According to the Legislative Budget Board (LBB), no fiscal implications to the State are anticipated for HB 5489. The fiscal note does not identify any expected state cost, state savings, or state revenue effect from the bill.

The bill could affect local governments by reducing revenue from impact fees during the temporary moratorium. Political subdivisions that otherwise would have imposed impact fees under Chapter 395, Local Government Code, may lose that fee revenue while the moratorium is in effect.

The LBB does not quantify the local revenue reduction. The impact would likely vary by political subdivision depending on how heavily each local government relies on impact fees and whether any existing fee was pledged to debt before September 1, 2025. The fiscal note does not identify offsetting local savings or specify whether local governments would replace the revenue through other sources.

Texas Policy Research recommends that lawmakers vote YES on HB 5489 while also considering amendments to strengthen the bill because it advances a clear, limited-government and free-enterprise objective: restricting the use of local impact fees that can raise the cost of new development and contribute to higher housing prices. The bill analysis identifies housing affordability as the core concern, noting that although some municipalities use impact fees to fund capital improvements or facility expansions tied to new development, those costs may be passed from developers to consumers and may create affordability issues. By temporarily prohibiting political subdivisions from imposing impact fees beginning September 1, 2025, the bill would reduce one category of government-imposed development cost and create a four-year period to evaluate the effect of those fees on housing affordability.

The bill is also favorable because it does not create a new state program, agency, regulatory structure, criminal offense, or rulemaking authority. The bill analysis states that HB 5489 does not expressly create or increase a criminal offense and does not grant additional rulemaking authority to a state officer, department, agency, or institution. From a limited-government perspective, that structure is important. The bill restrains local revenue authority without expanding state administrative power.

The principal concern is fiscal cost-shifting. Impact fees are often used by local governments to fund or recoup infrastructure costs associated with new development. Temporarily suspending those fees may reduce upfront development costs, but it does not eliminate the underlying infrastructure expenses. Without additional safeguards, political subdivisions could replace the lost revenue through higher property taxes, utility rates, certificates of obligation, or other local fees. That would weaken the liberty benefit by shifting costs from new development to existing taxpayers and ratepayers rather than reducing the overall government burden.

For that reason, the bill should be amended to prevent political subdivisions from adopting functionally equivalent replacement fees during the moratorium. It should also require public disclosure of any replacement funding source used to cover infrastructure costs that otherwise would have been funded by impact fees. A reporting requirement before the August 31, 2029, expiration date would help lawmakers determine whether the moratorium reduced housing costs, shifted costs to taxpayers, delayed infrastructure projects, or increased local debt.

The bill’s existing debt-pledge exception is appropriate. It allows a political subdivision to continue imposing a specific impact fee if the fee was pledged before September 1, 2025, for debt repayment, and if not imposing the fee would impair the debt contract. That limitation protects existing contractual obligations while still applying the moratorium prospectively.

The bill strongly supports free enterprise by suspending a local fee that can increase the cost of development, affect housing supply, and create barriers for builders. The bill analysis notes that impact fees may be passed from developers to consumers and may contribute to housing affordability concerns. A temporary moratorium would reduce that burden and allow the Legislature to evaluate the role of impact fees in the housing market.

The bill strengthens private property rights by limiting a local government charge tied to the development and use of land. Property owners and developers would face fewer government-imposed costs when pursuing new development during the moratorium. The bill does not address other land-use regulations and does not, as written, prevent local governments from using substitute charges that may indirectly burden property.

The bill reduces reliance on a fee structure that assigns infrastructure costs to new development, which may improve affordability but may also shift some costs to the broader taxpayer or ratepayer base. That creates a mixed personal-responsibility effect. The bill supports individual housing choice by lowering a development-related government cost, but it should be amended to prevent cost-shifting that disconnects infrastructure use from those who benefit from or necessitate it.

The bill limits local revenue authority and does not create a new state agency, program, criminal offense, or rulemaking authority. The bill analysis specifically states that it does not grant additional rulemaking authority and does not create or increase criminal penalties. The temporary sunset also limits the duration of the policy. However, because the bill uses statewide preemption and may prompt local governments to replace impact-fee revenue through taxes, utility rates, or debt, amendments are needed to improve transparency and prevent fiscal workarounds.

The bill does not impose new mandates, penalties, surveillance, or restrictions on individuals. Instead, it limits the ability of political subdivisions to impose impact fees on new development during the moratorium period. This modestly improves individual liberty by reducing a government-imposed cost that may be passed on to homebuyers, though the benefit could be weakened if local governments replace the lost revenue through other taxes or fees.