According to the Legislative Budget Board (LBB), SB 2322 modifies the findings the Comptroller must make before recommending approval of a tax limitation agreement under the Texas Jobs, Energy, Technology, and Innovation Act (JETI). One major effect is that it removes the "compelling factor" requirement specifically for utility services projects, such as electric generation facilities, making it easier for those projects to qualify for tax limitations.

As a result of this broader eligibility, the state anticipates an increase in the number of projects that may receive these tax incentives. While the precise number of new qualifying projects is unknown, making the overall fiscal impact indeterminate, the Comptroller's office used market data from representative electric generation facilities to estimate illustrative cost projections. These projections suggest a significant growth in costs to the state due to decreased local taxable value and the consequent increase in state aid needed to meet school funding obligations.

Under modeled assumptions, the estimated cost to the Foundation School Program would begin at approximately $0.8 million in FY 2027 and grow steadily to an estimated $27.4 million by FY 2031. For the full biennium, the impact could reach $46.2 million by 2031, representing a meaningful increase in state expenditures to backfill lost local tax revenue due to expanded program participation.

While these figures are illustrative, they underscore the fiscal risk of loosening eligibility criteria without implementing offsetting safeguards or spending caps. This expansion could create long-term obligations for the state's general revenue fund, especially if high-value energy or industrial projects proliferate under the relaxed approval standards.

SB 2322 continues and expands a government program that provides selective tax incentives to large-scale capital investors—particularly utility service providers and electric generation facilities. While it marginally adjusts the criteria the Comptroller uses to approve such projects under the Texas Jobs, Energy, Technology, and Innovation Act (JETI), the underlying framework remains rooted in the policy structure created by HB 5 (88th Legislature), which authorized local tax limitations for certain companies. For those who opposed HB 5 on the grounds that it constitutes corporate welfare, SB 2322 represents a continuation—and in some respects, a deepening—of those same concerns.

Rather than correcting the imbalance created by HB 5, SB 2322 seeks to eliminate one of the few guardrails that restrained arbitrary or unjustified tax breaks: the “compelling factor” test. This test is designed to ensure that public subsidies are only awarded when a project would not proceed in Texas without them. By exempting certain electric generation projects from this requirement, the bill opens the door for companies that were already planning to locate in Texas to receive lucrative tax abatements—effectively turning a competitive development tool into a guaranteed financial windfall. This shift undermines the stated economic justification for the JETI program and removes a critical layer of taxpayer protection.

The fiscal consequences further underscore the concern. According to the Legislative Budget Board, removing the compelling factor test could lead to significant increases in the number of approved projects, particularly high-value electric generation facilities. This would reduce local taxable property values, particularly for school districts, and increase the state’s obligation to fund public education through the Foundation School Program. Projected costs to the state could grow from $0.8 million in FY 2027 to $27.4 million annually by FY 2031, placing additional pressure on the general revenue fund and, by extension, Texas taxpayers.

Moreover, the bill represents a marginal expansion of the government’s role in economic development and private market decisions. By increasing the discretion and reach of the Comptroller to award tax limitations with less evidentiary burden, SB 2322 expands state authority over business investment choices without corresponding increases in transparency, accountability, or fiscal safeguards. While the regulatory burden on businesses is slightly reduced, the broader impact is a government-favored market distortion that places politically selected companies at an advantage.

Given these considerations, SB 2322 fails to align with the core liberty principles of free enterprise, limited government, personal responsibility, and taxpayer protection. The bill grows the scope of government in the economic sphere, shifts costs onto the broader public without sufficient justification, and advances a model of corporate privilege through public subsidy. Therefore, Texas Policy Research recommends that lawmakers vote NO on SB 2322.

• Individual Liberty: The bill does not directly affect individual rights or freedoms. It neither expands nor restricts personal civil liberties, and its scope is narrowly focused on tax policy for capital investment projects. However, by shifting tax burdens from large corporations to the general public, it may indirectly limit the economic liberty of individuals who must absorb higher taxes or receive reduced public services to compensate for lost local revenue.
• Personal Responsibility: This bill undercuts the principle of personal responsibility by allowing large corporations, particularly in the energy sector, to receive taxpayer-funded incentives without needing to prove their investment decisions depend on such incentives. The removal of the "compelling factor" requirement effectively allows companies to offload part of their operational cost onto the public, rather than fully shouldering the financial responsibility of doing business in Texas. It sends a signal that well-connected firms can receive preferential treatment regardless of actual need.
• Free Enterprise: The bill significantly distorts the free market by intervening in favor of select companies through targeted tax limitations. By easing eligibility criteria for certain projects (e.g., electric generation facilities), the bill creates an uneven playing field, favoring large, capital-intensive firms that are able to navigate the incentive process, while leaving smaller or unsubsidized competitors at a relative disadvantage. This violates the free enterprise principle that all entities should compete under equal rules, free from special government favoritism or interference.
• Private Property Rights: Though the bill does not directly restrict or alter private property ownership, its fiscal implications have downstream effects on property taxpayers. When large businesses are granted tax abatements under JETI, local school districts lose revenue, and property tax burdens may increase for homeowners and small businesses to make up the difference. This indirect shift in responsibility infringes on the equitable treatment of property owners and risks weakening public confidence in the fairness of the property tax system.
• Limited Government: The bill expands the discretion and scope of government authority in managing private economic activity. By relaxing the oversight standard (i.e., removing the compelling factor test) for a class of applicants, the Comptroller gains more unchecked power to award taxpayer subsidies without a rigorous justification. Additionally, the fiscal note indicates a significant increase in state spending to offset reduced local tax revenue, further entrenching government in the role of subsidizer rather than neutral arbiter. This runs counter to the limited government ideal of a restrained and fiscally disciplined state.

• HB 4149 (Similar To)