According to the Legislative Budget Board (LBB), HB 718 is not expected to have any significant fiscal implications for the State of Texas. The analysis assumes that any costs associated with implementing the bill, such as compliance review or contract oversight by public institutions of higher education, could be absorbed within existing institutional resources and budgets.

Similarly, no significant fiscal impact is anticipated for local units of government. Since the bill pertains specifically to the contracting practices of public higher education institutions and does not impose any direct requirements or financial obligations on local governments, its reach is narrowly tailored and fiscally neutral at the local level as well.

Multiple higher education systems and agencies were consulted in the development of the fiscal note, including the University of Texas System, Texas A&M University System, Texas Tech University System, and the Higher Education Coordinating Board. None reported anticipated fiscal burdens resulting from the bill’s implementation. Overall, HB 718 is designed to regulate partner eligibility rather than expand programmatic responsibilities, allowing institutions to manage the impact administratively without additional appropriations.

HB 718 aims to enhance accountability in public-private partnerships by prohibiting public institutions of higher education in Texas from entering into construction contracts for student housing with private entities that have unresolved legal or financial issues, specifically, pending actions or liens related to nonpayment of contractors, subcontractors, or vendors. The bill is intended to prevent partnerships with entities that may pose financial or operational risks, thereby improving the quality and reliability of student housing projects on Texas campuses​.

The bill’s purpose aligns with key public policy goals, including promoting responsible business practices and protecting public resources. It does not increase the size of government or impose additional costs on taxpayers. The Legislative Budget Board found that any implementation costs could be managed within existing budgets. However, the bill does introduce a narrow regulatory burden on certain private businesses. Its current language imposes a categorical ban without providing a path for appeal or review, which could unintentionally exclude otherwise qualified entities engaged in legitimate, unresolved disputes.

To better align with principles of fairness, limited government, and free enterprise, an amendment is recommended to allow institutions some discretion, such as a waiver or review process for entities with pending claims that are not indicative of misconduct. This approach would maintain the bill’s protective intent while offering a more balanced and flexible application.

Texas Policy Research recommends that lawmakers vote YES on HB 718 but also consider amending the bill to better align it with principles of fairness, limited government, and free enterprise to allow institutions some discretion, such as a waiver or review process for entities with pending claims that are not indicative of misconduct. This approach would maintain the bill’s protective intent while offering a more balanced and flexible application.

• Individual Liberty: The bill has a minimal direct impact on individual liberty, as it primarily governs contracts between public institutions and private entities. However, it indirectly touches on liberty by restricting opportunities for certain businesses to engage in public contracts based on unresolved financial or legal issues. If applied too rigidly, it could inadvertently penalize companies before due process has run its course, raising concerns about fairness and reputational harm.
• Personal Responsibility: The bill strongly reinforces personal and corporate responsibility. It ensures that businesses engaged in public-private partnerships must maintain good standing in their financial dealings with subcontractors and vendors. By holding potential contractors accountable for their financial behavior, the bill promotes ethical business practices and protects public interests.
• Free Enterprise: This is where the bill raises the most concern. By disqualifying any private company with a pending lien or action, regardless of the circumstances, it imposes a blanket restriction on market participation. This could unfairly limit competition, exclude reputable businesses involved in minor or disputed claims, and discourage new entrants into the student housing sector. An amendment that introduces a waiver or review process would better support free enterprise while still meeting the bill’s goals.
• Private Property Rights: The bill does not infringe on private property rights directly. It does not take, damage, or regulate the use of private property. However, by potentially limiting access to public contract opportunities based on unresolved financial disputes, it could indirectly affect a company’s ability to leverage or profit from its assets and services.
• Limited Government: While the bill does not grow the government in terms of budget or personnel, it expands regulatory oversight by adding new prohibitions on who can contract with public institutions. Without an avenue for case-by-case evaluation, this rigid regulatory approach could be viewed as inconsistent with the principle of minimal government intervention. An amendment offering flexibility, such as an appeals process, would bring the bill more in line with limited government ideals.