Senate Bill 2532 aims to ensure proper use of Galveston's hotel occupancy tax revenues

The Senate Committee on Economic Development convened on April 23, 2025, to discuss Senate Bill 2532, a proposed measure aimed at reforming the calculation of property tax rates for municipalities that receive hotel occupancy tax (HOT) revenues. The bill, introduced by Senator Middleton, seeks to ensure that these funds are used for their intended purposes, primarily promoting tourism and maintaining coastal infrastructure.

Senator Middleton emphasized that the bill would create a fiscal accountability mechanism for coastal municipalities, particularly those with park boards, like Galveston. The proposed legislation aims to lower property tax rates for local taxpayers if HOT revenues are misallocated. This measure is designed to protect taxpayers from the financial burden of mismanaged funds while maintaining transparency in municipal spending.

Support for the bill was voiced by representatives from the Texas Travel Alliance, who highlighted the importance of responsible use of HOT revenues for the tourism-dependent economy of Galveston. Erica Boyd, the Alliance's president, stated that the bill would foster trust among stakeholders and ensure that funds are directed towards enhancing local tourism.

However, the bill faced opposition from several Galveston officials, including elected representatives and the mayor pro tem. They argued that the legislation unfairly targets Galveston by imposing punitive measures that could undermine the city's financial stability. Critics expressed concerns that the bill's language could create loopholes and complicate the relationship between the city and its park board, which is responsible for managing tourism-related funds.

The committee heard testimony from various stakeholders, with some supporting the bill for its potential to enhance fiscal responsibility, while others cautioned against its implications for local governance and financial oversight. The discussion highlighted the ongoing tension between ensuring accountability in the use of public funds and maintaining local autonomy in managing tourism revenues.

As the meeting concluded, the bill was left pending, with further discussions anticipated to address the concerns raised by both supporters and opponents. The outcome of this legislation could significantly impact the financial landscape for Galveston and similar coastal municipalities in Texas, as they navigate the complexities of tourism funding and property tax calculations.