Relating to the rate of the hotel occupancy tax in certain municipalities and the use of certain revenue from that tax by those municipalities; authorizing an increase in the rate of a tax.

SB 2189 allows small coastal Texas municipalities (population 5,000 or less with a state highway ferry system) to temporarily increase their hotel occupancy tax rate from 7% to a maximum of 8% if approved by local voters. The bill requires voter approval for this rate increase, which expires December 31, 2035. Municipalities must allocate at least 1% of hotel tax revenue toward tourism-related facilities like parks, marinas, or visitor attractions, and can use excess revenue for main street beautification and pedestrian safety improvements. The law specifies that these additional beautification funds cannot exceed what the municipality spends from other sources on similar projects each year.