ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
March 2,2006
Opinion No. GA-0408
The Honorable Ronald D. Hankins
Somervell County Attorney Re: Authority of a municipality with a population
Post Office Box 1335 of fewer than 35,000 to impose a hotel occupancy
Glen Rose, Texas 76043 tax in its extraterritorial jurisdiction when the
combined rate of state, county, and municipal
hotel occupancy taxes would exceed 15 percent
(RQ-0390-GA)
Dear Mr. Hankins:
You ask about the authority of a municipality with a population of fewer than 35,000 to
impose a hotel occupancy tax in its extraterritorial jurisdiction when the combined rate of state,
county, and municipal taxes would exceed 15 percent.’
The state imposes a hotel occupancy tax at the rate of 6 percent of the price paid for a hotel
room. See TEX. TAX CODEANN. $0 156.05 la, .052 (Vernon 2002 & Supp. 2005). Section 352.002
of the Tax Code authorizes various counties having certain characteristics to impose a hotel
occupancy tax at a rate that generally may not exceed 7 percent. Id. $6 352.002, .003(a) (Vernon
Supp. 2005). Section 351.002 of the Tax Code authorizes municipalities to impose a hotel
occupancy tax at a rate that generally may not exceed 7 percent. Id. $6 35 1.002, .003 (Vernon 2002).
A municipality with a population of fewer than 35,000 may impose the tax in its extraterritorial
jurisdiction. Id. 8 351.0025(a). However, such a “municipality may not impose a tax [in its
extraterritorial jurisdiction] if as a result of the adoption the combined rate of state, county, and
municipal hotel occupancy taxes in the extraterritorial jurisdiction exceeds 15 percent of the price
paid for a room in a hotel.” Id. 1535 1.0025(b).
You inform us that the City of Glen Rose (“Glen Rose”) in Somervell County adopted by
ordinance of October 1, 1996, a municipal hotel occupancy tax at the rate of 7 percent that it also
imposes in its extraterritorial jurisdiction under section 3 5 1.0025(a). See Request Letter, supra note
1, at 1. You state that Glen Rose currently collects taxes from three hotels in its extraterritorial
jurisdiction. Id. You also inform us that Somervell County is authorized to impose a tax under
‘See Letter from Honorable Ronald D. Hankins, Somervell County Attorney, to Honorable Greg Abbott,
Attorney General of Texas (Aug. 23,2005) (on file with the Opinion Committee, also available at http://www.oag.state
.tx.us) [hereinafter Request Letter].
The Honorable Ronald D. Hankins - Page 2 (GA-0408)
section 352.002(a)(9). See id.; see also TEX. TAXCODEANN. $352.002(a)(9) (Vernon Supp. 2005).
You,advise us that, in 2005, the Somervell County Commissioners Court passed an order imposing
a tax at the rate of 7 percent for all hotels in the county. See Request Letter, supra note 1, at 2.
Because of recent legislation, the tax may not be imposed at hotels within Glen Rose. See TEX.TAX
CODE ANN. 8 352.002(d) (Vernon Supp. 2005) (providing that the tax imposed by a county
authorized by subsection (a)(9) “does not apply to a hotel located in a municipality that imposes a
tax under Chapter 35 1 applicable to the hotel”). Your question is about exercising taxing authority
in Glen Rose’s extraterritorial jurisdiction. As you note, the tax rates of the state (6 percent), the
county (7 percent), and the city (7 percent) when combined would exceed 15 percent. See Request
Letter, supra note 1, at 2. Section 35 1.0025(b) clearly prohibits a municipality from adopting an
ordinance imposing a municipal hotel occupancy tax at a rate that when combined with existing state
and county taxes would exceed 15 percent. See TEX. TAX CODE ANN. 6 35 1.0025(b) (Vernon 2002).
You ask, however, whether the county or the municipality has priority under section 35 1.0025(b)
when the municipality adopted its tax prior to the county’s adoption of its tax. See Request Letter,
supra note 1, at 2. If the county has priority, you ask whether the municipality may adopt a tax at
a rate so that the combined rate does not exceed 15 percent under section 35 1.0025(b). See id
We are to construe section 351.0025, if possible, according to its plain language. See
Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S. W.2d 864,865-66 (Tex. 1999). The section
provides as follows:
(a) A municipality with a population of less than 35,000 by
ordinance may impose the tax authorized under Section 35 1.002 in
the municipality’s extraterritorial jurisdiction.
(b) The municipality may not impose a tax under this section if as a
result of the adoption the combined rate of state, county, and
municipal hotel occupancy taxes in the extraterritorial jurisdiction
exceeds 15 percent of the price paid for a room in a hotel.
TEX. TAX CODE ANN. 5 351.0025(a)-(b) (Vernon 2002). Section 351.0025(b) plainly limits the
authority of municipalities, not counties, to impose a hotel occupancy tax in the municipality’s
extraterritorial jurisdiction. Id. 0 35 1.0025(b). Thus, it is not a question of priority between the
municipality and the county. The pertinent inquiry is whether section 351.0025(b) is construed
either (1) as an absolute cap requiring Glen Rose to cease imposing the tax in its extraterritorial
jurisdiction at the 7 percent rate or (2) as a prohibition only against imposing a new tax or a new rate
that results in a combined rate exceeding 15 percent.
