Opinion No.
Background
- City of Galveston seeks to use surplus hotel occupancy tax funds from its convention center agreement.
- Home-rule status gives broad powers but subject to state law and charter constraints.
- Chapter 351 governs hotel occupancy taxes and limits use to tourism/convention/hotel purposes.
- Surplus funds are to be kept separate when under third-party management and not commingled.
- Statutory provisions impose restrictions on reserve funds and require expenditure only for purposes aligned with tourism/convention goals.
- Tex. Att'y Gen. Op. No. JM-965 supports that expenditures must align with §351.101(a)-(d).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether surplus hotel tax funds may be used for general city purposes. | City argues funds may be used generally. | Abbott maintains funds remain restricted to tourism/convention purposes. | No; funds retain §351 restrictions. |
| Whether a third-party management agreement changes the character of tax revenues. | City contends agreement could alter fund character. | Earlier law preserves tax-revenue character despite external management. | No change to character; funds still restricted. |
| Whether reserve funds under §351.108(f) may support general city goals. | City seeks to use reserves for non-tourism purposes. | Reserves limited to tourism/convention-related enhancements. | Reserved funds cannot be used for general city purposes. |
Key Cases Cited
- In re Sanchez, 81 S.W.3d 794 (Tex. 2002) (home-rule limits interpreted; statute-driven constraints on municipal power)
- City of Galveston v. Hill, 519 S.W.2d 103 (Tex. 1975) (home-rule status and authority limitations)
- Proctor v. Andrews, 972 S.W.2d 729 (Tex. 1998) (limits on municipal authority under constitution and statutes)
- Dallas Merchants Concessionaire's Ass'n v. City of Dallas, 852 S.W.2d 489 (Tex. 1993) (limits on municipal revenue use and grants of power)
- Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628 (Tex. 2010) (statutory interpretation; purpose of revenue restrictions)