According to the Legislative Budget Board (LBB), SB 35 is not expected to have a significant fiscal impact on the state. The analysis assumes that any costs associated with implementing the bill could be absorbed within the existing resources of the Texas Department of Transportation (TxDOT). This suggests that limiting the number of design-build contracts from six to two per biennium would not require additional state funding or lead to measurable savings or expenditures beyond what is already allocated in the budget.

For local governments, the fiscal impact is also expected to be neutral, meaning that counties, municipalities, or other local entities that might be involved in transportation projects would not experience any additional costs or revenue changes due to this legislation. While reducing the number of design-build contracts could shift the way transportation projects are awarded, the state's overall spending on infrastructure is expected to remain relatively unchanged under this bill. However, there could be longer-term economic effects, such as potential delays in certain projects or shifts in how TxDOT prioritizes large-scale infrastructure investments.

In summary, SB 35 does not introduce any new appropriations or financial obligations for the state and is expected to be implemented using existing budgetary resources without additional costs to taxpayers. However, the broader economic effects—such as potential efficiency losses or reduced competition in the contracting process—are not explicitly addressed in the fiscal note.

SB 35 proposes reducing the number of design-build contracts that the Texas Department of Transportation (TxDOT) can enter into from six per biennium to two. While this aligns with the principles of limited government by tightening oversight on infrastructure projects and potentially preventing excessive spending, it also places unnecessary constraints on free enterprise. Design-build contracts streamline project delivery by integrating the design and construction phases, which reduces administrative burdens and accelerates completion timelines. By imposing a lower cap, the bill limits opportunities for private contractors to compete for state infrastructure projects, which could lead to unintended inefficiencies and delays.

One of the key justifications for this bill is that reducing the number of design-build contracts would result in TxDOT focusing on larger-scale, design-intensive projects, rather than distributing contracts among smaller, less complex projects. This shift can be beneficial in several ways. Larger projects often have greater economic and regional impacts, improving statewide infrastructure in a more meaningful way. Because major highway expansions, bridge replacements, and freeway improvements require substantial planning, prioritizing a few large projects allows for better resource allocation, greater efficiency, and long-term cost savings. These projects are often more complex and time-intensive, making them well-suited for design-build contracts, which integrate design and construction phases to accelerate completion and reduce delays.

Additionally, focusing on larger, high-impact projects reduces administrative complexity by limiting the number of contracts that need oversight, allowing TxDOT to streamline project management and ensure better execution. Managing multiple small projects can result in fragmented construction timelines, more bureaucratic oversight, and increased costs due to frequent bidding and contract negotiations. By directing design-build contracts toward large-scale projects, the state can improve long-term infrastructure quality and strategic development.

However, while prioritizing large-scale projects has clear benefits, strictly limiting design-build contracts to only two per biennium could inadvertently delay or deprioritize smaller, yet essential, transportation improvements. Many small- to mid-sized projects—such as congestion relief initiatives, rural road improvements, and critical infrastructure repairs—also play a vital role in the state’s transportation network. If these projects are forced into a more traditional design-bid-build process, they could face extended timelines and higher administrative costs. The concern is that a rigid cap on contracts does not allow for flexibility based on project needs, which could create gaps in infrastructure development.

To strike a better balance between government oversight and market competition, the bill should be amended to allow up to four design-build contracts per biennium instead of two. This adjustment would still ensure responsible fiscal management while maintaining flexibility for project selection based on priority and impact. Additionally, rather than imposing an arbitrary numerical cap, the bill should incorporate performance-based criteria for awarding design-build contracts, ensuring that projects are selected based on cost-effectiveness and urgency.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 35 unless amended as described above. The proposed restrictions, while aiming to improve oversight, risk reducing efficiency in transportation projects and limiting opportunities for private contractors. A modified approach would better serve the dual goals of fiscal responsibility and infrastructure effectiveness without unnecessary constraints on project development for a state already struggling to keep up with infrastructure challenges as a result of a burgeoning population.

SB 35 is a named legislative priority of Texas Lt. Gov. Dan Patrick.

• HB 5329 (Same As)
• SB 1655 (Same As)
• HB 5453 (Similar To)