Grimes County commissioners remove nonprofit exemption from proposed hotel-occupancy tax bill

Grimes County commissioners voted unanimously Feb. 28 to ask the Legislature to remove language in a draft bill that would have exempted hotels operated by nonprofit organizations from a proposed county hotel-occupancy tax, and authorized two commissioners to coordinate with state and local officials on the amended bill.

County Commissioner David Tullis, who requested the special meeting after receiving a revised draft from State Representative Wharton’s office, told the court the draft included a new exemption clause that was not in the version the court originally approved. “Tax imposed under this subsection does not apply to a hotel operated by a nonprofit organization exempt from federal income taxation under section 501(a), internal revenue code of 1986, by being listed as an exempt organization in section 501(c)(3) of that code,” Tullis read from the draft and said he had not authorized that specific language on his own.

The exemption prompted immediate concern from several commissioners about fairness and revenue impacts. Commissioner Philip Cox and others noted that the hotel-occupancy tax is collected from overnight guests rather than being charged directly to hotels, and that many users of nonprofit facilities would still be required to pay if they did not present proof of tax-exempt status. “If we start exempting everybody, next thing you know, we don't have no money to budget,” Commissioner Michael Rasca said, arguing that exempting one owner would create a disparity with for-profit hotels along Highway 6.

Commissioner Chad Malott moved to delete the added language (lines 10–14 of the draft) that would have created the automatic nonprofit exemption; Commissioner Mark Oreskes seconded. The court approved the motion on a 5-0 vote. The court then approved a separate motion, also unanimous, authorizing Commissioner Tullis and Commissioner Philip Cox to coordinate with state and local elected officials, including Representative Wharton and state Senate staff, to pursue the amended bill and follow up on language changes.

During discussion, commissioners and staff talked about next steps and stakeholder outreach. Tullis said he had met with representatives of Camp Allen, including Allen Kite and Josh Fultz, and with legislative staff in Austin. He said the county would be open to further discussion with Camp Allen about potential relief for specific, documented tax-exempt groups but objected to carving out a blanket, automatic exemption in the enabling legislation. “All facility bookings are subject to the state hotel occupancy tax rate of 6%,” Tullis said, quoting Camp Allen’s website, and noted that state law already provides processes for exempting entities that submit proper documentation.

Several commissioners asked that any future county resolution or ordinance that actually levies the tax be developed after broader stakeholder input so the court can consider targeted exemptions or administrative processes for exempt organizations. The court also discussed the technical bracketing language (subsection “kk”) used in the bill to identify qualifying counties by population and geography rather than by name; that bracketing remains part of the draft, and commissioners agreed to keep the original subsection A language intact while removing the added nonprofit-exemption clause.

The court did not adopt any tax rate or levy at the Feb. 28 meeting; the actions were limited to asking the Legislature to remove the exemption language from the draft bill and authorizing county commissioners to coordinate with state and local officials on the bill’s progress. Commissioners said they intend to continue meeting with stakeholders, including Camp Allen and the City of Navasota, before taking any county-level vote to levy the hotel-occupancy tax.