According to the Legislative Budget Board (LBB), SB 621 is not expected to have any fiscal impact on the State of Texas. The bill solely prohibits political subdivisions, such as cities and counties, from establishing or operating public banks, and it does not create new state expenditures or revenue changes.

For local governments, the fiscal impact is also expected to be minimal. While the bill restricts local governments from engaging in banking operations, it does not impose direct costs or require adjustments to existing financial structures. The LBB report suggests that no significant financial burden will be placed on cities, counties, or other political subdivisions as a result of this prohibition.

Overall, SB 621 does not introduce additional state or local financial obligations. Instead, it prevents potential future costs that could arise from government-run banking institutions, such as administrative expenses, regulatory compliance, and potential financial risks associated with public sector banking.

SB 621 seeks to prohibit political subdivisions, such as cities and counties, from establishing, operating, or owning public banks. The bill was introduced in response to concerns raised after the City of Austin conducted a feasibility study in 2024 regarding the establishment of a public bank. The study found that launching a public bank would cost between $30 million and $50 million, with additional annual banking costs exceeding $400,000—a financial burden significantly higher than the city's current banking expenses.

From a policy perspective, the bill aligns with the principles of free enterprise and limited government by preventing government entities from entering the banking industry, which is traditionally a private sector function. Historical precedent suggests that public banks have a high failure rate, as demonstrated by multiple public banking experiments in the 19th century, including the short-lived Vermont public bank (1806-1812). The concern is that government-run banks may make lending decisions based on political and ideological considerations rather than market-driven financial prudence, which could expose taxpayers to financial risks.

Fiscal analysis confirms that SB 621 has no direct fiscal impact on the state and does not impose significant costs on local governments. Instead, it prevents potential future financial liabilities that could arise from mismanagement or failures of government-owned banking institutions. Given that public banks would operate using taxpayer dollars, failure could necessitate taxpayer-funded bailouts, further increasing financial strain on local communities.

Based on these considerations, SB 621 is a prudent measure that upholds free-market principles, protects taxpayers, and limits government expansion into private-sector banking. For these reasons, Texas Policy Research recommends that lawmakers vote YES on SB 621.

• HB 2367 (Same As)