HB 3066 proposes to extend the period during which certain municipalities—specifically the City of Allen—may retain state hotel occupancy and sales tax revenues from 10 to 20 years for a qualified hotel and convention center project. While the bill is framed as an economic development tool, the expanded tax entitlement raises substantial concerns that warrant a firm opposition vote based on core principles of limited government, fiscal responsibility, and fair market policy.
At its core, HB 3066 expands the state’s involvement in local economic development initiatives by allowing a municipality to continue diverting state-collected tax revenues for a longer period. Rather than reducing the size or reach of government, this bill doubles the duration of a special tax-sharing arrangement. It creates a precedent for long-term state entanglement in local development funding, contrary to the principle that local projects should be locally financed.
The bill benefits a single city, Allen, by enabling it to retain tax revenue not available to other similarly situated municipalities. This creates an uneven playing field where cities with the political leverage to obtain special legislation receive advantages over others. HB 3066 is narrowly tailored, and its benefits are concentrated, which is antithetical to free enterprise principles that require equal treatment under the law and open competition. It invites the risk of further carve-outs and politically driven exemptions in future legislative sessions.
The Legislative Budget Board estimates that the extension will result in $108.6 million in additional foregone state revenue through FY 2049, with total losses reaching $182 million. While the bill includes a clawback mechanism triggered in the 40th year if the state fails to recoup comparable revenue, inflation and nominal growth make repayment highly unlikely. This leaves the state bearing long-term financial risk without a strong guarantee of fiscal return, limiting resources available for statewide priorities like infrastructure, education, or tax reform.
The hotel occupancy tax (HOT) is often criticized as regressive and distortionary, disproportionately affecting the travel and hospitality sectors and enabling the government to generate revenue with limited political accountability. Rather than scaling back the use of HOT or reducing its dependency on targeted subsidies, HB 3066 entrenches it further. It converts a tax designed to fund general municipal services into a tool for long-term revenue capture and redistribution.
While HB 3066 may be well-intentioned in supporting local development, its mechanisms raise serious policy objections. It expands government intervention, favors one locality over others, incurs substantial fiscal costs for the state, and reinforces a problematic tax structure. On balance, the legislation compromises key liberty principles and presents more risk than benefit to Texas taxpayers and markets.
For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 3066.
- Individual Liberty: The bill does not directly affect the rights or freedoms of individuals. It does not regulate behavior, impose new restrictions, or confer personal rights. However, when public funds are diverted from general revenue to narrowly targeted projects, it raises secondary concerns about taxpayer equity and the opportunity cost of how public money is used.
- Personal Responsibility: The bill allows the City of Allen to benefit from an extended revenue entitlement funded by state-collected taxes, rather than requiring the city to bear full fiscal responsibility for its hotel and convention center investments. By relying on a state-managed subsidy to finance local development over 20 years, the bill reduces the incentive for fiscal discipline, encouraging municipalities to expect and lobby for long-term state support rather than operating within their own tax base.
- Free Enterprise: The bill distorts the free market by granting special treatment to a specific municipality and its affiliated development project. Businesses in other cities—including those with similar tourism infrastructure—will not receive comparable benefits. This preferential treatment undermines competition, tilts market conditions, and places privately financed competitors at a disadvantage. Rather than creating a level playing field, the bill entrenches government favoritism and political gatekeeping over which projects receive indirect subsidies.
- Private Property Rights: The bill does not involve eminent domain or impose restrictions on property use, so it does not directly infringe on private property rights. However, public-private partnership models funded through long-term tax entitlements often blur the lines between public assets and private benefits, raising questions about the appropriate role of taxpayer funding in private development ventures.
- Limited Government: This is where the bill most clearly contradicts liberty values. The bill expands a state-run tax rebate program, prolongs state involvement in local development financing, and effectively ties up state revenue for two decades. It imposes an administrative burden on the state comptroller and sets a precedent for future requests from other municipalities seeking similar carveouts. Rather than limiting government, the bill enlarges its scope, creating complex financial entanglements between state and local entities for narrowly defined purposes.
