According to the Legislative Budget Board (LBB), the fiscal implications of HB 4755 are minimal at the state level. This is largely because the bill does not alter state tax rates, create new revenue streams for the state, or require additional state expenditures. It instead adjusts the local authority of certain municipalities to impose or redirect hotel occupancy taxes under specific, narrow conditions.

For local governments, the bill may have a positive fiscal impact, though modest and geographically limited. It authorizes a small municipality—meeting very specific criteria relating to population, location, and the presence of a cultural heritage museum—to impose or continue collecting a municipal hotel occupancy tax to finance a convention center built before January 1, 2025. This could provide a dedicated revenue stream for servicing debt or maintaining such a facility without requiring direct property tax increases or general fund expenditures.

However, the practical impact is constrained by the narrow eligibility window and the fixed expiration date of the taxing authority. Only a small number of municipalities (potentially only one) would likely qualify, and only for a single pre-existing project. Therefore, while the bill does increase local fiscal capacity for a specific purpose, the overall financial footprint is small and time-limited.

HB 4755, while narrowly tailored, ultimately reinforces and extends the use of hotel occupancy taxes (HOT) in a way that is inconsistent with principles of limited government, sound tax policy, and free enterprise. The bill allows a small class of municipalities—specifically those with populations under 25,000, containing a cultural heritage museum, and located in counties bordering both Mexico and the Gulf of Mexico—to impose a venue tax to finance a convention center constructed before January 1, 2025. While the scope of the bill is restricted, its underlying mechanism and implications raise significant policy concerns.

First and foremost, the bill relies on the hotel occupancy tax, which is a problematic revenue tool. This tax targets non-residents, shifting the cost of local infrastructure onto travelers who have no political representation in the jurisdiction levying the tax. This violates the spirit of taxpayer accountability and transparency. It also encourages municipalities to grow dependent on a volatile and regressive revenue stream, one that fluctuates with tourism patterns and broader economic conditions. Tying long-term debt to such an unstable source introduces unnecessary financial risk, especially for small cities with limited fiscal flexibility.

Second, this bill supports a model of local development that competes directly with private enterprise. Publicly funded and operated convention centers—particularly those financed with subsidized revenue streams—can undercut private venues, distorting the local market. This discourages private investment and opens the door to inefficient, government-led development. Even though the tax authority sunsets by 2056 or upon debt repayment, the precedent of extending HOT-based financing for public projects in narrowly defined jurisdictions continues a trend that favors government-backed infrastructure over market-driven alternatives.

In short, while the bill seeks to address real infrastructure challenges in small, tourism-reliant cities, it does so through a taxing mechanism and policy approach that are fundamentally flawed. As such, Texas Policy Research recommends that lawmakers vote NO on HB 4755.

• Individual Liberty: The bill does not directly restrict individual freedoms such as speech, association, or privacy. However, by enabling a local government to impose a hotel occupancy tax (HOT) on consumers without their explicit consent, particularly visitors who cannot vote in the jurisdiction, it introduces a form of indirect taxation that undermines representative consent. While not a direct infringement, it is a deviation from the ideal of voluntary, accountable governance.
• Personal Responsibility: The bill does not significantly encourage or discourage personal responsibility. However, by using public funds to subsidize the development and maintenance of a convention center, it potentially insulates local governments from the need to engage in fiscally disciplined planning or seek private-sector solutions. That said, it does not place any direct burdens or remove accountability from individuals.
• Free Enterprise: This bill is most clearly in conflict with free enterprise. It allows for the use of public tax revenue to fund, operate, and maintain a convention center, effectively putting the government in direct competition with private-sector event venues. Government-funded facilities, backed by non-market revenue sources like the HOT, create unfair market conditions that can crowd out private investment, distort pricing, and lead to inefficiencies in the local economy.
• Private Property Rights: The bill does not directly take or restrict private property. However, it leverages public funding to support a municipally controlled facility, which could have downstream effects on private property values and investment decisions. For example, a subsidized convention center could depress demand for nearby private venues or commercial spaces, indirectly influencing the market and how property rights are exercised.
• Limited Government: This bill expands municipal taxing authority through a narrowly bracketed exception, allowing a local government to impose an additional HOT under specific conditions. Even though the authority is capped in duration (sunsetting in 2056 or upon debt retirement), it still reflects an expansion of local government’s scope—both in tax collection and in the financing and operation of public infrastructure. From a limited government standpoint, this continues a trend of mission creep in local governance, particularly when it comes to economic development initiatives.