We’ve written before about the Texas law prohibiting public entities from doing business with financial institutions that “engage in boycotts against energy and firearms companies.” One study on the impact of that law claims that the law cost taxpayers hundreds of million dollars in increased fees. The Texas Association of Business Chambers of Commerce Foundation (TABCCF) released a study
“… developed by TXP and authored by economist Jon Hockenyos, brings to light new data and analysis on the adverse economic impacts of Texas laws that prohibit public contracting with certain banks based on their independent business decisions.
Notably, the new study finds that Texas’ ‘Fair Access’ laws will result in:
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$668.7 million lost in economic activity;
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$180.7 million in decreased annual earnings;
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3,034 fewer full-time, permanent jobs; and
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$37.1 million in losses to State and local tax revenue”
However, a new report released last month by the American Energy Institute (AEI) argues that the TABCCF used “wrong data for its analysis” and that
“…using the correct data shows no significant increase in the cost of bond issuance in 2022 and 2023 compared to the historical average… Texas’ Bond Review Board (BRB) carefully tracks such costs each year, and their annual reports are the primary data source used for the TABCCF study. Unfortunately, BRB used a different weighting scheme in its 2022 and 2023 reports compared to prior years. BRB corrected this error in a May update to those reports, but the author of TABCCF’s study, TXP, Inc., has not corrected its analysis.
The correction makes the TABCCF study’s claim of nearly $700 million in economic losses entirely moot. The correct data shows that the average underwriting cost in 2022 and 2023 was $6.38 per $1000 of bonds issued, not $12.03 as originally reported, compared to an average of $6.03 from 2015 to 2021. Also, the total cost of issuance for new bonds, which is a more complete measure than underwriting costs, averaged $16.70 per $1,000 of bonds issued in 2022 and 2023, compared to an average of $15.24 from 2015 to 2021.”
Zach wrote just last week that state anti-ESG bills are dying on the vine. However, if AEI is indeed correct, that could strengthen Texas’ anti-ESG position and re-ignite anti-ESG momentum in the other states, as the paper concludes:
“Given the errors of TABCCF’s study conducted by TXP, Inc., and the flaws with other efforts to continue an ESG scheme, policymakers should understand the political influence that biases the results toward ESG.”
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