                               ATTORNEY GENERAL OF TEXAS
                                            GREG        ABBOTT




                                              November     18,2003



The Honorable David Swinford                                Opinion No. GA-O 124
Chair, Committee on Government           Reform
Texas House of Representatives                              Re: Whether municipal hotel occupancy tax
P. 0. Box 2910                                              revenue may be used to fund certain programs at
Austin, Texas 78768-2910                                    a county senior center (RQ-0065GA)


Dear Representative      Swinford:

        On behalf of the City of Dumas (the “City”), you ask whether a municipality                      may use
municipal hotel occupancy tax revenue to fund certain programs at a senior center.’

         The City has inquired whether it may pay a portion of its hotel occupancy tax revenue to the
Moore County Senior Center (the “Senior Center”).* The Senior Center believes it is a permissible
recipient of the tax revenue because people from other communities, including some from outside
an “easy driving time,” come to eat or to participate in other activities at the center, including
quilting and crafting:

                 The [Clenter has a need for additional funding to perpetuate the programming
        efforts including the quilting room, which is open to the public. Quilts are always
        on display and anyone who visits can see actual quilting being done. Funding for
        craft expenses; bringing in outside entertainment         and brochure development,
        especially for the new Visitor Center here in Dumas [sic]. This funding request
        reflects a close relationship to the funding of Dumas’ Crabb Art Center and the
        Window on the Plains Museum.3




          ‘See Letter from Honorable David Swinford, Chair, Committee on Government Reform, Texas House of
Representatives, to Nancy Fuller, Chair, Opinion Committee, Texas Attorney General’s Office (June 11,2003) (on file
with the Opinion Committee).

           *Letter from Vince DiPiazza, City of Dumas City Manager, to Honorable David Swinford, Chair, Committee
on Government Reform, Texas House of Representatives        (May 27, 2003) (on file with the Opinion Cornmittee)
[hereinafter City of Dumas Letter].

         3Letter from Lisa Underwood, Executive Director, Moore County Senior Center Inc., to City Commission, City
of Dumas (Mar. 10, 2003) (on file with the Opinion Committee); Letter from Lisa Underwood, Executive Director,
Moore County Senior Center Inc., to City of Dumas City Council Members (Jan. 16,2003) (on file with the Opinion
Committee).
The Honorable David Swinford       - Page 2         (GA-0124)




The City asks whether a payment to the Senior Center would be “a legal use of’ its municipal hotel
occupancy tax revenue. City of Dumas Letter, supra note 2.

         Any incorporated municipality “by ordinance may impose a tax” on certain persons who     pay
to use or possess “a room that is in a hotel, costs $2 or more each day, and is ordinarily used    for
sleeping.” TEX. TAX CODE ANN. 8 35 1.002(a) (Vernon 2002); see also id. $ 35 1 .OOl( l),           (4)
(defining the terms “municipality” and “hotel”). Section 35 1.101 of the Tax Code restricts the   use
of the revenue:

               (a) Revenue from the municipal hotel occupancy tax may be used only to
       promote tourism and the convention and hotel industry, and that use is limited to the
       following:

                        (1) the acquisition of sites for and the construction,
               improvement,      enlarging, equipping, repairing, operation,   and
               maintenance of convention center facilities or visitor information
               centers, or both;

                        (2) the furnishing of facilities, personnel, and materials for
               the registration of convention delegates or registrants;

                      (3) advertising and conducting solicitations and promotional
               programs to attract tourists and convention delegates or registrants to
               the municipality or its vicinity;

                        (4) the encouragement,         promotion,   improvement,      and
               application of the arts, including instrumental and vocal music, dance,
               drama, folk art, creative writing, architecture, design and allied fields,
               painting, sculpture, photography, graphic and craft arts, motion
               pictures, radio, television, tape and sound recording, and other arts
               related to the presentation, performance, execution, and exhibition of
               these major art forms;

                         (5)   historical restoration and preservation projects or
               activities or advertising and conducting solicitations and promotional
               programs to encourage tourists and convention delegates to visit
               preserved historic sites or museums:

                                (A) at or in the immediate vicinity of
                       convention center facilities or visitor information
                       centers; or

                                (B) located elsewhere in the municipality or
                       its vicinity that would be frequented by tourists and
                       convention delegates; and
The Honorable   David Swinford     - Page 3         (GA-0124)




                         (6) for a municipality located in a county with a population
                of 290,000 or less, expenses, including promotion expenses, directly
                related to a sporting event in which the majority of participants are
                tourists who substantially increase economic activity at hotels and
                motels within the municipality or its vicinity.

