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Travis County looking to tax lodging rooms, rental cars

Wednesday, September 5, 2012 by Michael Kanin

Travis County officials are once again exploring whether to implement a hotel/motel and short-term car rental tax countywide. If applied, the tax would go into effect in the county’s unincorporated regions – where no such tax currently exists – and within city limits, including those of the City of Austin – where a hotel/motel tax is already in place.


If they move forward with the tax, Travis County Commissioners would have to specify a project that would benefit from the tax revenue and seek voter approval for the idea.


“One example is the AT&T Center in Bexar County was financed through a hotel/motel and venue tax,” outgoing Budget Director Leroy Nellis said after Tuesday’s county commission hearing. “Essentially the steps that happen are: They come up with these projects normally through a citizens’ advisory committee. …They’d look at all these projects and they actually put those projects on the ballot. … What you do is essentially, if the voters approve the projects, will they also approve a tax,” Nellis continued.


One argument to impose the levy is it would weigh heaviest on visitors to the county, people who would theoretically travel here to attend activities at a project built with revenues from the tax. “Its tourists that come in and use the hotel and they also use the venues, you know?” Nellis said. “So the idea is that the people who visit the city through any of the events that people come in and use hotels that they pay a tax … and they help fund the debt payments on these projects that are approved by the voters.”


Nellis noted that “it normally takes about 12 months to go through the process” but that it could take up to 18 months before a hotel/motel tax might appear on a Travis County ballot.


This is not the first time that Travis County officials have explored the idea of a hotel/motel tax. Indeed, county staffers produced a rather hefty set of research about the concept for county commissioners last year. As part that effort, the then-head of the county’s Planning and Budget Office Rodney Rhoades and Nellis each drafted memos that detailed Travis’ options.


Rhoades’ memo, penned in late 2010, suggested that while the county could implement as much as a 2 percent tax, he favored a 1.75 percent rate. He added that, with the 1.75 percent Travis County hotel/motel tax, county guests would see a total of a 16.75 percent charge – or the same rate as Bexar County. That figure includes 2010 state tax rate of 6 percent and a City of Austin tax rate of 9 percent. He also reported that Bexar County estimated that it collected $11.6 million in its hotel/motel tax in 2010.


Detailing the county’s authority to implement the taxes, Rhoades wrote: “Chapters 334 of the Local Government Code authorize the imposition of venue taxes for authorized venue projects.”

He noted that permissible venue taxes include; a sales and use tax, short-term motor vehicle rental tax, admissions tax, parking tax, facility use tax, and hotel occupancy tax.


Austin’s hotel/motel and short-term car rental taxes have not changed since Rhoades’ memo. The state’s hotel/motel tax also remains the same.


Rhoades also suggested that Travis County could implement a 5 percent short-term rental car tax rate.


Nellis suggested the county hire a specialist before moving forward, telling commissioners that such a consultant could cost about $200,000.


County Judge Sam Biscoe requested that staff return to the court next week with updated research.

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