According to the Legislative Budget Board (LBB), the fiscal implications of HB 3045 indicate a direct revenue impact on the Property Tax Relief Fund but no immediate effect on the General Revenue Fund during the 2026–27 biennium. Specifically, the bill is projected to result in a revenue loss of approximately $2.92 million to the Property Tax Relief Fund over that biennium. Under existing law, any shortfall in this fund must be offset by a corresponding transfer from General Revenue to ensure the Foundation School Program remains fully funded.

Looking further ahead, the projected fiscal impact grows significantly. By fiscal year 2030, the annual revenue loss to the Property Tax Relief Fund could rise to nearly $4.67 million. These estimates are based on the current franchise tax payments made by entities that are likely to qualify for the exemption under the bill’s criteria—namely, corporations operating FAA-authorized spaceports under contract with the U.S. Department of Defense. The projections incorporate expected industry growth and the scheduled expiration of the research and development tax credit, which affects baseline tax liabilities.

Importantly, the fiscal note cautions that the actual cost to the state could be substantially higher than projected. This is because the bill exempts the entire franchise tax obligation of qualifying corporations, not just the revenue derived from spaceport-related activities. If a corporation engaged in broader commercial ventures were to qualify under the bill, potentially through the acquisition of a spaceport operator, the scope of the tax exemption could be significantly expanded. Thus, while the initial impact is modest, the long-term fiscal exposure for the state could be considerably greater depending on how the exemption is utilized in practice.

There is no anticipated fiscal impact on local governments, which do not collect franchise taxes. Nonetheless, the shift of funds from General Revenue to support the school finance system could indirectly constrain other state-level spending priorities in the long run.

HB 3045 proposes a full franchise tax exemption for corporations that operate spaceports authorized by the Federal Aviation Administration (FAA) and that have contracts with the U.S. Department of Defense (DoD) to provide launch or spaceflight services. While the stated aim is to promote Texas’s role in national defense and aerospace innovation, the policy design is overly narrow and fiscally unsound. The exemption is likely to benefit only one or two large corporations, most notably SpaceX, while providing no comparable relief or opportunity to the broader business community.

The bill violates the principle of tax equity by granting exclusive relief to a small subset of the aerospace sector. This kind of preferential treatment introduces distortions into the tax code, giving select companies a government-sanctioned competitive advantage based not on performance or merit, but on qualifying criteria tailored to a limited field of actors. In a market-based economy, such selective tax exemptions can undermine the level playing field and create perverse incentives for other industries to seek similar carve-outs, leading to an increasingly fragmented and inefficient tax system.

From a fiscal responsibility standpoint, the bill is problematic. According to the Legislative Budget Board, the proposed exemption would lead to a $2.92 million revenue loss to the Property Tax Relief Fund over the next biennium, with that cost rising to nearly $4.7 million annually by 2030. State law requires these losses to be offset by General Revenue transfers to maintain funding for the Foundation School Program. Moreover, the bill lacks a sunset provision or performance-based review, which means the fiscal impact could grow unchecked over time.

The policy also undermines the principle of limited government. While it may appear to reduce tax burdens, it actually represents a form of targeted government intervention in the marketplace. True limited government favors broad-based, neutral tax structures, not industry-specific exemptions that favor the well-connected or politically salient. This bill places the state in the position of picking winners and losers in the private sector, with little public transparency or accountability.

Additionally, the justification for the bill—that Texas must offer this incentive to remain competitive—relies on a race-to-the-bottom logic that prioritizes short-term recruitment over long-term policy coherence. Other tools exist to support high-value industries, such as research and infrastructure investment, which can be structured to include clear performance metrics and clawback provisions. By contrast, HB 3045 offers a blanket exemption with no such safeguards, raising serious questions about oversight and return on investment.

For all these reasons—its narrow application, inequitable treatment of businesses, fiscal risks, and deviation from limited government principles—HB 3045 does not represent sound tax policy or a prudent use of public resources. While the goal of strengthening Texas’s aerospace sector is valid, this approach does not achieve that objective in a fair or fiscally sustainable manner. As such, Texas Policy Research recommends that lawmakers vote NO on HB 3045.

• Individual Liberty: The bill does not directly restrict or enhance individual liberty, as it deals with corporate taxation and not personal freedoms. However, it may have an indirect impact. By reducing tax revenues to the Property Tax Relief Fund, requiring backfills from General Revenue, resources may be diverted from public services such as education and infrastructure. If those shifts result in reduced quality or accessibility of public goods, the ability of individuals to flourish and exercise opportunity could be negatively affected over time.
• Personal Responsibility: The bill does not influence personal behavior, decision-making, or accountability in a direct way. However, one could argue that by offering a blanket exemption to large corporations without requiring performance-based metrics or accountability, it undermines the broader ethic of responsibility in public policy. When the government removes tax obligations from certain entities without demanding clear outcomes or oversight, it may foster a culture of dependency or entitlement rather than merit-based reward.
• Free Enterprise: While the bill may appear pro-business at a glance, it ultimately undermines the principle of free enterprise by granting preferential treatment to a specific industry and likely only one or two companies. True free enterprise thrives on open competition without government favor or interference. By carving out tax exemptions for companies with specific federal contracts in the aerospace sector, the bill distorts market competition, disadvantages firms that do not qualify, and increases the risk of cronyism. This kind of selective incentive is antithetical to a level economic playing field.
• Private Property Rights: The bill does not directly alter or infringe upon property rights. It neither expands nor restricts ownership, use, or control of private property. Any benefit it provides to qualifying companies is through taxation policy, not through regulation of property or contractual freedoms.
• Limited Government: The bill conflicts with the principle of limited government. While it superficially reduces taxation, it does so in a highly selective and interventionist manner. Limited government supports uniform laws applied fairly, minimizing state interference in the economy. This bill, by contrast, involves the state in industry-specific economic engineering—selecting favored sectors and relieving them of taxes while others continue to shoulder the burden. It also introduces fiscal consequences that require other parts of government (namely education funding) to absorb the cost, expanding the state’s redistributive role rather than limiting it.

• SB 1731 (Same As)