According to the Legislative Budget Board (LBB), SB 898 is not expected to have a significant fiscal impact on the state budget. The bill’s proposed change—increasing the cap on low income housing tax credits for individual developments from $2 million to $3 million per round—can be implemented without requiring new state appropriations or additional staffing. The Texas Department of Housing and Community Affairs (TDHCA), which administers the tax credit program, is expected to absorb any administrative costs using existing resources.

The absence of a fiscal impact is largely attributed to the nature of the Low Income Housing Tax Credit (LIHTC) program itself, which leverages federal tax credits to incentivize private investment in affordable housing. The state’s role is primarily administrative, involving the evaluation and allocation of credits, not direct financial disbursement.

Similarly, no significant fiscal impact on local governments is anticipated. Because LIHTCs do not rely on local tax dollars and do not impose mandates on municipalities or counties, the increase in the credit cap per development is not expected to result in material costs or administrative burdens at the local level.

In summary, while the bill adjusts the ceiling on credit awards, it does so within the existing operational framework of the state’s housing finance system and does not trigger new fiscal commitments at the state or local level.

This bill raises several important concerns when viewed through the lens of core liberty principles. At its core, SB 898 reflects an expansion of government involvement in shaping private markets through targeted subsidies. Though the LIHTC program has longstanding bipartisan support and is federally administered, increasing the per-development cap risks deepening the state’s entanglement in a subsidized housing model whose long-term impact remains contested.

From a Limited Government perspective, this proposal represents a step away from a more restrained role for the state. Rather than encouraging innovation through regulatory reform—such as liberalizing zoning laws or reducing permitting barriers—this measure doubles down on a public-private subsidy mechanism. While the state does not directly allocate funds under LIHTC, expanding eligibility for a larger share of federal tax credits reinforces a model that assumes the government should direct where and how housing supply is built. Opponents may prefer approaches that empower market forces through deregulation rather than expanding programmatic ceilings.

In terms of Free Enterprise, critics may argue that increasing the per-development cap advantages large developers capable of assembling higher-cost, complex projects. Smaller developers, nonprofits, or regional players may struggle to compete for credits against better-resourced firms. This could reduce market dynamism and create a form of regulatory favoritism, contrary to a free-market ethic of open, competitive participation.

Skepticism about program efficacy also weighs against the proposal. While LIHTC has produced thousands of housing units nationwide, evaluations of its cost efficiency and impact on affordability are mixed. Some research suggests the program often relocates development rather than increasing overall supply. Raising the cap could unintentionally incentivize costlier projects with limited public benefit, without evidence that doing so leads to more or better housing outcomes.

Lastly, fiscal conservatives may object to the potential future implications of the bill. Although the Legislative Budget Board projects no direct cost to the state, expanding the allowable cap may encourage calls for increased allocations down the road or lead to greater expectations for state-level matching incentives. This incremental expansion could erode fiscal discipline over time.

In summary, while the bill seeks to modernize the credit cap to reflect current construction realities, it reinforces a housing policy framework reliant on targeted subsidies and centralized allocation. Lawmakers committed to limiting government’s role in the economy, fostering open competition, and reassessing public program performance may reasonably conclude that the bill heads in the wrong direction. Texas Policy Research recommends that lawmakers vote NO on SB 898.

• Individual Liberty: While the bill does not directly infringe on individual rights, it reinforces a top-down approach to housing development through government-administered tax incentives. This model shifts decision-making about housing investment from individuals and private actors to regulatory boards, which can indirectly limit market-driven diversity in housing options. Individual liberty would be more strongly supported by reforms that increase consumer choice through deregulation rather than subsidy-driven development.
• Personal Responsibility: The legislation does not alter legal obligations or personal accountability in any meaningful way. It targets developers and housing policy mechanisms rather than individual behavior. However, to the extent that it continues reliance on government-subsidized housing models, it could be seen as discouraging community-level or private philanthropic efforts to address housing affordability without state facilitation.
• Free Enterprise: Raising the per-development cap could distort competition in the housing market. By enabling larger developers to receive up to $3 million in tax credits per project, the policy may further consolidate the benefits of the Low Income Housing Tax Credit (LIHTC) program among a small group of well-capitalized actors. This disadvantages smaller developers or new entrants who may lack the capacity to pursue larger-scale projects, thereby weakening the principle of equal opportunity and open competition in the market.
• Private Property Rights: This bill does not change laws around property ownership, zoning, or eminent domain. However, to the extent that it incentivizes centralized planning and development via tax credits, it could indirectly influence how land is used or prioritized, favoring subsidized multifamily developments over other private uses. Still, such impacts are peripheral and do not constitute a direct intrusion on property rights.
• Limited Government: The bill expands the scope of an existing government-administered program by raising the ceiling on how much subsidy an individual project may receive. While it does not increase overall state spending, it deepens the reliance on centralized, bureaucratically managed housing development strategies. From a limited government perspective, this represents further entrenchment of a subsidy-driven approach rather than promoting deregulation or market-oriented reforms to address housing affordability.

• HB 1865 (Same As)