Texas Lawmakers Propose Creating State Department of AI

Texas legislators will consider three bills aimed at expanding state oversight of artificial intelligence when the 90th legislative session convenes January 12, 2027. The most ambitious measure would create a standalone Department of Artificial Intelligence.

Three Bills Filed Ahead of 90th Session

Rep. Salman Bhojani, D-Euless, filed House Bill 605 to establish an independent state agency responsible for monitoring compliance with AI requirements, evaluating government AI systems, and maintaining a public registry of covered systems used by state agencies [1][3]. The department would operate separately from the existing Department of Information Resources (DIR) and be governed by a five-member board appointed by the governor with Senate consent. Board appointments must reflect expertise in AI, cybersecurity, privacy, government administration, and public procurement "to the extent practicable" [1].

Bhojani also filed HB 474, which would require state agencies to establish policies ensuring meaningful human oversight of certain AI-driven decisions. A third proposal, HB 416 from Rep. Mary González, would prohibit state agencies from using AI systems to make employment-related decisions including hiring, promotions, and terminations [1].

All three bills were filed after bill filing opened November 9, 2026, and would take effect September 1, 2027, if enacted [3]. More than 1,260 bills had been filed as of 5 p.m. that Monday [3].

Department Would Oversee State Agency AI Use

Under HB 605, state agencies would be required to maintain inventories of covered AI systems and submit information about their use, purpose, data categories, and safeguards. The new department would conduct risk-based reviews, prioritizing systems subject to "heightened scrutiny" and those presenting documented risks to individual rights, government services, security, or public funds [1].

The department would maintain a searchable public registry identifying covered AI systems, their governmental purposes, and whether human review is available for certain decisions. Agencies would prepare public impact summaries for systems subject to heightened scrutiny. An initial statewide inventory would be due by December 1, 2028, with the public registry established by March 1, 2029 [1].

On procurement, the department would develop a model checklist with DIR and the comptroller addressing performance testing, data restrictions, vendor accountability, incident reporting, and subcontractor responsibilities. Agencies considering procurement of high-scrutiny AI systems would submit intended-use summaries before contracting; the department could issue written risk recommendations within 30 days, though failure to do so would not block an otherwise lawful procurement [1].

The legislation preserves DIR's existing purchasing authority and AI standards, training, and implementation responsibilities. The two departments would coordinate oversight and establish information-sharing procedures. The new department would not independently regulate private AI companies or impose duties on local governments [1].

Human Oversight and Employment Restrictions Also Proposed

HB 474 would apply when AI systems make or serve as a controlling factor in "consequential decisions" or present a reasonably foreseeable risk of substantial harm to health, safety, property, critical infrastructure, or confidential information security. Oversight must be performed by an appropriately trained employee with authority to approve, reject, modify, override, or terminate the AI system's decision [1].

Texas already has governance requirements addressing human oversight. DIR's code of ethics, effective March 2026, requires governmental entities to maintain human review capabilities and ensure AI systems can be paused, restricted, or disabled. HB 474 would add specific statutory requirements, with DIR responsible for establishing minimum standards including timing and documentation of human review. DIR would have until March 1, 2028, to adopt rules, with agencies required to implement interim safeguards before then [1].

HB 416 would prohibit state agencies from using AI for employee performance reviews, hiring, promotions, demotions, terminations, and other employment decisions. It would also bar state employees from entering confidential, non-public information into AI systems. Unlike the other two bills, HB 416 would prohibit specified uses rather than establish oversight procedures [1].

Building on Existing Framework

The proposals follow several laws enacted during the 89th legislative session that established Texas' current AI governance framework. Senate Bill 1964 directed DIR to establish an AI code of ethics, risk management standards, and governance measures, while HB 2818 created an AI division within DIR. The Texas Responsible Artificial Intelligence Governance Act took effect January 1, 2026, establishing restrictions on certain AI uses, disclosure requirements, and the Texas Artificial Intelligence Council [1].

In an August update, DIR outlined its implementation of those requirements, including governance resources, employee training, and a public-sector program supporting evaluation and testing of AI systems [1]. HB 605 would establish a separate oversight function rather than replace DIR's existing division.

What Happens Next

The bills face a divided legislature: Democrats hold the House majority after last week's elections, but Republicans retain control of the Senate [3]. None of the three measures have been enacted, and their provisions could change during the legislative process [1]. The regular session begins January 12, 2027, with bill filing continuing through March 12 [3].