According to the Legislative Budget Board (LBB), HB 3336 is projected to have a negative fiscal impact on the state’s General Revenue Fund, totaling an estimated $3.52 million for the biennium ending August 31, 2027. The annual cost to the state is estimated at $1.76 million per fiscal year beginning in 2026 and continuing through at least 2030.

The legislation authorizes a tax credit for alcoholic beverage producers, distributors, and wholesalers who donate spent grain byproducts for agricultural use. Each eligible taxpayer may claim a credit of up to $30,000 annually. According to the Legislative Budget Board, if Texas producers had claimed the credit in calendar year 2024, it could have cost the state approximately $1.4 million. The projection assumes future claims would remain at about half that amount, with additional claims coming from distributors and wholesalers representing nonresident producers.

The bill does not impose significant fiscal implications on local governments. Administration of the tax credit will fall under the Texas Alcoholic Beverage Commission, which will be responsible for processing applications and verifying compliance. While the credit encourages beneficial environmental and agricultural practices, it does reduce overall tax revenue available to the state.

While HB 3336 is well-intentioned in its support for agricultural reuse and waste reduction, the bill presents several policy concerns that outweigh its benefits, particularly from the standpoint of tax equity, limited government, and fiscal responsibility. The measure introduces a targeted tax credit for a specific industry—alcoholic beverage producers and importers—for donating spent grain byproducts for agricultural use. While this promotes environmentally and economically beneficial practices, it does so through a selective incentive that undermines the neutrality and fairness of the state’s tax system.

First, the bill violates the principle of tax equity by granting a financial benefit exclusively to one class of businesses—breweries, distilleries, and distributors of liquor and malt beverages. Other industries that donate useful byproducts for similar agricultural or environmental purposes (such as food manufacturers, roasters, or grocers) are excluded from this benefit. Carve-outs of this kind erode the integrity of the tax code and create unequal treatment under the law, leading to a piecemeal system where tax benefits are allocated based on political or sectoral considerations rather than on broad, principled policy.

Second, the bill increases complexity within the tax code. While the credit is capped and administered by the Texas Alcoholic Beverage Commission (TABC), it adds an additional program for the agency to manage, along with associated rulemaking and application verification. Even small administrative expansions contribute to a growing web of narrowly tailored tax preferences that require oversight, enforcement, and ongoing bureaucratic attention. This runs counter to the goal of maintaining a lean, simplified regulatory structure and limited state intervention in private sector behavior.

Third, although the bill does not increase taxes, it imposes an estimated $1.76 million per year reduction in General Revenue through forgone alcohol tax collections. This recurring fiscal impact, while modest in isolation, represents a loss of flexible funding that could otherwise support core state priorities or be returned to taxpayers through broader relief. Especially when viewed in the context of a growing number of industry-specific tax expenditures, this approach strains long-term budget discipline and accountability.

Lastly, setting a precedent for targeted credits invites a cascade of similar requests from other sectors, further distorting the market and politicizing tax policy. The role of the state should be to create a level playing field, not to micromanage or reward specific industries through selective tax incentives.

In summary, HB 3336 raises legitimate concerns about fairness, government scope, and fiscal prudence. While the environmental and agricultural goals of the bill are commendable, its method—delivering targeted tax relief to a single industry—runs contrary to sound conservative fiscal and tax policy. For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 3336.

• Individual Liberty: The bill does not compel action; it offers a voluntary tax credit to those who choose to donate spent grain. This respects the freedom of producers to make decisions based on their values and operational preferences. However, it could be argued that when the tax code offers selective benefits, it shifts liberty from being universal to contingent on government favor, which erodes the equal application of law. Those in other industries making similar donations receive no such consideration, limiting their relative freedom to benefit from comparable behavior.
• Personal Responsibility: The bill encourages responsible behavior, specifically, the sustainable disposal of byproducts in a way that supports agriculture and reduces waste. It rewards businesses that choose to go the extra mile to donate spent grain, rather than discarding it. In this way, it affirms a personal and corporate ethic of contributing to broader community and environmental health.
• Free Enterprise: The bill does not impose restrictions or mandates. It uses a market-based incentive to encourage cooperation between two sectors: alcohol production and agriculture. By lowering the cost of donation, it could promote new market relationships and increase efficiency in resource use. However, offering tax credits to just one sector distorts the playing field, giving alcohol producers an edge that other industries do not receive. This risks undermining the principle of a neutral, non-interventionist government in the marketplace.
• Private Property Rights: The bill respects and reinforces private property rights by encouraging, rather than mandating, producers to use their byproducts in a certain way. Businesses retain full control over how they dispose of spent grain. The state does not confiscate, regulate, or reclassify the byproducts; it simply offers an incentive if producers choose to donate them.
• Limited Government: Here lies the strongest concern for opponents, grounded in liberty principles. The bill adds a new credit to the tax code, narrowing the base, grants rulemaking authority to TABC, increasing administrative complexity, risks prompting additional carve-outs in the future, and growing the tax expenditure footprint of the state. Though the program is modest in scope, it moves away from the principle that government should be restrained, neutral, and generally hands-off in how private businesses operate or how benefits are distributed.

• SB 1554 (Same As)