Texas Broadband Audit Renews Policy Debate

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Texas Lieutenant Governor Dan Patrick (R) and House Speaker Dustin Burrows (R-Lubbock) have jointly requested that the State Auditor's Office (SAO) conduct a performance audit of the Texas Broadband Development Office (BDO), citing concerns raised during the Senate Committee on Business and Commerce June 24 interim hearing examining the BDO's management of state and federal broadband development funds.

The request is significant because it comes from the joint chairs of the Legislative Audit Committee and follows increasing legislative scrutiny over how the BDO evaluates grant applications and distributes billions of dollars in state and federal funding. The audit will examine whether the office has administered those programs consistent with legislative intent and whether additional reforms should be considered before lawmakers return for the 90th Texas Legislature in January 2027.

Government programs entrusted with substantial taxpayer resources should always be subject to meaningful oversight. Texans deserve confidence that public funds are being administered transparently, consistently, and according to law. A performance audit is an appropriate step toward ensuring that accountability.

At the same time, the audit raises a broader policy question that extends well beyond the administration of a single state agency. It invites lawmakers to reconsider whether Texas should have created a permanent bureaucracy responsible for planning broadband deployment, distributing taxpayer-funded grants, and directing investment within a private industry. While the audit will determine whether the BDO followed legislative intent, it cannot answer whether the policy itself represented the appropriate role of state government.

Texas Policy Research Warned Early

This is not the first time Texas Policy Research (TPR) has examined the state's approach to broadband policy.

In July 2024, we examined how Texas broadband policy had increasingly shifted away from market-driven investment and toward government planning, taxpayer-funded subsidies, and centralized administration. At the time, the BDO was still relatively new, and lawmakers had only recently expanded its authority through the 88th Legislature (2023).

We did not question the importance of broadband access. Rather, we questioned whether creating a permanent government office to direct broadband investment represented sound public policy. We argued that expanding broadband access and expanding government are not synonymous, and that Texas could pursue greater connectivity by removing barriers to private investment rather than creating a permanent state bureaucracy.

Two years later, the request for an independent audit presents an opportunity to revisit those same policy questions. Regardless of what the State Auditor ultimately finds, Texas now has five years of experience with the BDO and a much clearer picture of how government-administered broadband programs function in practice.

The Broadband Office Kept Growing

The BDO did not emerge overnight. It was built incrementally through three consecutive legislative sessions, each expanding the size of government and increasing the state's role in broadband investment.

That process began during the 87th Legislature (2021) with House Bill 5 (HB 5), authored by State Rep. Trent Ashby (R-Lufkin). The legislation created the BDO within the Office of the Comptroller, established the Broadband Development Program, created the Broadband Development Account, directed the state to develop a statewide broadband map and broadband plan, and authorized grants, low-interest loans, and other financial incentives for broadband deployment in underserved areas.

When HB 5 was considered, it received overwhelming bipartisan support. The conference committee report passed the Texas Senate unanimously by a vote of 31-0 and the Texas House by a vote of 133-13. Few lawmakers publicly questioned whether creating a permanent broadband bureaucracy or authorizing taxpayer-funded financial assistance for broadband providers represented an appropriate function of state government. Instead, the debate largely centered on how quickly Texas could expand broadband access across the state.

From a limited government perspective, however, HB 5 represented a significant policy shift. Rather than limiting government to removing regulatory barriers, protecting private property rights, and creating a favorable environment for private investment, the legislation established a permanent bureaucracy responsible for planning broadband deployment, maintaining statewide maps, coordinating with federal agencies, and allocating taxpayer resources through grants and financial incentives.

Rather than reconsidering that model, lawmakers substantially expanded it during the 88th Legislature (2023). Senate Bill 1238 (SB 1238), authored by State Sen. Robert Nichols (R-Jacksonville), broadened the BDO's authority by revising broadband mapping, expanding grant eligibility, modernizing funding priorities, and increasing the office's administrative responsibilities.

That same session, voters approved House Joint Resolution 125 (HJR 125), also authored by Rep. Ashby, creating the Broadband Infrastructure Fund, and lawmakers enacted House Bill 9 (HB 9) to implement the constitutional amendment. Together, those actions dedicated approximately $1.5 billion in taxpayer resources to broadband and emergency telecommunications infrastructure projects. Texas voters approved the constitutional amendment, Proposition 8, in November of 2023 by nearly 70 percent.

Additional legislation, like that of Senate Bill 1243 (SB 1243), authored by State Sen. Joan Huffman (R-Houston), and Senate Bill 2119 (SB 2119), authored by State Sen. Charles Schwertner (R-Georgetown), expanded tax preferences for broadband grants and assigned new mapping responsibilities to the Broadband Development Office in partnership with the Public Utility Commission.