Section 351.0025(b) limits a municipality’s authority to “impose” a tax under certain
circumstances. See id. The common meaning of the word “impose,” in the context of imposing a
tax, is “to establish or apply by authority.” See MERRIAMWEBSTER’sCOLLEGIATEDICTIONARY583
(10th ed. 1993); see also TEX. GOV’T CODE ANN. 3 3 11.01 l(a) (Vernon 2005) (general rule of
statutory construction to give words their ordinary meaning). Consequently, under section
35 1.0025(b), “impose” could refer either to establishing a tax, applying the tax, or both.
The Honorable Ronald D. Hankins - Page 3 (GA-0408)
The statute clarifies that the intended meaning of “impose” is to establish a tax. The key
phrase is “as a result of the adoption.” TEX. TAX CODEANN. 5 35 1.0025(b) (Vernon 2002). Had
that phrase been omitted, then section 351.0025(b) would operate as an absolute cap limiting the
municipality’s authority to impose a tax regardless of when the county adopted its tax (“The
municipality may not impose a tax under this section if. . . the combined rate of state, county, and
municipal hotel occupancy taxes in the extraterritorial jurisdiction exceeds 15 percent . . . .“). But
by including the phrase “if as a result of the adoption,” section 351.0025(b) makes the act of
adopting a tax a condition to the subsection’s application. Id. Under section 351.0025(a), a
municipality imposes a tax by adopting an ordinance. See id. 5 35 1.0025(a). Section 35 1.0025(b)
suggests that it applies only when a municipality’s adoption of a tax ordinance directly and
immediately causes the combined rate to exceed 15 percent. Here, the combined rate did not exceed
the maximum when the municipality adopted its tax. The combined rate did not exceed 15 percent
until the county adopted its tax.
Of course, in a broader sense, the excess combined rate under section 351.0025(b) was a
“result” of a municipality’s adoption of a tax even though the municipality adopted its tax years
before the county adopted its tax. But that will always be the case. “[Wlhen possible to do so, effect
must be given to every sentence, clause, and word of a statute so that no part thereof be rendered
superfluous or inoperative.” City of San Antonio v. City ofBoerne, 111 S.W.3d 22,29 (Tex. 2003)
(quoting Spence v. Fenchler, 180 S.W. 597, 601 (Tex. 1915)). If the phrase “as a result of the
adoption” means only that the statute applies when a municipality’s tax is one of the causes of a
combined rate in excess of 15 percent, then the phrase attaches a meaningless condition. To give
the phrase meaning that is not superfluous, we construe section 35 1.0025(b) as inapplicable if the
combined rate of state, county, and municipal taxes did not exceed 15 percent at the time the
municipality adopted its hotel occupancy tax.
Section 351.0025 contrasts markedly with the language the legislature has used when it
intended the taxing authority of one political subdivision to be subject to the later action of another
subdivision. For example, section 352.002(e) clearly provides that the specified county may have
its authority to tax restricted due to the subsequent act of a municipality in the county:
[T]he tax imposed by a county authorized by Subsection (a)(17) to
impose the tax does not apply to a hotel located in the extraterritorial
jurisdiction of a municipality that imposes a tax under Chapter 35 1
applicable to that hotel. If, after the date the county begins to impose
a tax under this chapter, a municipality in the county adopts an
ordinance under Section 35 1.0025 authorizing the imposition of the
municipal tax in the municipality’s extraterritorial jurisdiction, the
county may not impose a tax applicable to a hotel located in that
territory on or after the date the municipality begins to impose that
tax.
TEX. TAX CODE ANN. 5 352.002(e) (Vernon Supp. 2005); see also id. 6 321.102(e) (Vernon 2002)
(providing for an automatic reduction of a local government entity’s sales and use tax “[i]f as a result
The Honorable Ronald D. Hankins - Page 4 (GA-0408)
of the imposition” of a sales and use tax the combined tax rate in the area exceeds 2 percent). In
section 351.0025(b), if the legislature had intended for a municipality’s authority to tax to be
restricted by later actions of the county, it could have said so. We conclude that a municipality that
has exercised its authority to impose a hotel occupancy tax under section 35 1.0025(a) does not lose
that authority when the county’s later adoption of a county tax results in a combined state, county,
and municipal tax rate that exceeds 15 percent. Accordingly, it is unnecessary to address your
remaining question.
The Honorable Ronald D. Hankins - Page 5 (GA-0408)
SUMMARY
Section 35 1.0025(b) of the Tax Code prohibits a municipality
with a population of fewer than 35,000 from adopting and imposing
a hotel occupancy tax in its extraterritorial jurisdiction when the
combined rate of state, county, and municipal taxes would exceed 15
percent. The section does not, however, prohibit a municipality from
imposing its tax if the combined rate did not exceed 15 percent when
the municipality adopted its tax but exceeds that rate after the county
adopts a county tax.
BARRY R. MCBEE
First Assistant Attorney General
ELLEN L. WITT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee