According to the Legislative Budget Board (LBB), HB 2404 is not expected to have any fiscal impact on the state budget. The bill authorizes the commissioners court of a county that borders Oklahoma and is bisected by United States Highway 62 to impose a county hotel occupancy tax. However, the imposition of this tax would be at the discretion of the county government, and the state itself would not incur any direct financial effects from this authorization.

Regarding local government, the bill could have a positive fiscal impact on eligible counties by generating additional revenue through the hotel occupancy tax. This revenue could be used to fund local projects or services, depending on how the county allocates the funds. However, since the bill only provides the authority to levy the tax and does not mandate it, the actual fiscal impact would vary based on whether the county chooses to implement the tax and the volume of hotel business in the area.

Overall, the bill offers local governments in the specified counties the flexibility to increase revenue without imposing a direct financial obligation on the state. The fiscal impact would primarily depend on the county’s decision to adopt the tax and the economic activity within the hotel sector.

HB 2404 seeks to authorize counties that border Oklahoma and are bisected by U.S. Highway 62, such as Childress County, to impose a hotel occupancy tax. While the bill’s intent is to provide counties with a means to generate additional local revenue through tourism, several concerns make a No vote more appropriate. These concerns center around taxation, economic impact, government expansion, local demand, and fairness.

One of the most significant reasons to oppose HB 2404 is that it introduces a new tax authority at the county level, allowing for an increase in the hotel occupancy tax rate. Although the bill itself does not mandate the tax, it opens the door for counties to levy additional taxes on hotel businesses. This expansion of taxing power may set a problematic precedent for further local tax increases. Lawmakers who prioritize limited government and low taxation may view this bill as an unnecessary and potentially harmful step toward increasing the overall tax burden on businesses and consumers.

Implementing a hotel occupancy tax could have unintended economic consequences, particularly in rural or economically disadvantaged areas like Childress County. The proposed tax could increase lodging costs, potentially deterring travelers and reducing tourism—a vital economic driver for many rural communities. By making local hotels less competitive compared to neighboring areas without the tax, this measure could inadvertently harm small hotel businesses that already face financial challenges. Lawmakers who advocate for economic growth and the protection of small businesses may find this consequence particularly concerning.

HB 2404 grants local government additional taxing authority, which contradicts the principle of Limited Government. While the bill aims to empower local decision-making, it ultimately expands government control over private enterprise. Lawmakers who prioritize minimizing government intervention may see this as an unnecessary overreach, as there are no compelling data or studies indicating that Childress County faces a significant revenue shortfall that would justify a new tax.

The bill does not present clear evidence of a specific local need for additional revenue that would justify implementing the hotel occupancy tax. Without a demonstrated fiscal shortfall or a clear plan for how the revenue would be used to benefit the community, authorizing a new tax may appear premature or unwarranted. Fiscal conservatives may argue that the county should first explore cost-saving measures or more efficient budget management before resorting to new taxes.

There is also a concern about fairness in how the tax would apply. The bill specifies that the county tax would not apply to hotels within municipalities that already have a hotel occupancy tax under Chapter 351. This provision could lead to a disparity between hotels inside city limits and those in unincorporated areas, placing rural hotels at a competitive disadvantage. Such an uneven application of taxation could unintentionally harm businesses that are less capable of absorbing additional costs.

From a Liberty Principles perspective, the bill conflicts with the concepts of Limited Government and Free Enterprise. By allowing local governments to impose a new tax, it increases governmental power while potentially stifling business growth. Although the bill aims to give local control, it effectively increases the potential tax burden on private businesses without sufficient justification.

Given these concerns, a No vote on HB 2404 is recommended. While the bill’s intent to support local revenue generation is understandable, its potential economic drawbacks, the risk of increased taxation, and the lack of demonstrated necessity outweigh the potential benefits. Additionally, the bill's approach may result in unintended consequences for local businesses and could set a precedent for future expansions of local taxing authority. Lawmakers committed to protecting small businesses, limiting government intervention, and opposing new taxes are encouraged to reject this measure. Texas Policy Research recommends that lawmakers vote NO on HB 2404.

• Individual Liberty: HB 2404 indirectly impacts individual liberty by authorizing local governments to impose a new tax on hotel stays. Although it does not directly infringe on personal freedoms, increasing the cost of lodging could reduce travel flexibility and affordability for individuals visiting affected areas. Those who value keeping expenses low when traveling may perceive this tax as a limitation on their freedom to choose affordable accommodations.
• Personal Responsibility: The bill has minimal direct impact on personal responsibility, as it targets businesses rather than individuals. However, from a broader perspective, it could be argued that the bill shifts some of the financial responsibility for local government funding from residents to visitors. This might reduce the perceived accountability of local governments to manage budgets efficiently, as they would rely on transient guests for revenue rather than addressing financial needs through more sustainable methods.
• Free Enterprise: The bill negatively affects free enterprise by potentially increasing operating costs for local hotels, particularly those located outside municipal boundaries where city hotel occupancy taxes already apply. Higher taxes can lead to increased room rates, which may reduce customer demand and put local businesses at a competitive disadvantage compared to hotels in neighboring areas without the additional tax. This could hinder the growth and profitability of small, independent hotels that are more sensitive to changes in customer behavior.
• Private Property Rights: HB 2404 does not directly infringe on private property rights, but it indirectly affects property owners in the hotel industry. The imposition of an occupancy tax increases the financial burden on hotel owners, limiting their ability to set competitive prices or invest in property improvements. In areas with limited tourism, the additional cost could lead to reduced occupancy rates and potential financial strain.
• Limited Government: The bill conflicts with the principle of limited government by expanding local governmental authority to impose a new tax. While it grants local control, it also increases government intervention in the private sector. Lawmakers who prioritize minimizing governmental powers may view this as a step toward increased taxation and regulatory burdens on businesses, particularly in economically vulnerable rural areas.

• SB 1086 (Same As)