The expansion continued during the 89th Legislature (2025). Senate Bill 1405 (SB 1405), authored by Sen. Nichols, further broadened the office's authority by restructuring portions of the Broadband Development Program, increasing reporting requirements, revising eligibility standards, and expanding grant administration. Senate Bill 1121 (SB 1121), authored by Sen. Nichols, streamlined permitting for communications infrastructure projects; House Bill 3260 (HB 3260), authored by State Rep. Keith Bell (R-Forney), supported broadband workforce development initiatives, and Senate Bill 2900 (SB 2900), authored by State Sen. Lois Kolkhorst (R-Brenham), later repealed the BDO Board of Advisors as part of a broader restructuring effort.

What began as a relatively modest office within the Comptroller's Office evolved into one of Texas's largest infrastructure investment initiatives. Along the way, state government assumed increasing responsibility for planning, financing, and directing broadband deployment through an expanding administrative structure funded by taxpayers.

The Risks of Government Investment

The recent Senate Committee on Business and Commerce interim hearing was broader than any single grant award. As part of the committee's interim charge, senators reviewed the BDO's management of existing state and federal broadband development funds, evaluated its ongoing funding decisions, and examined whether the office's strategic planning and grant administration were effectively serving the Legislature's objectives. The hearing reflected a growing legislative interest in how one of Texas' largest infrastructure investment programs is being administered.

During the hearing, Executive Director Bryant Clayton faced extensive questioning from committee members regarding the administration of broadband grants. Much of that discussion focused on applications involving Starlink and Amazon's Project Kuiper, with senators raising concerns about how applications were evaluated, whether deficiencies were treated consistently, and whether taxpayers ultimately received the greatest value from public investments. Those concerns ultimately prompted Patrick and Burrows to request an independent performance audit.

The audit may conclude that the BDO complied fully with existing law. It may recommend additional transparency or procedural improvements. Whatever its conclusions, the audit should provide lawmakers with valuable information regarding the administration of the program.

The controversy itself, however, should not be viewed as unusual. Whenever government administers grants, loans, or financial incentives, public officials necessarily become responsible for determining which companies qualify, which projects deserve funding, and how taxpayer dollars should be distributed. Those decisions inevitably generate disagreement because government has assumed responsibility for allocating resources that markets would otherwise allocate through voluntary exchange and competition.

The current audit is therefore not simply about one agency or one hearing. It reflects the broader challenge of asking government to perform functions that competitive markets have historically performed on their own.

Broadband Without Bigger Government

Broadband access is unquestionably important. Reliable internet service supports commerce, education, healthcare, agriculture, public safety, and countless other aspects of modern life. Expanding broadband availability, particularly in underserved communities, is a legitimate public policy objective.

The more important question is how that objective should be pursued.

House Bill 5 answered that question by creating a permanent bureaucracy responsible for administering taxpayer-funded grants and directing broadband investment. Implicit in that decision is the belief that government can effectively determine where investment should occur, which companies should receive financial assistance, and how public resources should be allocated.

Free markets and enterprise operate according to a fundamentally different principle.

No government agency, regardless of the expertise of its employees or the quality of its intentions, possesses the information available through decentralized markets. Every day, consumers communicate their preferences through the choices they make, while businesses respond by investing their own capital where demand exists and where they believe they can earn a return. Prices, profits, and losses continuously communicate whether those investment decisions are succeeding or failing.

Government planning necessarily replaces that decentralized decision-making with administrative judgment. Instead of entrepreneurs risking their own capital based on market signals, public officials decide where taxpayer dollars should be invested, which technologies qualify for support, and which companies receive financial assistance. Even when administered honestly and professionally, government lacks both the information and the incentive structure that make competitive markets effective.

Texas could instead encourage broadband expansion by removing unnecessary barriers to private investment. Streamlining permitting, protecting private property rights, ensuring fair access to rights of way, and reducing unnecessary regulatory burdens would create an environment where broadband providers can expand infrastructure without requiring taxpayers to finance private investment decisions.

Broadband Subsidies Are Corporate Welfare

One of the most significant concerns surrounding the BDO is not simply its administrative structure, but the policy model it represents.

Corporate welfare is often associated with incentive packages, tax abatements, or direct subsidies offered to favored industries. The Broadband Development Program operates on many of the same principles. Government collects taxpayer dollars, establishes eligibility criteria, evaluates competing private companies, and determines which businesses receive public financial assistance (taxpayer money) to construct private infrastructure.

