🔴Relating to prohibiting the investment of state money in certain countries and in certain private business entities in those countries
HB 34
🔴 HB 34: The Bill That Says “No Money for China or Russia” But Leaves Big Loopholes
What it says it does:
HB 34 claims to stop Texas from investing state money in companies connected to hostile nations such as China, Russia, Iran, or North Korea. It directs the Comptroller to maintain a list of “scrutinized companies” and requires pension funds and other state investment entities to divest from them.
What it actually changes:
The bill transfers long-term control over state investments to the Governor and the Comptroller. The Governor can add new “countries of concern” without legislative approval. Pension boards must sell investments that appear on the Comptroller’s list, even when those sales might reduce returns for teachers or retirees. Private equity and actively managed funds are exempt, allowing money to keep flowing indirectly to the same companies.
Who is pushing for it:
The witness files show support from State Armor, State Armor Action, and Texans for Strong Borders. These groups framed the measure as a national security safeguard while advocating for stronger executive control over financial decisions.
Who benefits:
Advocacy groups gain influence and future consulting contracts related to compliance. Private equity fund managers keep their portfolios intact under the bill’s exemptions. The Governor’s office gains unilateral power to redefine which countries qualify as threats.
Who gets left out or exposed:
Teachers, state employees, and retirees bear the financial risk if pension returns decline. Local boards lose discretion to manage investments. The public loses transparency because decisions about country designations and company lists happen without new audit or review requirements.
Why this matters long term:
HB 34 builds a permanent framework for executive-led control of state investments. It embeds national security screening into financial policy while removing checks from the Legislature and public auditors. Over time, this could normalize secretive financial controls and limit the independence of pension systems.
What to watch next:
Watch for new countries added to the “concern” list and for private fund exemptions that quietly expand. Monitor ERS and TRS reporting for reduced returns or untraceable divestment losses. Track whether the Legislature restores any oversight or audit authority next session.
Bottom line:
HB 34 is presented as protection against foreign threats, but its structure concentrates control in Austin and shields exempt funds from accountability. Texans deserve both financial security and transparency, not another layer of unreviewed executive power.
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