According to the Legislative Budget Board (LBB), SB 1585 is estimated to have no significant fiscal implication to the state. Agencies are expected to absorb any implementation costs within their existing resources. This means that while the bill imposes new regulatory and enforcement responsibilities—particularly concerning contract vetting and verification—state agencies such as the Department of Information Resources and the Office of the Attorney General are presumed to have the capacity to handle these duties without additional appropriations.

The bill does create a new state jail felony offense for vendors that violate its provisions, which could lead to revenue from associated fines and fees. However, the fiscal note emphasizes that the magnitude of this potential revenue impact cannot be determined due to uncertainties about how often the new offense would be prosecuted. Similarly, the impact on state correctional resources is indeterminate because there is no reliable data estimating how prevalent the prohibited conduct might be.

At the local level, the bill is also not expected to impose significant fiscal burdens. Local governmental entities must comply with the contract restrictions and verification requirements, but these responsibilities are considered manageable within their current administrative frameworks. In summary, while the bill introduces compliance, enforcement, and legal consequences, its fiscal footprint is considered minimal for both state and local governments.

SB 1585 reflects a targeted and balanced approach to strengthening Texas’s digital and critical infrastructure security. By prohibiting governmental entities from contracting with companies linked to foreign adversaries, the bill aims to mitigate the risk of espionage and sabotage, particularly through telecommunications and information technology services. The author’s intent, rooted in national security concerns regarding countries like China and Russia, is clearly supported by the structure and mechanisms introduced in the Committee Substitute.

The bill creates a coherent legal framework for designating foreign adversaries, mandates verification by vendors to prevent entanglements with scrutinized companies, and establishes enforceable penalties—including contract termination, civil fines, and criminal charges—for violations. While such regulatory measures may restrict certain market actors, they are narrowly tailored to balance free enterprise with the imperative of protecting public safety and state sovereignty. Limited exceptions allow contracts in cases where alternatives are unavailable or where the risk is demonstrably negligible, further underscoring the bill's pragmatism.

Additionally, the fiscal impact is minimal. According to the Legislative Budget Board, any implementation costs are expected to be absorbed by existing agency resources, and while some state revenue could arise from penalties, it is not anticipated to significantly affect the budget. The legislation avoids imposing undue burdens on local governments and contains no new rulemaking authority, preserving the principle of limited government.

In light of these considerations, SB 1585 aligns well with the core liberty principles—particularly protecting Individual Liberty, reinforcing Personal Responsibility in procurement, and preserving State Sovereignty under Limited Government. It is a prudent and well-constructed measure that enhances security while maintaining a reasonable regulatory footprint. As such, Texas Policy Research recommends that lawmakers vote YES on SB 1585.

• Individual Liberty: The bill positively supports individual liberty by aiming to safeguard Texans from potential foreign surveillance or exploitation through state-contracted technology systems. By restricting governmental contracts with companies linked to foreign adversaries, the state reduces the likelihood that personal data, communications, or infrastructure will be compromised. This enhances the protection of privacy and digital freedom for Texas residents, a key component of individual liberty.
• Personal Responsibility: The bill reinforces the principle of personal responsibility by placing clear compliance obligations on vendors seeking to do business with the state. Vendors must certify that they are not associated with scrutinized foreign entities and ensure that their subcontractors or supply chains also comply. This framework demands due diligence and ethical accountability in state procurement, fostering a culture of responsibility in public-private interactions.
• Free Enterprise: The bill places targeted restrictions on certain companies, which could be seen as a limitation on free enterprise. However, these limitations are narrowly applied to companies under foreign government control or influence—primarily from nations deemed security threats—and are justified on national security grounds. While the law may exclude some firms from participating in public contracts, it preserves the broader market and includes exceptions to prevent unnecessary disruption to service delivery or cost inflation. Thus, it strikes a balance between economic freedom and security.
• Private Property Rights: There is minimal direct impact on private property rights. The bill does not authorize the government to seize or regulate private property. Instead, it regulates state contracting behavior, meaning private companies are free to operate in Texas but may be barred from government contracts if linked to foreign adversaries. This distinction maintains respect for private ownership while holding public procurement to a higher security standard.
• Limited Government: While the bill expands the state’s role in reviewing and enforcing contract compliance, it does so within a focused and constitutionally appropriate context—defending state security and infrastructure. The bill does not create new bureaucracies or open-ended enforcement mechanisms. Instead, it relies on existing agencies and legal processes, including the Attorney General and Comptroller, maintaining a restrained approach consistent with limited government.