Henry Bell

Last week, the Texas Senate Committee on State Affairs held an important interim hearing to discuss “Responsible Investing” – an issue that directly impacts how our tax dollars are used to support retirement accounts, public pensions, as well as financing of local infrastructure projects to support our ever-growing economy. With Tyler becoming one of the fastest-growing metro areas in Texas in recent years, it is absolutely critical for our lawmakers in Austin to pursue smart policies that alleviate burdens on taxpayers to ensure sustained economic growth.

Texas legislators have always prioritized common-sense, pro-business legislation that has propelled our state to become the 8thlargest economy in the world. That’s why it’s so important for legislators to continue to examine the data surrounding the economic impact of legislation meant to protect taxpayers, including SB 13 – a 2021 law that bans certain companies from entering into public contracts in Texas if they are deemed to ‘boycott’ the oil and gas industry.

The facts show that, despite being labeled as ‘boycotters’ of the oil and gas industry, many of the financial institutions that have been targeted under this law are among the world’s largest financiers of fossil fuels – including HSBC and UBS group, which have more than $192 and $210 billion worth of fossil fuel projects, respectively, since 2016. Earlier this year, Lieutenant Governor Dan Patrick – who strongly supported the law that named investment giant BlackRock among the ‘boycotters’ of fossil fuels – acknowledged that “BlackRock has been a big investor in the fossil fuel industry.”

Senate State Affairs Committee Chairman Bryan Hughes has always been a thoughtful legislator, and he is right to take another look at how this law is being implemented, including examining how companies can be removed from the list of alleged ‘boycotters.’ This is a meaningful step in the right direction, and we hope Chairman Hughes and his colleagues in the legislature continue to look at the facts when considering any changes to this law next session.

Beyond these facts, policymakers should also consider that shutting banks out of doing business with public entities in Texas inherently reduces competition, which is both antithetical to our state’s pro-free market approach and harmful to consumers, taxpayers and the business community.

One study found that the law could result in higher interest rates and as much as $500 million in new debt levied on taxpayers. Another study conducted by Texas-based economist Ray Perryman earlier this year found that Texas’ economic losses amounted to more than $760 million in gross product in just the first year after the law’s implementation.

When CEOs consider moving or expanding their operation to Texas communities, they look at important quality of life factors including affordability, property taxes, and quality school districts for their employees’ children. But with laws that limit which companies can do business with Texas public entities, the attractive and affordable economic environment we’ve worked so hard to cultivate is at risk of being undermined.

Consider the fact that, in 2022, voters in the East Texas school district of Normangee ISD approved an $18.6 million bond to repair its schools, and UBS Group won the bid offering the best financial terms to underwrite the bond. However, because UBS Group had been placed on Texas’ list of “energy boycotters” – even though the bank is one of the world’s largest financiers of fossil fuels – the bank was unable to fulfill the contract despite the fact that it offered the lowest interest rate and best value for taxpayers.

Cases like these are exactly why legislators need to set clear guidelines on legislative implementation to ensure the heavy hand of government is not unnecessarily inserted into our free-market system and limiting competition for financial services.

As the state that continues to enjoy the most business relocation and expansion projects and is consistently ranked the ‘Best State for Business’ year after year, Texas needs to maintain its world-renowned reputation for being open for business. We trust that our elected officials will continue that proud tradition when they convene at the Capitol again next year.