According to the Legislative Budget Board (LBB), HB 23 is expected to have no significant fiscal implications for the State of Texas. The bill creates a new ad valorem property tax exemption specifically for real and personal property owned by nonprofit corporations located in counties with a population exceeding 3.3 million (effectively targeting Harris County). These nonprofits must be organized exclusively for charitable, educational, and scientific purposes and use their property to promote agriculture, support youth, and provide educational services to qualify for the exemption.

While this exemption would reduce the taxable property value base in Harris County, and thus reduce property tax collections for local taxing units, the impact on the state is expected to be minimal. Under current provisions of the Texas Education Code, a portion of any school district tax revenue loss due to the exemption may be offset through state funding formulas. However, the LBB estimates that the state fiscal impact is unlikely to be significant.

For local governments, the exemption would result in a decrease in the taxable property base. Consequently, the no-new-revenue and voter-approval tax rates under Section 26.04 of the Tax Code would increase to maintain revenue levels. This means taxpayers in Harris County could see slightly higher tax rates to offset the exemption granted to eligible nonprofit entities. Nonetheless, the total fiscal impact on local governments would depend on the specific assessed value of the properties exempted and how local taxing entities adjust their tax rates in response.

HB 23 proposes a new property tax exemption for real and personal property owned by nonprofit corporations located in counties with a population over 3.3 million, effectively limited to Harris County. To qualify, the property must be owned by a nonprofit organized exclusively for charitable, educational, and scientific purposes and used to promote agriculture, support youth, and provide educational services. While the bill is framed as an effort to support a worthy mission, such as that of the Houston Livestock Show and Rodeo, the exemption is narrowly tailored and raises significant policy concerns.

First, HB 23 contributes to the continued erosion of the property tax base by adding another category of tax-exempt property without any accompanying reduction in government spending. In practical terms, this results in a tax shift. Other property owners, residents, and businesses alike must absorb the shortfall, either through higher effective tax rates or reduced public services. This trend undermines tax equity and accountability, especially when applied selectively to favored entities in a specific county. A broad, stable tax base is essential to sound fiscal management and local government sustainability.

Second, the bill gives preferential treatment to a single category of nonprofits in a single geographic area. This special carve-out creates unequal treatment under the tax code and sets a precedent that invites other organizations to seek similar privileges. Over time, this results in a patchwork tax system that privileges politically connected groups while diminishing fairness and transparency for the general public.

Third, the process by which this bill was prioritized raises procedural concerns. HB 23 was given an unusually low bill number, signaling that it was granted “priority bill” status by House leadership. This fast-tracking displaces other legislative proposals, many of which offer broader, statewide property tax relief or meaningful structural reforms. Giving such high placement to a narrowly tailored exemption undermines the credibility of legislative priorities and reduces public trust in the process. Texans seeking real, lasting property tax reform are left waiting while carve-outs move to the front of the line.

Finally, while the bill analysis cites no direct fiscal impact to the state, the Legislative Budget Board acknowledges that local taxing entities will experience reduced taxable property values and thus higher no-new-revenue and voter-approval tax rates under Section 26.04 of the Tax Code. In effect, this means other property owners in Harris County may face increased tax burdens simply to subsidize this exemption. This is not tax relief, it is tax redistribution.

In sum, HB 23 is emblematic of the wrong approach to property tax policy: one that adds complexity, favors narrow interests, and shifts burdens rather than reducing them. As such, Texas Policy Research strongly recommends that lawmakers vote NO on HB 23 to uphold tax equity, spending restraint, and a commitment to prioritizing reforms that serve all Texans.

• Individual Liberty: The bill does not directly infringe upon or expand personal freedoms in a constitutional or civil rights sense. However, by creating a carve-out for select nonprofits in Harris County it creates the perception of unequal treatment under the law. When the tax code favors one class of entity over others without equal opportunity, it raises fairness concerns that erode trust in a system meant to treat all individuals and organizations equally.
• Personal Responsibility: The bill dilutes the principle of personal (and organizational) responsibility by relieving certain nonprofits of their obligation to contribute to local infrastructure and public services, costs that they nonetheless benefit from (e.g., roads, utilities, police, and fire protection). Rather than standing on their own merit and internal sustainability, these organizations would benefit from preferential tax treatment, effectively shifting their fiscal responsibility onto other taxpayers who must make up the difference.
• Free Enterprise: This bill fundamentally distorts the free enterprise system by offering tax advantages to a narrow subset of nonprofit organizations in a single county. It provides a government-created benefit that is not available to similar organizations elsewhere in the state or to for-profit enterprises providing comparable community services. This government favoritism interferes with market competition and undermines the idea that success should be based on value created, not on privileged status.
• Private Property Rights: While the bill respects the right of nonprofits to own and develop property, it alters the structure of how property rights are treated under the tax system. Exempting some owners from taxes while others remain fully liable creates an uneven playing field. Property tax burdens are redistributed rather than reduced, which indirectly infringes on the rights of other property owners who must shoulder a larger share of the tax load. Such policy fragmentation compromises the principle that all property owners should be treated equally under the law.
• Limited Government: The bill expands the government’s role in the tax system by adding yet another exemption to an already complex code, selectively benefiting politically favored organizations. Rather than simplifying the tax structure or reducing overall tax burdens, it entrenches government favoritism and administrative complexity. Importantly, it does so without any reduction in spending or structural reform, which runs counter to the principle that government should be restrained, fair, and fiscally responsible.