According to the Legislative Budget Board (LBB), the fiscal implications of SB 1250 are significant for the state, particularly in its treatment of tax revenue associated with project financing zones (PFZs). According to the Legislative Budget Board’s fiscal note, the bill would result in a net negative impact of $1.3 million to General Revenue-related funds during the 2026–2027 biennium. This loss is projected to escalate annually, reaching an estimated $1.9 million by FY 2030. Over the long term, revenue foregone by the state is expected to grow sharply, with an estimated total loss of $83.4 million by FY 2054, when compared to the current designation maintained by the city of Corpus Christi.

The primary driver of this impact is the bill’s provision allowing the city of Corpus Christi, already possessing a PFZ designated in December 2024, to redesignate a contiguous geographic zone that encompasses more high-performing hotel properties. This broader redesignation increases the volume of incremental state tax revenue (including hotel occupancy tax, sales tax, and mixed beverage taxes) redirected to the local trust account supporting the project. Specifically, the redesignation is projected to increase Corpus Christi’s entitlement to state tax revenue by nearly 90% in the first five years, rising from $6.7 million to $12.7 million. Over the full 30-year term, the entitlement increases from $94.1 million to $177.5 million.

While the bill aims to support tourism-related infrastructure development, it does so by diverting state tax revenue that would otherwise support statewide general revenue needs. The fiscal note also emphasizes that these estimates are conservative, as they do not include potential increases in hotel-related tax receipts from new tourism driven by infrastructure improvements or gains in market share from hotels outside the zone or state. Nevertheless, this approach trades immediate state revenue for the potential of longer-term local economic development, which raises policy considerations about equitable distribution of tax benefits and the efficiency of using state revenue to finance local projects.

SB 1250 proposes a targeted fix for the City of Corpus Christi’s Project Financing Zone (PFZ), enabling it to redraw the boundaries of its zone to include land-based hotel properties rather than the unproductive portion currently situated in the Gulf of Mexico. While the bill aims to place Corpus Christi on equal footing with other large Texas cities operating PFZs, the mechanism it uses—state hotel occupancy tax (HOT) revenue—raises fundamental concerns for those committed to limited government and tax neutrality.

The core issue with this legislation is that it not only preserves but expands the use of the state hotel occupancy tax, a levy that should be deeply objectionable to proponents of free enterprise and fiscal restraint. Originally justified as a way to make tourists “pay their fair share,” the HOT has evolved into a reliable funding stream for costly and often speculative local developments, such as convention centers and sports venues. This tax distorts economic behavior, unfairly targets a single industry, and allows local governments to spend without the kind of direct taxpayer accountability that general revenue funding would require.

SB 1250 deepens that problem by increasing the volume of state-collected taxes diverted into local trust accounts—$83.4 million more over 30 years than Corpus Christi’s current PFZ configuration would allow. That means less money for statewide priorities and more incentives for cities to game PFZ boundaries to maximize revenue capture, regardless of broader taxpayer benefit. It also reinforces a financing model that shifts economic planning away from the private sector and into the hands of politically directed development.

For those who believe the hotel occupancy tax is fundamentally unsound—both as a tax and as a tool of public finance—this bill represents a step in the wrong direction. It doesn’t reform or reduce reliance on the HOT; it institutionalizes and expands it.

Texas Policy Research recommends that lawmakers vote NO on SB 1250. If the policy goal is fairness or equal treatment between cities, the better path is to roll back the state’s involvement in PFZs altogether, not to double down on a tax mechanism that should not exist.

• Individual Liberty: The bill does not impose any direct restrictions on individual freedoms or behavior. However, by enabling the redirection of state-collected tax revenue for local economic development, it shifts decision-making power over significant public resources away from taxpayers and toward politically appointed entities. This reduces citizen control over how tax dollars are used, weakening the accountability loop essential to liberty.
• Personal Responsibility: There is no direct impact on individual or institutional responsibility. That said, the bill encourages reliance on public subsidies (via hotel tax rebates) to support projects that should arguably be financed through private investment or local taxation, thereby blurring the line between public need and private enterprise. While it doesn’t erode personal responsibility directly, it does little to reinforce it.
• Free Enterprise: By using tax revenue to fund infrastructure in specific zones—selected and shaped by municipalities—the bill favors certain businesses over others. Hotels and developments inside the PFZ benefit from state-backed subsidies, while those outside do not. This introduces distortions in the marketplace, encouraging rent-seeking and political favoritism rather than competition based on merit or innovation. It’s a classic example of government picking winners.
• Private Property Rights: The bill does not alter or infringe upon private ownership or use rights. However, development that arises from PFZ infrastructure projects can put pressure on nearby property owners (through rising taxes, gentrification, or eminent domain threats, though not explicitly authorized by this bill). Moreover, the preferential treatment given to businesses inside a PFZ may skew property values and development incentives based on political geography, not market choice.
• Limited Government: This bill grows the scope of government influence by increasing the amount of state tax revenue that can be redirected to local zones for specific development purposes. It sets a precedent for manipulating PFZ boundaries to optimize local revenue capture, without broader taxpayer oversight or statutory guardrails. Rather than reducing the footprint of government, it deepensthe  entanglement between state tax policy and local urban planning, contrary to the principle of limited government.

• HB 2877 (Same As)