Although intended to expand broadband access, the mechanism remains the same. Public resources are transferred to selected private enterprises rather than being allocated through voluntary market transactions. Companies that successfully navigate government application processes receive taxpayer assistance while competitors that do not receive no comparable benefit.

Texas Policy Research has consistently opposed this approach. The Texas Liberty Compact, our ten-point legislative reform agenda, calls for Texas to end corporate welfare by eliminating programs that allow government to pick winners and losers with taxpayer dollars. Rather than directing public resources toward selected industries or businesses, the Compact argues that government should create a fair and predictable legal environment where all businesses compete under the same rules and investment decisions are made by consumers and entrepreneurs, not bureaucracies.

The BDO illustrates why that principle matters. Once government assumes responsibility for directing private investment, businesses inevitably begin competing not only in the marketplace but also for government assistance. Success becomes tied not only to innovation, customer service, and efficient deployment, but also to satisfying administrative requirements and securing taxpayer-funded grants. Even when administered honestly, these programs distort market incentives by rewarding successful applicants rather than simply rewarding successful businesses.

The issue extends beyond broadband infrastructure. Every dollar awarded through a government grant program first must be collected from taxpayers or borrowed against future taxpayers. Those resources are then routed through a bureaucracy that must establish rules, review applications, resolve disputes, monitor compliance, conduct audits, and administer ongoing oversight. Each additional layer increases administrative costs while replacing decentralized market decisions with centralized government planning.

The BDO also illustrates another recurring feature of government expansion: mission creep. House Bill 5 created the office and authorized a grant program. Subsequent legislatures expanded its authority, broadened its mission, increased available funding, modified governance structures, and assigned new responsibilities. Today, lawmakers are requesting an audit to evaluate whether the bureaucracy is functioning as intended. That pattern extends well beyond broadband policy. Government programs often begin with limited objectives before accumulating additional responsibilities, appropriations, and administrative complexity over time. As government assumes greater responsibility for directing economic activity, lawmakers inevitably devote increasing time and taxpayer resources to overseeing the bureaucracy required to administer those responsibilities. The audit requested this week is an example of that cycle in practice.

The Audit Is Necessary, But Not Sufficient

The requested performance audit is an appropriate exercise of legislative oversight, and the State Auditor should conduct a thorough review of the BDO's administration of taxpayer resources.

An audit, however, can answer only administrative questions. It can determine whether the BDO complied with legislative intent. It can identify procedural deficiencies, recommend operational improvements, and evaluate whether grant awards were administered consistently. It cannot answer whether creating the BDO represented good public policy. It cannot determine whether Texas should continue subsidizing broadband providers or whether government should function as an allocator of private investment capital. Those are policy judgments that belong to the Legislature itself.

As lawmakers prepare for the 90th Texas Legislature, they have an opportunity not simply to improve the administration of the BDO, but to reconsider whether the underlying policy model reflects Texas's longstanding commitment to limited government, free enterprise, fiscal responsibility, and individual responsibility.

Policy Implications for the 90th Texas Legislature

The request for an audit is notable not only because of the concerns raised during the recent Senate Committee on Business and Commerce's hearing, but because it comes from legislative leaders whose institution overwhelmingly created the Broadband Development Office in 2021 and subsequently expanded its authority over the next two legislative sessions.

Texas now has five years of experience with this policy. During that time, the Broadband Development Office has evolved from a newly created office within the Comptroller's Office into a multibillion-dollar government program responsible for broadband planning, grant administration, statewide mapping, coordination with federal funding programs, and directing significant taxpayer-funded investment.

The State Auditor should conduct a thorough and independent review of how those responsibilities have been carried out, and any administrative shortcomings should be corrected. Oversight is an essential responsibility whenever government administers billions of taxpayer dollars. The audit, however, should not mark the end of the conversation. Administrative compliance is only one measure of success. The broader question is whether expanding government into broadband planning and investment was the right policy choice to begin with.

As the 90th Texas Legislature approaches, lawmakers have an opportunity to examine more than how the Broadband Development Office has operated. They can also evaluate whether Texas would be better served by policies that remove barriers to private investment rather than expanding government programs built on taxpayer-funded subsidies, corporate welfare, and centralized decision-making. Broadband access is an important public policy objective, but achieving that objective does not require government to become an investment manager for private industry.

For more than a century, Texas has distinguished itself by embracing limited government, free enterprise, and entrepreneurial innovation. Those same principles can guide broadband policy today. Rather than asking government to determine where capital should flow, Texas should foster an environment where private investment, consumer demand, and market competition drive infrastructure deployment.

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