According to the Legislative Budget Board (LBB), The fiscal implications of HB 4396 are expected to be minimal. No significant fiscal impact to the state is anticipated as a result of this bill. The costs associated with adding the American Performance Horseman and the American Rodeo to the Major Events Reimbursement Program (MERP) are assumed to be manageable within existing state resources.

The bill’s primary financial effect is related to the potential reimbursement of eligible expenses associated with hosting these newly designated major events. However, since the state already has the infrastructure and funding mechanisms in place under MERP, the inclusion of these two events does not introduce substantial additional costs.

Similarly, there is no significant fiscal impact expected at the local government level. The potential economic benefits, including increased tourism and related spending, are likely to offset any minor administrative costs associated with applying for or receiving program funds. Therefore, the bill is considered fiscally neutral, with manageable costs and potential economic gains.

HB 4396 seeks to expand the Major Events Reimbursement Program (MERP) to include the American Performance Horseman and the American Rodeo as eligible events. Additionally, the bill designates Teton Ridge Live Productions and Teton Ridge The American, LLC as the official site selection organizations for these events. While the bill aims to enhance Texas' ability to attract major equestrian and rodeo events, the underlying mechanism—subsidizing private events with public funds—raises significant concerns related to the principles of Free Enterprise and Limited Government.

MERP functions as a state subsidy, designed to use taxpayer funds to incentivize and reimburse event-related expenses. By expanding this program, HB 4396 increases the potential for public funds to be directed toward private enterprises, creating an uneven playing field. Subsidies inherently distort the free market by giving preferential treatment to selected events, which contradicts the principle of Free Enterprise. Private businesses should thrive based on consumer demand and economic viability, not through financial assistance from the government. Expanding this subsidy program risks undermining fair competition, as non-subsidized events must compete without the same state-backed financial support.

From a Limited Government perspective, increasing the scope of MERP represents a further entanglement of the state in private enterprise. Subsidy programs like MERP blur the line between public responsibilities and private business activities, making the government a stakeholder in events that should be independently managed. While the LBB reports that the costs of this expansion can be absorbed within existing resources, the principle at stake is not just fiscal responsibility but also the proper role of government. Using public funds to support specific private events risks growing the government’s footprint in the economic sector.

Even if absorbed within existing resources, these subsidies still represent a diversion of public funds away from essential services or infrastructure. Justifying such expenditures requires clear evidence of substantial economic benefit, which is not guaranteed. The assumption that hosting these events will significantly boost local economies may not always align with the reality of attendance figures, tourist spending, or long-term economic impact. There is also the risk of creating a precedent where more niche or specialty events lobby for similar inclusion, further expanding the program beyond sustainable limits.

Instead of expanding MERP, a more sustainable approach would involve promoting Texas as an attractive destination through private investment and local business incentives that do not rely on direct state funding. Encouraging private sponsorships and partnerships could reduce the need for public subsidies while still achieving the goal of attracting major events. This approach respects the principles of limited government and free market competition while reducing financial risk to taxpayers.

While the goal of increasing tourism and economic activity is valid, HB 4396’s approach of expanding subsidies is problematic from a liberty-oriented perspective. Subsidies inherently conflict with free enterprise by favoring specific private entities and expand government involvement in the economy. Given these considerations, the appropriate stance is to oppose the bill and advocate for more market-driven solutions to attract major events to Texas. Texas Policy Research recommends that lawmakers vote NO on HB 4396.

• Individual Liberty: HB 4396 has a limited direct impact on individual liberty since it primarily concerns state subsidies for private events rather than personal rights or freedoms. However, there is an indirect effect as taxpayers are compelled to support specific private events through public funding, reducing individuals' control over how their tax dollars are utilized. This can be seen as a subtle infringement on the principle that individuals should freely choose how to allocate their resources.
• Personal Responsibility: The bill does not explicitly encourage or discourage personal responsibility. However, by using taxpayer funds to support private events, it can inadvertently reduce the incentive for event organizers to bear the full financial risks associated with hosting large-scale events. Instead of operating within market forces and bearing the consequences of success or failure, organizers receive a financial safety net, diminishing the principle of personal responsibility within the private sector.
• Free Enterprise: The most significant impact of HB 4396 is on Free Enterprise. By expanding the Major Events Reimbursement Program (MERP) to include the American Performance Horseman and the American Rodeo, the state is actively intervening in the market by favoring specific events over others. Subsidizing these private events distorts competition by providing financial support that non-subsidized events do not receive. This undermines the free market principle where businesses should succeed based on consumer demand and financial viability rather than government support. Such subsidies may also discourage private investment or innovation in event hosting, as companies may come to rely on public funds rather than optimizing their business models.
• Private Property Rights: HB 4396 does not directly affect private property rights. However, from a broader perspective, the use of public funds to support private entities can be interpreted as a redistribution of resources. Taxpayer money, which could be considered the private property of individuals, is being allocated to support specific private enterprises, raising questions about whether this use respects the principle of property rights.
• Limited Government: The bill expands government involvement in the private sector by increasing the scope of a subsidy program. Rather than reducing the government’s footprint, HB 4396 broadens it, making the state more deeply involved in the economic outcomes of specific events. Subsidy programs inherently increase government influence by selecting economic "winners" through public support. This contradicts the principle of limited government, which advocates for minimal state intervention in the economy. Additionally, even though the LBB indicates that the fiscal impact is manageable, expanding MERP sets a precedent for further state involvement in subsidizing private initiatives, potentially leading to future budgetary expansions or similar subsidy demands from other events.