The primary funding source for the Hotel/Motel Tax Fund is the Hotel Occupancy tax, a consumption type of tax authorized under Texas state statute. All occupants staying overnight in hotels or motels in the City of Bay City for less than 30 consecutive days, are charged a hotel tax of 13% of the room cost. The City receives 7% of the revenue while the State collects 6%.

• In Chapter 351 of the Tax Code, funds derived from the Hotel/Motel Tax Fund can only be spent if the following two-part test is met:

• Every expenditure must directly enhance and promote tourism and the convention and hotel industry.
• Every expenditure must clearly fit into one of nine statutorily provided categories for expenditure of local hotel occupancy taxes:
• Funding the establishment, improvement or maintenance of a convention or visitor information center
• Paying for the administrative costs for facilitating convention registration
• Paying for tourism related advertising and promotion of the city or its vicinity
• Funding programs that enhance the arts
• Funding historical restoration or preservation projects
• Sporting events where the majority of participants are tourists in cities located in a county with a population of 290,000 or less
• Enhancing and upgrading existing sport facilities or fields for certain municipalities
• Funding transportation systems for tourists
• Signage directing the public to sights and attractions that are visited frequently by hotel guests in the municipality
• Within the city limits of Bay City there are currently 20 hotels and motels all in which report and pay hotel occupancy taxes to the City. The following hotels and motels can be found in Bay City, Texas:

Hotels and Motels within Bay City