According to the Legislative Budget Board (LBB), HB 3005 is not expected to have a significant fiscal impact on the State of Texas. The provisions of the bill, which relate to the timely payment of funds under certain construction contracts, can be implemented without requiring additional state appropriations. Any associated administrative or compliance costs are assumed to be absorbable within the existing resources of the relevant state agencies.

Similarly, no significant fiscal implication is anticipated for local governments. The bill does not impose new mandates or require additional expenditures by municipalities, counties, or other local governmental units. Instead, the bill merely clarifies the legal definition of a “bona fide” or “good faith” dispute in relation to audits post-substantial completion of a construction project, streamlining administrative processes without imposing new operational burdens.

Overall, HB 3005 presents a fiscally neutral policy change aimed at improving the efficiency and fairness of public construction contracting, without introducing new costs to taxpayers or public agencies at either the state or local level.

Texas Policy Research recommends that lawmakers vote YES on HB 3005 based on its clear alignment with core liberty principles and its positive effect on public-private contract integrity. The bill addresses a practical and recurring problem: prolonged audits used as a pretext to delay or avoid payment under construction contracts for public works. By establishing that any audit extending more than 60 days beyond the substantial completion of a project cannot be considered a "bona fide" or "good faith" dispute under Texas law, HB 3005 promotes contractual certainty, financial fairness, and a more responsible role for government as a contracting entity.

From the perspective of individual liberty and free enterprise, the bill strengthens the rights of contractors and subcontractors to receive timely payments for completed work. It effectively prevents government agencies from shifting financial burdens onto private businesses by unjustifiably withholding retainage through prolonged or indefinite audit processes. As explained in the bill analysis, this current practice undermines the intent of the Texas Prompt Payment Act, and HB 3005 is a logical legislative correction.

Moreover, the bill avoids overregulation or fiscal burdens. The Legislative Budget Board’s fiscal note confirms that the bill will not impose significant costs on the state or local governments, and it requires no additional rulemaking authority. It simply clarifies existing law to close a loophole that has been exploited to the detriment of private actors. By doing so, HB 3005 upholds the principle of limited government, enhances transparency, and promotes good faith dealings in taxpayer-funded projects.

In conclusion, HB 3005 is a well-targeted reform that protects the economic rights of contractors, promotes responsible public sector conduct, and fosters trust in public-private partnerships.

• Individual Liberty: The bill defends the rights of individuals and businesses, especially small contractors and subcontractors, by protecting them from unfair financial practices. When government entities delay payment under the excuse of an indefinite audit, it can place an unreasonable burden on workers and entrepreneurs. The bill gives them a clearer legal path to receive the money they've earned, affirming their right to just compensation for services rendered.
• Personal Responsibility: The bill encourages both government agencies and contractors to act responsibly. For agencies, it imposes a firm deadline, 60 days after project completion, to resolve audit issues. This prevents bad-faith delays and requires government actors to manage their oversight duties efficiently. Contractors, in turn, must still perform and deliver work according to contract standards, but they’re no longer expected to serve as de facto lenders for the government.
• Free Enterprise: Timely payment is critical to keeping businesses, especially small and mid-sized firms, in operation. The bill helps create a more predictable business environment, reduces cash flow disruptions, and levels the playing field in public contracting. By doing so, it reduces a barrier to market participation and promotes healthy competition for government contracts.
• Private Property Rights: While the bill doesn't directly affect land or physical property, it does support the broader notion of property rights by ensuring that businesses can access payments they are contractually owed. Money earned under contract is a form of property, and the bill helps protect those claims from arbitrary delays.
• Limited Government: The bill reins in a subtle but impactful form of bureaucratic overreach, using lengthy audits to withhold payment without due cause. By closing this loophole, the bill limits the government’s ability to delay compensation without accountability, enforcing clearer standard,s and promoting transparency.