                (b) Revenue derived from the tax authorized by this chapter shall be
        expended in a manner directly enhancing and promoting tourism and the convention
        and hotel industry . . . . That revenue may not be used for the general revenue
        purposes or general governmental operations of a municipality.

TEX. TAX CODE ANN. 0 351.101 (Vernon Supp. 2004); see id. 4 351.001(2), (4), (8)-(9) (Vernon
2002) (defining various terms). The term “tourism” is defined as “the guidance or management of
tourists,” and the terrn “tourist” is defined to mean “an individual who travels from the individual’s
residence to a different municipality, county, state, or country for pleasure, recreation, education, or
culture.” Id. 8 351.001(5)-(6) (Vernon 2002).

        The crucial issue is whether allocating the tax revenue to the Senior Center promotes
“tourism and the convention and hotel industry” and is within the permissible uses listed in section
35 1.101(a) of the Tax Code. See Tex. Att’y Gen. Op. No. DM-394 (1996) at 3 (stating that a
municipality may use municipal hotel occupancy tax revenue only for the uses set out in section
351.101).

        The City may not allocate any tax revenue to fund meals at the Senior Center because
meals are not within any permissible use listed in section 35 1.101(a). See TEX. TAX CODE ANN.
8 351.101(a) (V emon Supp. 2004).

         This office ultimately cannot determine whether funding other Senior Center activities are
permissible under section 35 1.101 because fact issues are involved. See Tex. Att’y Gen. LO-92-5 1,
at 2 (stating that determining whether section 35 1.101(b) permits a particular expenditure is a
question of fact); Tex. Att’y Gen. LO-92-16, at 3 (same). Rather, it is for the city’s governing body
to determine in the first instance whether a proposed expenditure is among the permissible uses
section 3 5 1.101 (a) lists and will “directly enhanc[e] and promot[e] tourism and the convention and
hotel industry.” TEX. TAX CODE ANN. 4 351.101(b) (Vernon Supp. 2004); see Tex. Att’y Gen.
LO-92-5 1, at 2. A municipality could find, for example, that subsidizing a quilting exhibit or
demonstration at a senior center is permissible as encouraging, promoting, improving, and applying
the arts, although the municipality would also have to find that the subsidy would “directly enhanc[e]
and promot[ e] tourism and the convention and hotel industry.” TEX. TAX CODEANN. fj 35 1.10 1(a)-
(b) (Vernon Supp. 2004). But any use of the funds that would not directly enhance and promote
tourism and the convention and hotel industry would be impermissible under the statute: “[Wlhen
money is spent for one of the [uses] listed in subsection (a), it should be done . . . in a manner that
promotes tourism and the convention and hotel industry.” Tex. Att’y Gen. Op. No. JM-965 (1988)
at 2.
The Honorable David Swinford       - Page 4       (GA-0124)




                                       SUMMARY

                        Under section 35 1.101 of the Tax Code, a municipality may
               expend its municipal hotel occupancy tax revenue “only to promote
               tourism and the convention and hotel industry” and only for the
               specific uses listed in the statute. TEX. TAX CODEANN. fj 3 5 1.10 1(a)
               (Vernon Supp. 2004). Whether a particular proposed expenditure of
               municipal hotel occupancy tax revenue is a permissible use and will
               “directly enhanc[e] and promot[e] tourism and the convention and
               hotel industry” is for a municipality’s governing body to determine in
               the first instance.

                                              Very truly yours,




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee
