BILL ANALYSIS Senate Research Center S.B. 621 89R4477 DRS-D By: Sparks Local Government 3/7/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT In the summer of 2024, the city council of Austin voted to conduct a feasibility study on opening a public bank. Public banks are operated using tax funds. Public banks take tax dollars, deposit the money, and give out those tax funds as loans. This raises a serious concern about the financial integrity of the bank, as business decisions that would normally be guided by the market are instead guided by politics and ideology. Because of this, public banks are prone to failure. The first public bank in America was opened in Vermont in 1806 and closed within six years. Several other public banks were opened in the 1800s and subsequently failed. In November of 2024, the feasibility study concluded it would cost between $30 million and $50 million to open the public bank and increase the city's banking costs to exceed $400,000 annually, which is more than what the city currently pays. This would be an incredible burden on taxpayers and create another avenue for local governments to take away property tax relief. S.B. 621 amends the Local Government Code to prohibit any political subdivision from establishing, operating, or owning a banking organization. As proposed, S.B. 621 amends current law relating to a prohibition on the establishment, operation, or ownership of a public bank by a political subdivision. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 140, Local Government Code, by adding Section 140.014, as follows: Sec. 140.014. PROHIBITION ON PUBLIC BANK. Prohibits a political subdivision, notwithstanding any other law, from establishing, operating, or owning an organization or entity that is organized for the purpose of engaging in banking as defined by Section 31.002 (Definitions), Finance Code. SECTION 2. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 621
89R4477 DRS-D By: Sparks
Local Government
3/7/2025
As Filed
Senate Research Center
S.B. 621
89R4477 DRS-D
By: Sparks
Local Government
3/7/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
In the summer of 2024, the city council of Austin voted to conduct a feasibility study on opening a public bank. Public banks are operated using tax funds. Public banks take tax dollars, deposit the money, and give out those tax funds as loans. This raises a serious concern about the financial integrity of the bank, as business decisions that would normally be guided by the market are instead guided by politics and ideology. Because of this, public banks are prone to failure. The first public bank in America was opened in Vermont in 1806 and closed within six years. Several other public banks were opened in the 1800s and subsequently failed. In November of 2024, the feasibility study concluded it would cost between $30 million and $50 million to open the public bank and increase the city's banking costs to exceed $400,000 annually, which is more than what the city currently pays. This would be an incredible burden on taxpayers and create another avenue for local governments to take away property tax relief. S.B. 621 amends the Local Government Code to prohibit any political subdivision from establishing, operating, or owning a banking organization.
As proposed, S.B. 621 amends current law relating to a prohibition on the establishment, operation, or ownership of a public bank by a political subdivision.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 140, Local Government Code, by adding Section 140.014, as follows:
Sec. 140.014. PROHIBITION ON PUBLIC BANK. Prohibits a political subdivision, notwithstanding any other law, from establishing, operating, or owning an organization or entity that is organized for the purpose of engaging in banking as defined by Section 31.002 (Definitions), Finance Code.
SECTION 2. Effective date: September 1, 2025.