A general view of the Texas Capitol during the 87th Texas legislature on Friday, May 7, 2021, in Austin. (Smiley N. Pool/The Dallas Morning News) AUSTIN — Major banks and tech firms could be barred from future contracts in Texas, under a Republican-led effort to punch back at companies […]
AUSTIN — Major banks and tech firms could be barred from future contracts in Texas, under a Republican-led effort to punch back at companies that cut ties with the firearms industry.
A bill nearing Gov. Greg Abbott’s desk would stop the state from inking contracts with businesses that refuse to work with gun sellers, manufacturers or trade associations, such as the National Rifle Association. Local governments would face the same limitations, which apply to deals worth $100,000 or more.
The legislation was filed after several companies began restricting business with the gun industry following deadly mass shootings in recent years.
Backers of the bill, including a trade association for firearm manufacturers, say taxpayer dollars shouldn’t fund businesses that undermine Texans’ right to bear arms. But critics warn the move is an unconstitutional limit on free speech that will almost surely draw court challenges.
“We don’t need a thought police,” Rep. Gene Wu, D-Houston, said when opposing the bill on the House floor.
While Texas lawmakers have tried to steer corporate policy with the state’s pocketbook before — by blacklisting companies that boycott Israel or do business with Iran — this year’s efforts are more expansive and could carry significant financial impact.
In addition to the proposal targeting companies that “discriminate” against the firearms industry, another nearing Abbott’s desk would bar the state from contracting with firms that “boycott” fossil fuels. The bill also calls for pension funds, such as the state employees and teacher retirement systems, to divest from companies that cut ties with oil and gas.
“This bill sends a strong message to those that, whether they be from Wall Street or some other actor, if you boycott Texas energy, Texas will not deal with you,” said Sen. Brian Birdwell, R-Granbury, when laying out his legislation in the Senate.
The two bills have passed both chambers, but lawmakers must agree on final versions before sending them to Abbott. Both are priorities of Lt. Gov. Dan Patrick.
Corporations and political debate
Texas is not unique. Republicans across the country are pushing back on companies that have waded into contentious political debates, ranging from voting rights to climate change.
The proposals in Texas are intended to make businesses rethink their policies, supporters said.
“This bill simply says that if you choose to discriminate you will not benefit from taxpayer dollars,” Darren LaSorte, director of government relations for the National Shooting Sports Foundation, said during a recent hearing on the bill. “We hope that it’s ultimately an incentive for executives in these industries to say ‘you know what, we’re going to stop the cancel culture. We’re going to stop the bias against the people’s Constitutional rights.’”
It remains to be seen whether that will happen. Similar efforts in Louisiana and Georgia targeting banks that restrict lending to the gun industry have not pushed those companies to reverse their positions.
Meanwhile, blue states have pressured corporations in the opposite direction. Two New York City pension funds announced plans in January to shed roughly $4 billion of investments in fossil fuel companies to promote clean energy. Large pension funds in California may do the same.
“You’re talking about major, major companies,” said Sherri Greenberg, professor of state and local government at the University of Texas at Austin’s Lyndon B. Johnson School of Public Affairs. “They have other investors with different views… I mean it’s not an accident they’ve made these decisions.”
At risk of losing contracts if the legislation becomes law are Bank of America and Citibank, which announced restrictive gun policies in 2018 after the deadly school shooting in Parkland, Fla. Bank of America stopped offering loans to companies that make AR-style firearms sold to civilians. Citibank ceased doing business with gun retailers that sell bump stocks or high-capacity magazines, among other things. Both declined to comment.
Cost to taxpayers?
The city of Dallas currently does business with all three companies, according to the city’s Chief Financial Officer Elizabeth Reich. She said the policy could undermine the city’s ability to get the best deal possible.
“Any time you reduce competition for city contracts it’s going to raise costs for the taxpayers,” she said.
Some firearms dealers testified this year they had to shop across several banks before they were approved for a business account.
Gary Zimmerman, a federally licensed firearm dealer from North Texas, recently told the Senate State Affairs committee that two banks refused to open up a checking account for his business, before a third finally agreed.
“I don’t want my tax dollars being done with businesses that are going to discriminate against myself that are in this business to protect our second amendment rights and our own lives as well,” he said.
The legislation, Senate Bill 19, applies only to future contracts with companies that have at least 10 full-time employees. Firms would have to verify in writing they won’t “discriminate” against the firearm industry throughout the length of the contract. A version approved by the House would let governments skirt the restrictions for noncompetitive contracts. The bill passed both chambers along a largely party-line vote.
The 2021 legislative session ends May 31.