According to the Legislative Budget Board (LBB), HB 1039 is expected to have no fiscal implication for the State of Texas. The bill targets a narrow provision of the Tax Code related to hotel occupancy tax (HOT) revenue allocation in a very specific category of municipalities—those that are the largest in their counties, border Mexico, and contain a national park over 400,000 acres in size. Currently, those municipalities are subject to specific spending requirements: at least 50% of HOT revenue must go to tourism advertising and promotion, with not more than 15% each allowed for the arts and historical preservation.

By repealing Section 351.1035, HB 1039 removes those spending mandates. The fiscal impact at the local level, however, is indeterminate and dependent on municipal budgeting decisions. Local governments will no longer be constrained by the current statutory percentages and could theoretically reallocate funds among tourism promotion, arts, historical preservation, or other HOT-eligible uses. This could lead to increased flexibility in budget planning for qualifying cities but might also reduce dedicated funding streams for specific cultural or tourism functions.

Overall, while the bill does not alter state revenue or expenditures, it shifts discretion in local hotel tax spending and could result in different programmatic priorities at the local level without changing the amount of tax collected.

HB 1039 proposes to repeal Section 351.1035 of the Texas Tax Code, which currently imposes specific spending requirements on hotel occupancy tax (HOT) revenue collected by the City of Alpine. Under the existing law, Alpine must allocate at least 50% of its HOT revenue to tourism promotion, with additional caps on spending for the arts and historic preservation. HB 1039 would eliminate these restrictions, granting Alpine the same flexibility most other Texas cities have in directing HOT funds among eligible uses outlined in broader state law.

While the bill superficially appears to promote local control and reduce state-imposed mandates, it presents deeper concerns for those who oppose the HOT on principle. Far from curbing or questioning the legitimacy of this tax, HB 1039 reinforces and entrenches its long-term use by facilitating more customized and flexible ways to spend the proceeds. This does not limit government—it merely reshuffles where and how the tax burden is applied, without addressing whether such a burden should exist in the first place.

From a liberty-focused perspective, the hotel occupancy tax is a fundamentally problematic revenue source. It disproportionately targets nonresidents, who have no voice in local governance, while enabling city governments to fund promotional, cultural, or tourism-related projects that may lack core public necessity or voter scrutiny. The tax structure creates an environment where local governments can grow their budgets off the backs of pass-through consumers, often with minimal accountability. HB 1039 does nothing to limit this growth; it simply gives municipalities broader latitude to spend the revenue, thereby normalizing and expanding its use.

Moreover, by responding to Alpine’s request to remove its unique restrictions, the legislature sends a broader signal that HOT revenue is an accepted and permanent funding stream for local projects. This subtly undermines any long-term effort to cap, reduce, or repeal the tax. Rather than moving the state toward a more restrained tax policy, the bill potentially fuels continued or expanded reliance on a regressive tax mechanism.

Given these considerations, Texas Policy Research recommends that lawmakers vote NO on HB 1039. The bill does not reduce taxation, does not limit government, and does not move toward ending the hotel occupancy tax. Instead, it perpetuates a revenue mechanism that many believe is inconsistent with principles of limited government, individual liberty, and personal responsibility. A principled stand against this bill serves as a statement against the normalization of taxation without representation and the ongoing expansion of government through off-budget, special-purpose revenues.

• Individual Liberty: The bill does not directly restrict individual freedoms, but by preserving and facilitating the ongoing use of the hotel occupancy tax (HOT), it indirectly upholds a system that taxes individuals, primarily travelers, without their representation or consent. These individuals have little or no say in how the tax is levied or used, which raises concerns about taxation without representation. This erosion of fiscal liberty can be seen as inconsistent with the principle of individual autonomy.
• Personal Responsibility: While the bill doesn't impose new obligations on individuals, it also does nothing to promote local self-reliance through voluntary civic action or private-sector tourism development. Instead, it continues to incentivize government-funded solutions (e.g., city-run advertising or cultural projects) funded through coercive taxation rather than voluntary support. This approach can crowd out community-based or entrepreneurial initiatives, which more directly reflect personal responsibility and local stewardship.
• Free Enterprise: The bill removes certain statutory restrictions on how Alpine allocates its HOT funds, theoretically allowing the city to support a wider range of tourism-promoting activities. In isolation, this increased flexibility might benefit some private enterprises that align with new spending priorities. However, the broader concern is that HOT revenue is often used to subsidize government-preferred sectors, projects, or venues, creating unfair advantages for certain businesses over others. This distorts natural market competition and violates the principle of a level playing field.
• Private Property Rights: The bill does not directly impact property rights. However, if HOT-funded projects lead to government-sponsored infrastructure or events near private property, this may indirectly influence property values or local development pressures. Since those paying the tax are often nonresidents, the link between taxation and property benefit becomes even more tenuous.
• Limited Government: This is where the bill most clearly conflicts with liberty principles. Rather than questioning the necessity of the hotel occupancy tax, the bill entrenches it by streamlining and reinforcing its use. It does not reduce the tax burden, eliminate regulations, or shrink government functions. Instead, it maintains and arguably encourages local government reliance on an off-budget, opaque funding stream that can be spent with broad discretion. Even though it removes a specific spending mandate, it leaves the taxing authority untouched—and thus enables continued growth of non-essential government programming.

• SB 913 (Same As)