According to the Legislative Budget Board (LBB), SB 1756 is not expected to have any fiscal impact on the state budget. The bill solely imposes limitations on future municipal use of hotel occupancy tax revenue by restricting the number of projects municipalities can fund under specific sections of Chapter 351 of the Tax Code. Specifically, municipalities will be limited to one project per section under 351.1015, 351.106, 351.102, 351.1021, and 351.1022. These restrictions apply prospectively and do not interfere with existing or ongoing projects that began before January 1, 2025.

Although SB 1756 repeals Section 351.155(d), which previously exempted large municipalities (with populations over 175,000) from the single-project limitation, it also includes grandfather provisions. Any municipal revenue pledges or commitments made before the effective date of the bill will remain valid and will continue to be governed by the law in effect at the time they were made.

For local governments, the bill may have a more nuanced financial impact over time. While there is no immediate fiscal effect, limiting future access to hotel tax revenue for additional projects could constrain long-term economic development plans, particularly those involving convention center expansion or hotel development that relies on tax-backed financing. However, the bill does not reduce current municipal revenue streams or require any new expenditures, hence, no direct local fiscal burden is projected under the bill as introduced.

SB 1756 takes a substantial step toward reining in the use of the municipal hotel occupancy tax (HOT), a tax that has long been criticized for distorting market dynamics, funding unnecessary or duplicative infrastructure, and diverting public funds into politically driven tourism projects. While the bill does not eliminate the hotel occupancy tax altogether—a limitation worth lamenting—it does significantly narrow its scope of use by restricting each municipality to just one project under specific authorizations within Chapter 351 of the Texas Tax Code.

For critics of the HOT, this is a meaningful reform. Historically, cities have used this tax to finance high-cost hotel and convention center developments, often in partnership with private entities, claiming tourism and economic development benefits. In reality, these projects often rely on speculative projections of hotel stays and may leave local taxpayers on the hook when revenues underperform. Moreover, they can crowd out private investment that doesn’t benefit from subsidized competition.

SB 1756 ends the practice of project proliferation by capping future uses to one per section, repealing the carve-out for large cities, and requiring legislative review for any new authorization. This imposes real limits on local governments’ ability to entrench themselves in ongoing subsidized tourism development.

While it falls short of abolishing the hotel occupancy tax entirely, which would be a more complete victory for fiscal restraint and market neutrality, this bill sends a clear message: the days of cities stacking one tax-funded hotel project after another without oversight are over. It's a measured but firm strike against expansive municipal use of a tax mechanism that should be used with far more caution, if at all.

For these reasons, Texas Policy Research recommends that lawmakers vote YES on SB 1756.

• Individual Liberty: The bill does not directly impact civil liberties in the traditional sense (e.g., speech, religion, or bodily autonomy), but it indirectly supports individual liberty by limiting the expansion of government-backed projects that often lead to higher tax burdens in the long term. Even though hotel occupancy taxes are paid primarily by travelers, their use for debt-backed municipal projects can result in broader taxpayer exposure if revenues fall short. Limiting this tool reduces the risk of government overreach into economic domains where it doesn't belong.
• Personal Responsibility: By requiring cities to come to the Legislature for permission to initiate more than one project, the bill imposes a higher standard of fiscal accountability. Municipalities will need to justify their spending to the public and the Legislature, rather than reflexively reaching for tax-backed subsidies. That promotes more deliberate decision-making — a fundamental aspect of responsible governance.
• Free Enterprise: Hotel occupancy taxes often distort markets by subsidizing government-preferred businesses (e.g., luxury hotels, convention centers) and crowding out private-sector competition. By capping how many times these funds can be used, the bill puts natural market forces back in the driver’s seat. While it doesn’t eliminate the tax or all its distortions, it’s a meaningful check against recurring government intervention in a sector that should be driven by demand, not subsidy.
• Private Property Rights: The bill doesn’t directly alter land use or ownership rights, but by limiting the number of HOT-backed developments, it may reduce the pressure for cities to use eminent domain or other regulatory powers to build tourism-centric infrastructure. Fewer tax-backed mega-projects means fewer chances of property owners being pushed aside for “the public good.”
• Limited Government: This is the bill’s strongest alignment. The bill curtails a frequently abused form of municipal taxing authority and reins in the unchecked growth of tax-funded public-private partnerships, particularly in the hospitality and convention sectors. It ends a blank-check approach to HOT-funded projects and restores the Legislature’s oversight role. Repealing the population exemption for large cities also prevents municipalities from gaming the system to get around statutory limits.