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BILL ANALYSIS

 

 

 

S.B. 621

By: Sparks

Pensions, Investments & Financial Services

Committee Report (Unamended)

 

 

 

BACKGROUND AND PURPOSE

 

As reported by KXAN Austin, the Austin City Council voted in July 2024 to conduct a feasibility study on the establishment of a City of Austin public bank. A November 2024 memorandum to the Austin mayor and city council members reported the study's conclusions, among them that "preliminary research into banks started in Texas suggest an approximate seed range would be $30-$50 million in funding," that "the start-up and operational costs of a public bank would likely exceed $400,000 annually," and that "the city's current banking fees are less than $400,000 annually." The bill sponsor has informed the committee that public banks are operated using tax funds, that those tax funds are used to provide loans, and that this raises a serious concern about the financial integrity of the bank because business decisions that would normally be guided by the market would instead guided by politics and ideology. The bill sponsor has also informed the committee that public banks are prone to failure, that several public banks were opened in the 1800s and subsequently failed, and that this shows that public banks may be an incredible burden on taxpayers. S.B. 621 seeks to prohibit any political subdivision from establishing, operating, or owning an organization or entity that is organized for the purpose of engaging in banking.

 

CRIMINAL JUSTICE IMPACT

 

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

 

RULEMAKING AUTHORITY

 

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

 

ANALYSIS

 

S.B. 621 amends the Local Government Code to prohibit a political subdivision from establishing, operating, or owning an organization or entity that is organized for the purpose of engaging in banking as defined by reference to the Finance Code.

 

EFFECTIVE DATE

 

September 1, 2025.