According to the Legislative Budget Board (LBB), HB 5165 is not expected to have any fiscal implications for the State of Texas. The bill simply authorizes a narrowly defined category of municipalities to utilize already-collected municipal hotel occupancy tax (HOT) revenues for specified tourism-related expenditures. Since the measure does not alter tax rates or impose new taxes, it does not affect state revenue or appropriations.

On the local level, the bill would allow an eligible municipality—specifically, the county seat of a county with a population over 10,000 that contains a sandhills state park—to allocate hotel occupancy tax revenue toward the development or maintenance of a recreational facility and an arena used for rodeos, livestock shows, or agricultural expositions. This could enhance the municipality’s ability to promote tourism and potentially increase local economic activity. However, these impacts would be contingent upon the municipality’s collection levels and discretion in how funds are allocated.

Overall, HB 5165 represents a permissive policy change that expands local discretion without imposing fiscal mandates. It shifts no financial burden to the state and allows for localized economic development through already existing revenue mechanisms.

HB 5165 seeks to amend the Texas Tax Code to authorize a narrowly defined class of municipalities, specifically tailored to the City of Monahans, to use municipal hotel occupancy tax (HOT) revenue for the construction and operation of recreational facilities or arenas used for rodeos and agricultural events. Although the stated goal is to enhance tourism and support local economic development, the bill raises fundamental concerns regarding tax equity, statutory consistency, and sound fiscal policy.

First and foremost, the expansion of HOT usage is itself problematic. Hotel occupancy taxes are imposed on non-resident visitors who have no political representation in the municipality collecting the tax. This undermines the core principle of taxation with representation. Moreover, such taxes distort consumer behavior, discourage travel-related spending, and often fund projects that would not withstand the scrutiny of local voter-funded taxation. Authorizing their use for non-core municipal functions like arenas or recreation centers weakens fiscal accountability and blurs the line between essential public infrastructure and discretionary amenities.

Furthermore, the bill does not impose new taxes or require new appropriations, but it grants enhanced spending authority that could encourage unnecessary or inefficient use of public funds. There is no performance requirement, cap, or public referendum requirement for how these funds must be used once authorized. In the absence of stricter guidelines or broader applicability, the measure promotes an uneven playing field among municipalities and increases the risk of taxpayer-funded expenditures that do not serve broad or long-term public interests.

In summary, while the intent of HB 5165 may be to support local tourism in a high-occupancy region, the method of doing so—through regressive, poorly accountable taxation and special-interest legislation—runs counter to the principles of limited government, tax fairness, and legislative clarity. For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 5165.

• Individual Liberty: The bill does not directly restrict personal freedoms, but it indirectly undermines the principle of individual liberty by reinforcing a tax structure that lacks accountability. Hotel occupancy taxes are levied on non-residents—individuals who have no say in how the tax is levied or how the revenue is spent. This form of taxation without representation diminishes the democratic consent of the governed and violates the spirit of liberty by allowing governments to extract revenue from individuals without political recourse.
• Personal Responsibility: The bill does not directly promote or discourage individual responsibility. However, by allowing a city to rely on a tax paid by outsiders to fund local facilities, it arguably disincentivizes local fiscal responsibility. Instead of asking residents to contribute to amenities they use, it shifts the burden to tourists and passersby, weakening the link between public spending and local taxpayer accountability.
• Free Enterprise: While the bill claims to promote tourism and economic development, the use of public tax dollars to build or subsidize recreational or event venues (e.g., rodeo arenas) can distort the competitive landscape. Private businesses that might otherwise provide similar services are placed at a disadvantage when competing against publicly subsidized venues. This undermines free enterprise by introducing government-backed competition into what could be a privately met market need. Moreover, it reinforces government intervention in sectors that the market might serve more efficiently.
• Private Property Rights: The bill does not directly impact property rights, zoning, or eminent domain. However, by expanding the scope of government spending through HOT revenues, it does marginally increase the scope of government influence over land use and development priorities, especially if publicly funded facilities are sited or expanded in ways that encroach on or affect nearby private landowners or private event venues.
• Limited Government: The bill violates the principle of limited government on two fronts. First, it broadens the scope of municipal spending without new voter oversight or general applicability. It adds another bracketed exception to the Tax Code—a trend that increases statutory complexity and reflects government favoritism toward particular municipalities. Second, by extending tax-based spending authority to arenas and recreational facilities, the bill encourages local governments to move beyond their core infrastructure and public safety roles into areas better served by private enterprise or voluntary associations.