable provision.
In short, if, as appears to be the case, the City of El Paso, Texas collected more than $2
million in hotel occupancy tax revenue in the most recent calendar year, it is not bound by the
allocation formula of section 35 1.103(a) of the Texas Tax Code.
SUMMARY
Pursuant to section 351.103(b) of the Texas Tax Code, the
allocation restriction of section 35 1.103(a) of the Tax Code does not
apply to a municipality which has collected in excess of $2 million in
hotel occupancy tax revenue in the most recent calendar year.
Attorney General of Texas
ANDY TAYLOR
First Assistant Attorney General
CLARK RENT ERVIN
Deputy Attorney General - General Counsel
ELIZABETH ROBINSON
Chair, Opinion Committee
James E. Tourtelott
Assistant Attorney General - Opinion Committee