According to the Legislative Budget Board (LBB), SB 2298 is projected to have no immediate fiscal impact on General Revenue-related funds through the biennium ending August 31, 2027. However, beginning in fiscal year 2028, the bill would have a negative revenue impact on the state. The Legislative Budget Board estimates a revenue loss of $1.88 million in FY 2028, increasing slightly to $1.96 million in FY 2029 and $2.03 million in FY 2030, with continued losses projected for up to a decade thereafter.

The fiscal impact stems from the bill's provision that adds a new municipality—identified as the city of Plano—to the list of cities eligible to receive state sales and hotel occupancy tax revenue generated by a qualified hotel and convention center project. Under the bill, Plano would be entitled to receive these state tax revenues for 10 years after the opening of the project. This entitlement effectively redirects funds that would otherwise flow into the state treasury, resulting in a revenue loss to the General Revenue Fund.

Additionally, the bill includes a clawback mechanism: the Comptroller is required, on the 20th anniversary of a qualified hotel's opening, to compare the state tax revenue received by the municipality (under Sections 351.156 and 351.157 of the Tax Code) with the revenue received by the state from those same sources during the 10-year period following the tax-sharing arrangement. If the municipality has received more than the state during that time, it must remit the difference back to the Comptroller. While this provision provides a fiscal safeguard, its effectiveness may be limited due to inflation and long-term forecasting uncertainty, making it unlikely that significant repayments will occur.

For local government, specifically the city of Plano, the bill could provide a substantial influx of revenue that would support the development and operation of a major tourism-related project. These funds could offset municipal costs associated with the project and incentivize private-sector investment. Overall, while fiscally neutral in the short term, SB 2298 poses long-term General Revenue reductions with relatively limited guarantees of recapture.

SB 2298 proposes to expand the permissible uses of municipal hotel occupancy tax (HOT) revenue and extend state tax rebates to a newly bracketed municipality—specifically enabling the City of Plano to participate in a program that directs certain hotel, sales, and use tax revenue to finance tourism-related projects, including hotels and convention centers. While the intent is to stimulate economic development and tourism infrastructure in one of Texas’s fastest-growing areas, the structure and implications of this bill raise substantial concerns grounded in principles of limited government, market fairness, fiscal responsibility, and statutory equity.

First, SB 2298 further entangles public funding with private-sector activity. By allowing municipal and state tax revenue to be redirected toward hotel and convention center development, the state is effectively subsidizing commercial ventures that should be financed by the private market. This raises significant free enterprise concerns, as such subsidies can distort local markets, provide competitive advantages to politically favored developments, and set a precedent for taxpayer-backed risk-taking on projects with uncertain returns. While the bill includes a clawback provision tied to long-term tax receipts, the enforcement mechanisms are delayed and contingent, making them unreliable fiscal safeguards.

Second, the bill adds Plano to a growing list of bracketed municipalities—cities defined by narrowly tailored demographic or geographic criteria to qualify for special statutory privileges. This practice undermines consistency in state law, creates perceptions of preferential treatment, and weakens the Legislature’s credibility on equitable tax policy. Rather than adopting statewide standards or sunsetting underused provisions, SB 2298 expands a model that fosters legislative carve-outs for individual cities based on local political capital.

Third, the fiscal note from the LBB indicates a projected negative impact of nearly $4 million on the state’s General Revenue fund through FY 2029, with further losses expected over the following decade. While this may be justified as an investment in long-term tourism or convention activity, the projected fiscal drain, combined with no clear accountability for performance or return on investment, poses a risk to the state’s budget stability. The bill's financial structure relies on assumptions about future tourism-driven growth, which are inherently speculative and vulnerable to macroeconomic shifts.

Moreover, SB 2298 continues to rely on the hotel occupancy tax, a levy that lacks direct local voter oversight and is often critiqued for enabling municipal overspending. Because this tax is primarily paid by visitors, cities may face little resistance in dedicating the revenue toward grandiose capital projects, regardless of whether those projects meet local needs or produce broad-based economic benefits. HB 4682 exacerbates that risk by increasing the eligible uses of HOT funds without imposing new oversight or competitive safeguards.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 2298. While its goal to support Plano’s economic development may be well-intentioned, the method—expanding a precedent of taxpayer-backed commercial investment with limited transparency—does not reflect sound fiscal or policy judgment. A NO vote reflects a commitment to fiscal discipline, uniform lawmaking, and a government that respects the boundaries of private enterprise.

• Individual Liberty: The bill does not directly constrain or infringe on personal freedoms, but it indirectly affects individual liberty by weakening accountability in government taxation and spending. When tax revenues—especially those generated from visitors—are funneled into high-cost developments like hotels and convention centers without direct voter consent or transparent outcomes, the public’s voice in how funds are used is diminished. Taxation without corresponding oversight erodes the foundational principle that government power should be exercised with the informed consent of the governed.
• Personal Responsibility: Rather than expecting municipalities and developers to secure financing for their own projects, the bill shifts responsibility onto taxpayers by enabling the use of public funds to subsidize private or semi-private ventures. This creates a moral hazard: local governments and their partners may pursue speculative or ambitious projects with less financial risk, knowing public revenue is backing the endeavor. This undermines the principle that entities should bear the full costs and consequences of their decisions.
• Free Enterprise: The bill violates the principle of free enterprise by introducing market distortions. It favors specific public-private developments through state-authorized tax rebates and access to municipal HOT revenue. Private hotels or convention centers operating without such support are placed at a competitive disadvantage, creating an uneven playing field. Government should not use tax policy to pick winners and losers in the hospitality and tourism sector—yet this bill does precisely that.
• Private Property Rights: The bill does not interfere with private property rights in a direct legal sense (e.g., no eminent domain). However, it indirectly affects the value and competitiveness of private property. When public funds are used to finance developments on city-owned land or nonprofit-affiliated projects, adjacent private businesses may face reduced demand or pressure to relocate, expand, or seek their own subsidies just to compete. This weakens the natural, voluntary dynamics of property value and commercial use.
• Limited Government: The most significant liberty violation is to the principle of limited government. SB 2298 expands the reach of municipal government by sanctioning broader use of tax revenue for tourism infrastructure and enabling state-supported financing of non-essential services. It also exemplifies the growing use of bracket bills—legislation narrowly tailored to specific cities or populations—which undermines general lawmaking and feeds government bloat. Rather than restraining the role of government to essential services, the bill actively invites it into areas best left to private initiative.

• HB 4682 (Same As)