According to the Legislative Budget Board (LBB), HB 2289  is projected to have no net fiscal impact on General Revenue Related Funds during the biennium ending August 31, 2027. However, beginning in fiscal year 2029, the bill is expected to result in a negative impact on state revenue, continuing for a decade. Specifically, the bill would lead to an estimated revenue loss of $906,000 in 2029 and $942,000 in 2030, as indicated by the LBB.

The fiscal implications arise from the bill's inclusion of New Braunfels as an eligible municipality to receive tax revenues derived from a hotel and convention center project. Once a qualified hotel project is operational, New Braunfels would be entitled to receive funds from the state sales and use tax and the state hotel occupancy tax generated by the hotel, as well as any connected restaurants, bars, and retail establishments. This entitlement would last for up to ten years from the hotel's initial occupancy date. The negative fiscal impact is projected to begin in 2029 because the anticipated opening date for the qualified hotel is September 1, 2028.

Local government impacts are positive for the city of New Braunfels. By acquiring eligibility under this bill, the city would gain significant revenue from the hotel and associated businesses. These funds would support the hotel and convention center project's financial obligations, thereby enhancing local economic development and tourism potential. Nonetheless, the cost to the state arises from the diversion of tax revenue that would otherwise flow into the General Revenue Fund.

HB 2289 should be opposed because it compromises fiscal responsibility and undermines the principle of defending taxpayers' rights to their money and property. While the bill aims to support economic development in New Braunfels by allowing the city to use tax revenues from hotel and convention center projects, the associated costs and long-term financial risks outweigh the potential local benefits.

Fiscal responsibility requires that lawmakers safeguard the use of public funds, ensuring they are managed prudently and equitably. HB 2289 would result in a direct financial loss to the state, as the Legislative Budget Board (LBB) projects a negative impact of $906,000 in 2029 and $942,000 in 2030, continuing annually for a decade. This loss arises from diverting tax revenue that would otherwise support statewide needs. By reallocating these funds to a single municipality, the bill disregards the collective rights of Texas taxpayers to have their money utilized for the benefit of the entire state, rather than subsidizing one local project.

A key element of fiscal responsibility is maintaining a fair and uniform tax policy that treats all municipalities equitably. This bill grants New Braunfels special privileges by allowing it to claim specific tax revenues, setting a precedent for other cities to demand similar benefits. Such preferential treatment undermines the principle that all taxpayers should benefit equally from the state’s revenue system. Lawmakers should resist creating policy exceptions that disproportionately favor one community at the expense of others.

The bill also allows New Braunfels to pledge future tax revenues to finance project-related obligations, effectively shifting financial risks to the public. If the hotel and convention center do not generate the expected economic returns, local taxpayers could be burdened with covering budget shortfalls. Responsible governance requires preventing scenarios where public funds are used to underwrite potentially risky financial ventures, particularly when these commitments could detract from funding essential state services.

Fiscal responsibility also aligns with promoting free enterprise and limited government. By enabling a municipality to use public tax revenues to support private economic development, the bill effectively intervenes in the free market. This approach not only distorts competition but also contradicts the principle that government should not pick winners and losers. Instead of creating special incentives for one city, the state should prioritize policies that foster a level playing field for all businesses and municipalities.

Supporting HB 2289 would compromise the state’s commitment to fiscal responsibility and taxpayer protection. It would allow the diversion of public funds from statewide priorities to a single municipality, setting a concerning precedent for future policy decisions. Lawmakers have a duty to defend taxpayers’ rights by ensuring that their money is used wisely and fairly. Therefore, a No vote on HB 2289 is recommended to uphold the principles of fair taxation, prudent fiscal management, and the responsible use of public resources. Texas Policy Research recommends that lawmakers vote NO on HB 2289.

• Individual Liberty: The bill's impact on individual liberty is indirect but potentially problematic. By allowing New Braunfels to collect and use tax revenue from hotel and convention center projects, it potentially redirects funds that might otherwise support broader state initiatives benefiting a wider range of individuals. Taxpayers across Texas might see this as an infringement on their liberty if their money supports a single city's projects rather than being allocated according to statewide priorities. While the bill does not directly limit personal freedoms, the diversion of state revenue to one locality can be perceived as prioritizing collective municipal interests over individual taxpayer rights.
• Personal Responsibility: The principle of personal responsibility emphasizes that individuals and local governments should be accountable for their financial decisions without relying on state subsidies. By allowing New Braunfels to pledge future tax revenue from hotel and convention center projects to fund obligations, the bill could encourage financial imprudence. If projected revenue fails to materialize, local taxpayers may ultimately bear the financial burden. This approach may foster a dependency mindset, where local development projects are expected to be underwritten by state-allocated funds rather than being sustainably financed through private investment or local tax initiatives.
• Free Enterprise: The bill challenges the principle of free enterprise by effectively allowing government intervention in the market. By directing public funds to support a specific hotel and convention center project, the bill picks winners and losers in the local economy. Other businesses and sectors that do not receive similar support may be at a competitive disadvantage. True free enterprise requires a level playing field where businesses succeed based on consumer demand rather than government-facilitated economic advantages. This selective allocation of tax revenues distorts market dynamics and undermines fair competition.
• Private Property Rights: The bill does not directly impact private property rights, as it primarily deals with the collection and allocation of tax revenues rather than issues of property ownership or eminent domain. However, the potential financial burden placed on taxpayers if the project underperforms could indirectly affect residents' economic stability and property values, especially if municipal resources become strained. In essence, while not an overt infringement, the bill's approach may indirectly compromise financial security tied to property ownership.
• Limited Government: HB 2289 conflicts with the principle of limited government by expanding the role of municipal authorities in managing and allocating state tax revenues. Rather than promoting self-sufficient local governance, the bill entangles state resources with municipal projects, increasing governmental involvement in local economic initiatives. This kind of state intervention risks setting a precedent where more cities seek similar revenue arrangements, thereby expanding the scope of government involvement in what could be considered local economic responsibilities. Instead of limiting government power, the bill broadens municipal access to state funds, contradicting the goal of minimizing state interference.

• SB 1444 (Same As)