Executive Summary
Texas enters the 2026–27 biennium with the largest budget in its history ($337.4B) and three structural shifts every SLG seller should know. First, cybersecurity is being pulled out of DIR into a brand-new standalone agency — the Texas Cyber Command in San Antonio — changing where security dollars and decisions sit. Second, the Texas Responsible AI Governance Act (TRAIGA) took effect January 1, 2026, putting real guardrails on government use of AI and creating an AI Advisory Council and regulatory sandbox. Third, an historic semiconductor and data-center buildout (TSIF, Meta, Stargate, TI) is turning Texas into national AI infrastructure. For Dell, the buying motion still runs through DIR Cooperative Contracts, and TX-RAMP cloud certification remains a hard gate on anything touching state data.
- AI-infrastructure / 'AI factory' demand tied to the Texas data-center and semiconductor boom (PowerEdge, networking, services).
- Stand-up of the Texas Cyber Command in San Antonio — secure compute, infrastructure, and managed services for a greenfield agency.
- Agency AI adoption under TRAIGA guardrails — a chance to lead with governed, on-prem and private-cloud AI for sensitive workloads.
- Endpoint, client, and lifecycle refresh across a record general-government budget.
Dell Action Plan
- Lead the AI-infrastructure conversation: tie Dell ISG / AI Factory offerings to the Texas data-center and semiconductor buildout and the university research-computing buyers.
- Engage the Texas Cyber Command early as a greenfield account in San Antonio — secure compute, infrastructure, and managed services for a brand-new agency.
- Clear the TX-RAMP gate before pursuing cloud/as-a-service deals — confirm the right certification level for any offering touching state data.
- Validate that Dell's DIR Cooperative Contract coverage and resellers are current and correctly scoped for the agencies you're targeting.
- Position governed, private/on-prem AI for sensitive workloads as agencies operationalize TRAIGA.
Budget & Fiscal
Texas budgets on a two-year (biennial) cycle. The 89th Legislature's SB 1 appropriates $337.4B for 2026–27 — roughly $176B in FY2026 and $160B in FY2027 — the largest in state history. There is no single 'state IT budget' line; technology spend is distributed across agencies and a set of named technology and security initiatives funded this biennium.
- Funding figures are biennial (two-year) totals unless noted.
- Cybersecurity dollars are mid-migration from DIR to the new Texas Cyber Command — confirm which entity owns a given program before forecasting.
All Funds appropriations by agency (LBB Fiscal Size-Up 2026-27 Biennium, per-article 'Appropriations by Agency, All Funds' figures) Statewide: $339.89B → $327.96B (-3.5%). Top 12 movers of 115 agencies.
| Agency | Prior | Current | Δ $ | Δ % |
|---|---|---|---|---|
| Texas Education Agency | $77.17B | $89.97B | +$12.81B | +16.6% |
| Trusteed Programs within the Office of the Governor | $10.79B | $1.72B | −$9.07B | -84.0% |
| Teacher Retirement System of Texas | $13.47B | $8.2B | −$5.27B | -39.1% |
| Health and Human Services Commission | $95.33B | $98.21B | +$2.88B | +3.0% |
| Texas Water Development Board | $3.32B | $455.3M | −$2.86B | -86.3% |
| Texas General Land Office and Texas Veterans Land Board | $4.84B | $2.43B | −$2.41B | -49.7% |
| Texas Facilities Commission | $2.59B | $488.5M | −$2.1B | -81.1% |
| Employees Retirement System of Texas | $2.07B | $27.5M | −$2.04B | -98.7% |
| Texas A&M Service Agencies | $5.25B | $3.9B | −$1.34B | -25.6% |
| Education Programs – Comptroller of Public Accounts | $0 | $1B | +$1B | — |
| Department of State Health Services | $3.33B | $2.37B | −$963.6M | -28.9% |
| Texas Department of Transportation | $40.8B | $39.92B | −$879.3M | -2.2% |
- Prior column is LBB's 2024-25 estimated/budgeted spending (not the originally enacted 2024-25 GAA); fiscal 2025 includes supplemental appropriations from HB 500, 89th Legislature, so one-time supplemental items show as large decreases into 2026-27.
- Covers all agency rows in the nine per-article summary tables (Articles I-VIII and X). Excludes statewide employee benefits and debt service line items, interagency-contract deductions, Article IX general provisions, and SB 5 (2nd Called Session, 2025) disaster funding; agency sums therefore run about 3 percent below the published GAA all-funds totals ($347.5B in 2024-25 and $338.2B in 2026-27).
- Teacher Retirement System of Texas (state retirement/TRS-Care contributions) is included as an agency; other benefit lines (Optional Retirement Program, group insurance, Social Security) are excluded.
- SB 3070 (2025) abolished the Texas Lottery Commission and moved its functions into the Texas Department of Licensing and Regulation; LBB shows both biennia under TDLR.
- Article I swings reflect one-time 2024-25 items: Trusteed Programs (Governor) -$9.1B (broadband/economic development funds), ERS -$2.0B (one-time pension contribution), Facilities Commission -$2.1B.
- Some agency groups in Article III are aggregates (General Academic Institutions, Health-related Institutions, Texas A&M Service Agencies, two-year college systems), matching LBB's presentation.
