According to the Legislative Budget Board (LBB), the proposed exemption from ad valorem taxation for animal feed held for retail sale—provided it is already exempt from sales and use tax—would not result in a significant fiscal impact to the state. However, there could be some indirect cost increases due to how the school finance system works in Texas.

Specifically, because the bill would reduce the taxable property base—namely the inventory value of exempted animal feed—school districts could see a reduction in their property tax revenues. Under the school finance formulas, this revenue shortfall would be partially or fully offset by increased state funding to maintain equitable school funding levels. Nonetheless, this impact is projected to be minor and not result in a substantial increase in state expenditures.

For local governments, the fiscal implications are more nuanced. A reduction in taxable property value could lead to lower property tax levies unless jurisdictions increase their tax rates. Under Texas law (Section 26.04 of the Tax Code), local governments may respond to declining tax bases by adjusting their no-new-revenue and voter-approval tax rates upward. Thus, while some local taxing entities might see a decline in revenues if they maintain current rates, others could mitigate the fiscal impact by raising rates, redistributing the tax burden among non-exempt property owners.

In sum, HB 1399 has a limited fiscal impact at the state level and variable local impacts, depending on how local jurisdictions respond to changes in the tax base.

Texas Policy research recommends that lawmakers vote YES on HB  1399 as it presents a narrowly tailored exemption to Texas’s property tax code by removing ad valorem taxation from animal feed held for sale at retail, provided it already qualifies for exemption from sales and use taxes. The measure aims to address a policy inconsistency where such feed is tax-exempt throughout its supply chain except while held as retail inventory. By aligning the treatment of this essential good, the bill promotes consistency and fairness within the tax structure.

The bill supports core liberty principles, especially free enterprise and private property rights. It reduces the tax burden on agricultural and retail businesses without expanding government programs or spending. Furthermore, the fiscal impact at the state and local levels is expected to be minor, according to the Legislative Budget Board, making it a pragmatic and focused reform.

That said, this recommendation is made with an important caveat. While the bill’s intentions and execution are reasonable, there is a broader policy concern with carving out exemptions within a property tax system. Such measures, while well-meaning, risk shifting the tax burden to non-exempt taxpayers if not paired with spending reductions or structural reforms. This tension—between targeted relief and overall equity—deserves continued legislative attention.

Nonetheless, HB 1399 strikes an appropriate balance in this case, and the relief it provides is specific, justified, and limited in scope.

• Individual Liberty: The bill enhances individual liberty by reducing the tax burden on business owners engaged in agricultural and retail activities. By exempting animal feed held for retail sale from property taxation, the legislation allows these owners greater control over their property and financial choices. They are less constrained by government taxation on inventory, a productive asset, thus supporting the principle that individuals should be free to use and benefit from their property with minimal interference.
• Personal Responsibility: This bill does not absolve businesses of responsibility; instead, it supports those who are already contributing to the economy through agricultural and animal-related commerce. It doesn't introduce subsidies or entitlements—it simply removes a tax burden. Businesses still compete in the marketplace and are responsible for managing their operations. The bill reinforces the idea that government should not penalize responsible ownership or commerce through inconsistent taxation.
• Free Enterprise: The bill promotes a freer market by removing a distortion in the tax code that penalized certain inventory. Feed for livestock and animals is a core component of the agricultural supply chain, and taxing it at the retail stage—when it is not taxed at any other point—creates a disincentive and competitive imbalance. By eliminating this tax, the bill fosters a more neutral and growth-oriented market environment.
• Private Property Rights: Property rights are strengthened when owners are not unduly taxed on inventory that serves a legitimate and productive business purpose. The bill reaffirms the principle that individuals and businesses have a right to hold and use their property—like feed intended for sale—without arbitrary or excessive taxation, especially when that property is already recognized elsewhere in the tax code as essential and exempt.
• Limited Government: This bill reflects the principle of limited government by slightly reducing the scope of government taxation. It does not introduce new regulatory structures, expand administrative authority, or increase spending. It merely trims back a narrow piece of the tax code in favor of consistency and fairness, reducing government reach in a specific area of commerce.

• HJR 99 (Enabling for)
• SB 994 (Same As)