Estimated Time to Read: 4 minutes
Artificial intelligence (AI) may be the most disruptive technology of our time, and Texas lawmakers are determined to get ahead of it. During the 89th Legislative Session, multiple bills have been introduced to regulate how AI is developed, used, and overseen across both private and public sectors. Supporters claim the bills enhance transparency, protect consumers, and guard civil liberties. But a closer look reveals that many proposals come with steep costs, vague mandates, and a creeping expansion of state authority.
Let’s break down three major pieces of AI legislation—HB 149, SB 1964, and HB 2818—and assess whether Texas is charting a course for responsible innovation or regulatory overreach.
HB 149 – A Sweeping AI Framework With Big Government Footprint
At first glance, HB 149, authored by State Rep. Giovanni Capriglione (R-Southlake), seems like a forward-looking blueprint for AI governance. It introduces data protections, transparency rules, and creates the Texas Artificial Intelligence Council. But beneath that intent lies a sweeping regulatory framework that could choke innovation and grow government in ways inconsistent with limited-government principles.
Key Issues:
- Fiscal impact: Over $25 million projected for 2026–27, with recurring annual costs of over $10 million.
- Government expansion: Adds 20 Full-Time State employees and builds new enforcement and compliance infrastructure.
- Regulatory burden: Developers must comply with biometric data restrictions, respond to investigative demands, and meet unclear ethical mandates.
- Innovation chilling: Small businesses and open-source developers may struggle to navigate the compliance maze.
While HB 149 gestures toward innovation by including a regulatory sandbox, the structure is buried within a centralized enforcement regime that mirrors interventionist models from California and Colorado. A better version would include sunset provisions, small business carveouts, open-source exemptions, and stricter limits on the Council’s authority.
Without substantial amendments, HB 149 threatens to undermine the very innovation it claims to protect.
HB 149 passed the Texas House by a vote of 146 to 3. It is currently in the Senate Committee on Business and Commerce.
SB 1964 – Bureaucratic AI Governance Masquerading as Oversight
SB 1964, authored by State Sen. Tan Parker (R-Flower Mound) targets government use of AI, requiring agencies to inventory AI tools and adhere to a new AI Code of Ethics. While promoting “ethical” use sounds good in theory, the bill significantly expands the Department of Information Resources (DIR), adds 10 new state employees, and grants broad rulemaking power with little legislative restraint.
Key Issues:
- Estimated fiscal cost: $7.28 million over the 2026–27 biennium; over $4 million annually through 2030.
- Overregulation: Vendors face contract termination if they fail to comply with vague ethical or disclosure mandates.
- Regulatory creep: Creates new training, sandbox, and advisory programs—all administered by an unelected agency.
Despite good intentions, the bill sets up a sprawling oversight regime that could hinder vendor participation in public-sector AI projects. Worse, it lacks sufficient redress mechanisms for individuals impacted by AI decisions and abandons transparency features from the original version, like public complaint portals and mandatory impact assessments.
Texas doesn’t need a top-down AI bureaucracy. It needs focused safeguards, legislative control, and strong limits on executive power.
SB 1964 is on the Texas Senate’s Intent Calendar and can be brought up for deliberation at any time.
HB 2818 – Growing State AI Infrastructure Without Guardrails
HB 2818, also authored by Capriglione, creates a new Artificial Intelligence Division within the Texas Department of Information Resources to help agencies modernize legacy systems using generative AI. The bill has some merit—it promotes efficiency and allows contracting with private AI vendors—but it does so by creating permanent state infrastructure, new recurring costs, and zero built-in accountability.
Key Issues:
- Fiscal impact: $8.1 million through 2027, with $5 million in recurring annual costs.
- Government expansion: Adds 9 full-time state employees with no performance benchmarks or sunset clause.
- Duplication risk: State-run AI systems may compete with or crowd out private-sector solutions.
Texas Policy Research supports modernization, but not through unchecked bureaucratic growth. The bill should be amended to include performance benchmarks, budget caps, sunset review, and strong consideration for public-private partnerships to prevent state overreach into markets already well-served by industry.
HB 2818 passed the Texas House by a vote of 137 to 10. It now heads to the Texas Senate.
The Bottom Line: Will Texas Lead on AI with Liberty in Mind?
Across these bills, a trend is emerging: Texas is trying to regulate AI from the top down, through new councils, divisions, and ethics codes, without fully considering the long-term costs to taxpayers, innovators, and civil liberties.
Texans deserve protections from harmful AI uses, but not at the cost of growing government, stifling open-source innovation, or creating permanent bureaucracies with vague mandates.
Texas Policy Research urges lawmakers to reevaluate these efforts and ensure any AI-related laws align with the five liberty principles: Individual Liberty, Personal Responsibility, Free Enterprise, Private Property Rights, and Limited Government.
Without that foundation, AI legislation becomes just another way for the state to centralize power in the name of progress.
Texas Policy Research relies on the support of generous donors across Texas.
If you found this information helpful, please consider supporting our efforts! Thank you!
