GAINESVILLE, Texas — As budget planning season gets underway, the Gainesville City Council received a detailed walkthrough of one of the most tightly restricted revenue sources at its disposal: the Hotel Occupancy Tax.
At the council's June 16 meeting, Jackson Olesky, associate general counsel of the Texas Hotel and Lodging Association, broke down what the tax can — and cannot — pay for. The presentation arrives as the city begins shaping its next budget and weighs how to allocate the limited pool of HOT dollars.
What the tax is
The Hotel Occupancy Tax is collected from hotels, Airbnbs and other places where visitors stay overnight. Olesky said the tax has existed for more than a century to help Texas cities promote hotel use and tourism.
Gainesville levies a 6% HOT rate, which Olesky described as fairly standard statewide.
The two-part test
Under Chapter 351 of the Texas Tax Code, every HOT expenditure must clear a two-part test, Olesky explained.
First, the spending must directly promote tourism and the hotel and convention industry. Second, it must fall into one of a fixed set of permitted categories:
- Convention and visitor centers
- Registration of convention delegates
- Advertising and promotion of the city
- Promotion of the arts
- Historic preservation and restoration
- Sporting events
- Wayfinding signage and transportation
"Tourism is defined under Texas law as guiding or managing individuals who are traveling from a different city, county, state or country," Olesky said.
Spending caps
Some categories carry their own ceilings. Arts promotion and historic preservation are each capped at 15% of HOT revenue, Olesky said, while advertising and promotion must make up at least one-seventeenth of the funds.
Those limits matter as the city sorts through competing requests. In August of the prior year, 13 groups submitted proposals seeking a share of HOT funding.
What's next
The presentation was informational, giving council members a framework as they move deeper into the budget cycle. Residents who want to weigh in can attend upcoming City Council meetings, where budget discussions will continue in the coming weeks. Meeting agendas and times are posted on the City of Gainesville website.