Texas is Working to Eliminate Discrimination in Government

The conservative view is that minority groups and women are as capable of starting a successful business as anyone else, and we expect those businesses to succeed or fail based on merit instead of skin color or sex.

For far too long, discrimination based on sex and race has been commonplace in government at all levels. Students in K-12, colleges and universities, and in law schools are taught that the 14th Amendment prohibits state discrimination based on sex and race because it guarantees equal protection under the law. In practice, discrimination has long been the official policy of government, but that is changing. At the federal level, the Trump Administration should be applauded for efforts to reverse this practice. In the states, the matter is far more complicated. In Texas, where one might not expect, sex and racial discrimination are deeply embedded in state law. Governor Greg Abbott and Acting Comptroller Kelly Hancock are working to remedy one of the state’s biggest examples, the statute on Historically Underutilized Businesses (HUBs).

Texas statute defines HUBs as businesses in which the majority ownership is held by an “economically disadvantaged person.” This may sound like a designation based on economic standing, but it expressly applies to black Americans, Hispanic Americans, women, Asian Pacific Americans, Native Americans, and disabled veterans. In other words, the benefits of the HUB designation are overwhelmingly based on race and sex.

And what are the benefits of a HUB designation? They enjoy a host of government-provided advantages, including preferential treatment in state contracting and assistance in procuring those contracts. The state also promotes HUBs to give them increased exposure to the general public. Large state agencies (e.g. HHSC and TxDOT) and school systems (e.g. the University of Texas) all have webpages dedicated to promoting HUBs and highlighting the services available to them. State agencies with a biennial budget of over $10 million are required to designate a staff member to serve as a HUB coordinator. The website for HHSC even lays out desired quotas for HUBs in state contracting.

The stated goal of HUBs is to remedy past discrimination. A statutory requirement for being designated an “economically disadvantaged person,” thus qualifying for HUB status, is having “suffered the effects of discriminatory practices or other similar insidious circumstances over which the person has no control,” but such a designation is necessarily subjective. Statute gives the Comptroller the duty of determining the size at which a HUB has grown so large that it “probably does not significantly suffer from the effects of past discriminatory practices.” The logical implication of codifying a process in which success negates discrimination undermines the basic premise of the program in the first place. Indeed, the conservative view is that minority groups and women are as capable of starting a successful business as anyone else, and we expect those businesses to succeed or fail based on merit instead of skin color or sex.

The publicly made case for HUBs cannot withstand basic scrutiny. The statistics on female- and minority-owned businesses in Texas bear out the aforementioned conservative view. Roughly 46% of the workforce in Texas is female and roughly 43% of all business in Texas are owned by women. Racial minorities are roughly 25% of the workforce and they own roughly 21% of businesses. Hispanics make up roughly 38% of the workforce and own roughly 31% of businesses. These breakdowns take place within the 2.9 million businesses operating in Texas, a number that has doubled in 10 years. If you’re a progressive and holding a hammer, every minor disparity looks like a nail, but the numbers make it clear that everyone is welcome to start a business in Texas and people of all backgrounds are successfully starting them every day.

Citing an Executive Order from Governor Abbott, Acting Comptroller Kelly Hancock has suspended new HUB certifications. His guidance declares to state agencies and institutions of higher education that “discrimination based on race, ethnicity, or sex has no place in public contracting in Texas.” Indeed:

Agencies may not award a government contract based on race, ethnicity, or sex. Instead, competition for state contracts must be conducted based strictly on legal criteria, in order to produce best value for the state. Agencies are prohibited from preferencing some vendors — and disfavoring others — based on race, ethnicity, or sex.

The suspension will continue “pending further action to ensure that the program’s administrative procedures and rules comply with the U.S. and Texas constitutions.”

When the 90th Texas Legislature convenes in January 2027, the “further action” should be to repeal the HUB program and eliminate sex- and race-based discrimination from statute. In the meantime, Governor Abbott and Acting Comptroller Hancock should be recognized for adhering to Chief Justice John Roberts’s declaration in Parents Involved in Community Schools v. Seattle School District No. 1 that “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”

Russell H. Withers serves as General Counsel and Policy Director at the Texas Conservative Coalition Research Institute, a state-based public policy think-tank.