According to the Legislative Budget Board (LBB), HB 643 is estimated to have no significant fiscal implications to the state. The legislation proposes to raise the threshold for when a payment bond is required on public work contracts from $25,000 to $100,000. While this change may necessitate updates to contracting procedures and documents, state agencies have reported that these adjustments can be implemented using existing staff and resources, thus incurring no additional financial burden on state operations.

Similarly, the bill is not expected to have a significant fiscal impact on local governments. Although municipalities and joint boards may also need to revise internal policies and contract management practices to reflect the new threshold, the anticipated costs are minimal and can be absorbed without requiring new appropriations or major restructuring.

In essence, HB 643 streamlines small-scale public contracting without imposing new costs on government entities. The fiscal neutrality of the bill suggests that it is primarily regulatory in nature, aimed at reducing procedural overhead for smaller public work projects while maintaining existing resource allocations within state and local government frameworks.

HB 643 seeks to raise the dollar threshold at which contractors must obtain payment bonds on public work contracts with government entities. While intended to reduce regulatory burdens and open the door for smaller businesses to compete for public projects, the bill ultimately compromises important financial protections for subcontractors, laborers, and suppliers who rely on payment bonds to ensure they are compensated for their work. By removing these safeguards on contracts under $100,000 (or $50,000 for municipalities and airport joint boards), the legislation shifts risk away from contractors and onto the most vulnerable parties involved in public construction.

From a liberty-oriented perspective, this bill presents serious concerns. It undermines the principle of individual liberty, as subcontractors would lose access to a guaranteed remedy when contractors fail to pay. It weakens personal responsibility by allowing contractors to take on publicly funded projects without demonstrating financial accountability through bonding. It also challenges the integrity of property rights, as unpaid work or materials provided on unbonded projects may not be recoverable, leading to costly legal battles or outright losses.

While the bill could reduce bureaucratic barriers and encourage small business participation—aligned with the ideals of free enterprise and limited government—these benefits are outweighed by the risks it imposes on others. Government contracting, even on small jobs, should be grounded in fairness, accountability, and trust. Removing payment bond requirements for lower-value contracts without offering alternative protections fails that test.

As such, Texas Policy Research recommends that lawmakers vote NO on HB 643. The bill, while well-intentioned, removes critical financial protections and undermines key liberty principles. A more balanced solution would seek to support small contractors without exposing subcontractors and suppliers to increased financial harm.

• Individual Liberty: Individual liberty means protecting each person’s rights and freedoms, including the right to pursue work and be fairly compensated for it. This bill removes a key safeguard for subcontractors, laborers, and suppliers: the payment bond. Without it, individuals working on smaller public projects could lose their ability to recover payment if a contractor defaults. The removal of this protection can restrict economic freedom and leave individuals vulnerable to financial harm through no fault of their own.

• Personal Responsibility: The payment bond requirement holds contractors accountable for paying those they hire. By raising the threshold and exempting more contracts from this rule, the bill lowers the expectation of financial responsibility from contractors. Instead of ensuring contractors are prepared to meet obligations, it shifts the burden — and risk — to subcontractors. This undermines a culture of responsibility and discourages prudent business practices in publicly funded projects.

• Free Enterprise: The bill does support free enterprise in the sense that it reduces regulatory and financial barriers for small or emerging businesses to enter public contracting. Contractors who struggle with the cost or process of securing a bond would now have more opportunities. However, removing a safety net for other businesses in the supply chain creates a less reliable market environment. A healthy free enterprise system requires not just access but fairness and enforceable agreements — which this bill weakens.

• Private Property Rights: When a subcontractor or supplier provides labor or materials, they are exercising their property rights. If they are not paid and have no access to a bond-backed claim, their property (work or goods) is effectively taken without compensation. This undermines their legal claim to payment and weakens the broader principle that individuals should be secure in their ownership and contracts.

• Limited Government: On the surface, the bill aligns with limited government by reducing regulatory mandates. Fewer bonding requirements mean less state-imposed procedure. However, government contracting isn’t just about efficiency — it also involves protecting taxpayer funds and ensuring fair treatment of all parties. By removing a longstanding financial safeguard without offering an alternative, the bill risks increasing disputes, defaults, and legal intervention, which could ironically grow government’s role in resolving problems.