The dust has settled on an election that reshuffled every branch of Texas government, and the business community is now asking the question that will define the next two years: is the state still open for business in the way it has been for a decade? The Texan’s Ripples newsletter laid out the stakes this week after Democrats swept statewide executive offices, gained a majority in the Texas House and flipped a special state appeals court — even as Republicans held the Senate and kept narrow majorities on the Railroad Commission and the state’s top two courts, leaving Texas in a rare period of divided government.
Exit polling put the economy and cost of living at the top of voters’ minds, and it is on economic terrain that the incoming administration’s agenda is most concrete for employers. Gov.-elect Gina Hinojosa (D-Austin) leveraged public opposition to data centers during her campaign and has vowed to require them to cover infrastructure costs and pay a larger share of grid and water costs. She has also called for a moratorium on new data centers until the Legislature adopts guidelines and ends certain long-term tax breaks. Because the Texas governor’s formal authority is limited, much of the practical fight will happen through appointments: gubernatorial picks for the Public Utility Commission, the Texas Commission on Environmental Quality and other permitting bodies could alter timelines, standards and costs for data centers, industrial facilities and the transmission projects they depend on.
The regulatory map below the governor’s office is also shifting. Railroad Commissioner-elect Jon Rosenthal will join Republican Commissioners Christi Craddick and Wayne Christian in regulating the energy industry, though it remains unclear how the agency’s approach to oil and gas permitting might change. As attorney general, state Sen. Nathan Johnson (D-Dallas) will hold discretion over enforcement, including anti-ESG measures that affect corporate contracts and underwriters, consumer protection laws and litigation involving businesses and state agencies.
The Legislature’s arithmetic points toward negotiation rather than transformation. Democrats controlling the House and Republicans the Senate means the 90th session will likely produce some stalemates — but possibly a few bipartisan compromises on the budget, property taxes, energy and infrastructure, economic-development incentives and industry regulation. A central question for the pro-business coalition is whether lawmakers preserve the tort reforms that have long anchored Texas’ legal climate or allow them to erode. In the Senate, the GOP majority is expected to rewrite chamber rules to give a Republican majority leader control over committee assignments and the floor calendar, while presumptive House Speaker Senfronia Thompson (D-Houston) signaled Friday that she plans to work with both parties.
The judiciary adds a wildcard that national coverage tends to miss. The 15th Court of Appeals — created by the Legislature in 2023, with statewide jurisdiction over civil matters involving state government and appeals from the Business Court — is now fully Democratic, a change bound to shape how disputes over agency actions and business litigation are resolved. Companies that structured themselves around a predictable appellate environment will be recalculating.
None of this amounts to a closed sign. Texas still leads the nation in new data-center construction and capacity, and its job-growth record remains the strongest pitch in the country. But the weekly read on Austin is that the state’s business climate is no longer on autopilot: the costs of power, water, litigation and incentives will all be re-examined by officials who ran, in part, on repricing them. The firms best positioned for the 90th session will be the ones already reading the committee dockets.
