As Palo Pinto County Grows, Hotel Occupancy Tax Codes May Need Tweaking
By Amy Bearden
Palo Pinto County resident Jeff Hinkson is certainly no stranger to the business of politics. He has run two campaigns, including the successful election and then subsequent re-election of Graford Veterinarian Glenn Rogers to State Representative House District 60 earlier this year.
Now Hinkson hopes to be a conduit between the County and Representative Rogers to address legislation he says impacts future tourism dollars in Palo Pinto County.
This week, he approached the Palo Pinto County Commissioners during their regular meeting with a presentation to make known his findings regarding current, yet antiquated Hotel Occupancy Tax(HOT) legislation that governs the county since the late 1980’s and early 1990’s.
So What Exactly Are HOT Funds?
HOT stands for Hotel Occupancy Tax and it’s a percentage placed on guest’s hotel bill that helps fund the promotion of local tourism. Hotels, motels, AirBNBs or any business within the county that collects revenue from overnight stays must assess their customers this tax.
Those funds are then collected and disbursed by the county and shared amongst the local Chamber of Commerces to promote tourism. HOT fund revenues have very specific parameters in which they can be spent.
The HOT rate in Palo Pinto County is currently set at 4% but the law allows up to 7%. HOT have no impact on county tax payers as the fee is paid by the visitors coming to stay overnight in the community.
Reading the HOT Funds Fine Print
Jeff Hinkson calls Possum Kingdom Lake home these days but it was his love for Strawn and his research of how to set up a municipal HOT Fund in that community that was the catalyst for his discovery of a “quirky piece of legislation” that could have big impact on Palo Pinto County.
In his presentation, Hinkson told the court his recent study and understanding of the HOT legislation in the county led him to two conclusions he wanted to share with Commissioners.
Not only did he suggest to the court that the county consider raising the 4% HOT rate, which is well below the cap, he also encouraged them to contact Representative Glenn Rogers to discuss rewriting the current HOT legislation to reflect the projected population growth of the county.
“You have an opportunity with a hometown legislator that can research, write and carry this legislation to change this,” said Hinkson.
Hinkson recently began studying HOT to completely understand the legislation and has been working with Representative Rogers’ staff in Austin, as well as some local county officials to aid his research.
In his findings, Hinkson discovered a clause in the legislation that nullified the HOT if the county population exceeds 30,000. According to his research, if the current HOT legislation stays written as it is, and Palo Pinto County keeps the upward trend of growing, and the next census reflects that projected growth, a HOT could no longer be levied by the county. Meaning, the current law would not allow the county to collect HOT if the 2030 census exceeds a population of 30,000.
The most recent census from 2020 has Palo Pinto County’s population at 28,686 people, which is likely under counted according to audible musings in the court room.
Hinkson said due to projected population growth, the HOT could become inapplicable and suggested the county ask Representative Roger’s to rewrite the legislation to protect the future of HOT funds needed to promote tourism.
“Between the opening of the new Palo Pinto Mountain State Park next year, what’s happening at Possum Kingdom Lake, or the renovation of historical hotels, the future of the county is tourism,” said Hinkson
“What you don’t want to do is kick it down the road,” claimed Hinkson.
“What I can tell you after running two campaigns, there is no guarantee that you are gonna have your hometown guy sitting in that pink granite building down in Austin. This is an easy thing to do. If you go back 4 years and we had the previous legislator, I’m not sure he would carry this for us,” remarked Hinkson.
He said the legislation is an issue that can easily be fixed by Representative Rogers and now is the time of year legislators want work on local issues.
HOT Funds in Palo Pinto County
MWAN emailed County Auditor Phyllis Banks for details regarding the most recent data about Palo Pinto County’s HOT Funds.
“The total tax (HOT) collected with penalties and interest for Fiscal Year 2021 was $218,342.60. The total collected for Fiscal Year(FY) 2022, which ended September 30th, 2022, with penalties and interest is $262,866.37,” responded Banks.
For FY 2021, the county kept 5% and the other 95% was distributed to the Chamber of Commerce’s in Palo Pinto County. The disbursement was as follows: 19% to City of Mineral Wells Chamber of Commerce and 76% to PK Chamber of Commerce.
The county added the Strawn Chamber of Commerce at the beginning of Fiscal Year 2022, which was October 1, 2021. For FY 2022, the county keeps 5% and the other 95% is disbursed to the Chamber of Commerce’s in Palo Pinto County. The disbursement is as follows: 19% to City of Mineral Wells Chamber of Commerce, 71.25% to PK Chamber of Commerce, and 4.75% to Strawn Chamber of Commerce.
So what would the HOT Funds look like if the rate is raised to the cap as suggested?
According to the county, if the rate had been 7% in FY2021, it would have generated an additional $157,088.67 before any penalties and interest. In FY2022, it would have generated an additional $193,501.28 before any penalties and interest.
Rose Jordan, Director of Tourism for MW Area Chamber of Commerce, spoke with MWAN and verified Hinkson’s findings regarding the population cap language in the law. Jordan did say the HOT Funds were safe for now as the next census is many years away. She said looking and planning for the future is always a good idea because the county is growing.
We asked what a HOT Rate increase would mean for Mineral Wells and she said the additional revenue could allow them to explore several impactful advertising opportunities or even help fund more staff.
“Hiring a second tourism person to help with manning the new, expanded visitor center, help with things like social media, website management and some of the day-to-day so that I can get out of the office more to build relationships with my tourism partners or have a presence at high-yielding travel shows, and do more of the high-level planning and programming,” said Jordan. “The funds have to be used to help increase overnight stays in the county.”
County Treasurer Tanya Fallin spoke to the Commissioner’s during Hinkson’s presentation and reminded the court that they are the body in control of the HOT funds and decide how the money is utilized. Fallin told the court she would like to consult with the Attorney General’s office to better understand the situation and what authority the county possesses regarding HOT rates.
The Chamber Chamber of Commerce Board of Directors recently appointed Cody Jordan as the organization’s new Chairwoman and she too concurs the HOT Rate needs increasing.
“It only affects hotel guests and will be a great boost for the tourist economy as we can utilize that increase to help program tourist type activities as well as increase our marketing for tourism. Most places have it set at 7%, ours is too low.
MWAN will continue to follow the story and bring you any updates we learn.