Source: LBB, Fiscal Size-Up 2026-27 Biennium (Dec 2025), Figures 47, 121, 146, 220, 235, 264, 298, 314, 344 · General Appropriations Act, 2026-27 Biennium (SB 1, 89th Legislature)
Initiatives & Policy
Texas Cyber Command3
LaunchedHB 150 (signed June 2025) created the nation's largest state cyber agency, headquartered in San Antonio with UTSA as a partner and led by retired Navy Vice Adm. Timothy 'T.J.' White. It is absorbing DIR's cybersecurity functions in phases — DIR transferred statewide cybersecurity employees and functions on March 1, 2026, with the transition slated to complete by Dec 31, 2026 and people/process/mission integration finalized by Feb 1, 2027 — and stands up a Cyber Threat Intelligence Center, Incident Response Unit, and Digital Forensic Lab serving state and local government. Active hiring for analysts and unit leadership through mid-2026. A greenfield agency means greenfield infrastructure, secure compute, and services needs.
TRAIGA — Responsible AI Governance Act5
In effect Jan 1, 2026HB 149 focuses on government use of AI: prohibits manipulative/discriminatory and social-scoring systems, stands up an AI Advisory Council, and opens a 36-month regulatory sandbox. Agencies now need governed, auditable AI — an opening for private/on-prem AI on sensitive data rather than open public models.
Semiconductor & Data-Center Buildout8
AcceleratingThe Texas CHIPS Act funds the Texas Semiconductor Innovation Fund (~$948M). Alongside it, hyperscale AI data centers are landing fast (Meta's $1.5B El Paso campus scaling toward 1GW; the multi-site Stargate project; TI's new Sherman 300mm fab). This is the strongest tailwind for Dell AI-infrastructure and ISG demand in the state.
TX-RAMP Cloud Security Program6
MandatoryUnder DIR, Texas agencies and public higher-ed may only contract for cloud services that hold TX-RAMP certification (NIST 800-53 Low/Moderate baselines). Certification must be maintained for the life of the contract. Any Dell cloud/as-a-service offering touching state data needs the right TX-RAMP level — a gate to clear early, not at close.
Procurement & Competition
The Texas Department of Information Resources (DIR) is the central technology procurement authority. Most state, local, and higher-ed technology buys run through DIR Cooperative Contracts, which let eligible entities purchase from pre-competed vendor agreements without running their own RFP. DIR also delivers Shared Technology Services and Communications Technology Services.
| Vehicle / gate | What it means for Dell |
|---|---|
| DIR Cooperative Contracts | Primary vehicle. Pre-competed; open to state agencies, local gov, and higher-ed. Confirm Dell agreements and resellers are current and correctly scoped. |
| DIR Shared Technology Services (STS) | Data center, cloud, and managed services delivered through DIR for participating agencies. |
| TX-RAMP certification | Not a contract, but a prerequisite gate for any cloud/as-a-service offering touching state data. |
| Key buying entity | Role |
|---|---|
| DIR | Central IT procurement, policy, and (currently) cyber — leads the statewide technology motion. |
| Health & Human Services (HHSC) | Among the largest agency IT spenders; data-heavy modernization. |
| Texas Cyber Command | New buyer for security infrastructure and services; San Antonio. |
| University systems (UT, Texas A&M) | Large independent research-computing and AI-infrastructure buyers. |
Texas is a competitive, contract-driven market — incumbents hold DIR agreements across compute, networking, and services. Differentiation tends to come from TX-RAMP-ready offerings, AI-infrastructure capability, and services that map to the Cyber Command and data-center buildout rather than price alone.
Power Structure
| Decision-maker | Why they matter |
|---|---|
| Greg Abbott Governor · State of Texas | Made Cyber Command an emergency item; champions the semiconductor/AI agenda. |
| Tony Sauerhoff7 State CIO & DIR Executive Director · DIR | Confirmed permanent March 2026 (interim from Jan 2026); former Chief AI & Innovation Officer and state CISO. Owns statewide tech direction as DIR sheds cybersecurity to the Cyber Command (functions transferred March 1, 2026). |
| Timothy 'T.J.' White (VADM, USN ret.)4 Chief, Texas Cyber Command · Texas Cyber Command | Abbott appointee (term through Feb 1, 2027); former commander, U.S. Fleet Cyber Command / 10th Fleet. Leads the greenfield agency and its Threat Intelligence, Incident Response, and Forensics units. |
| Tan Parker / Giovanni Capriglione Legislative sponsors · Texas Legislature | Lead authors behind Cyber Command (HB 150) and AI/innovation policy. |
| Legislative Budget Board (LBB) Appropriations & fiscal analysis · State of Texas | Sizes program costs and staffing — useful for forecasting cyber/AI spend. |
News & Signals
Sources
- LBB — General Appropriations Act, 2026–27 Biennium
- The Texan — Texas Senate approves $336B 2026–27 budget
- Office of the Governor — Abbott signs Texas Cyber Command into law
- UTSA Today — Texas Cyber Command launch
- Holland & Knight — Texas enacts comprehensive AI governance (TRAIGA / HB 149)
- Texas DIR — Texas Risk and Authorization Management Program (TX-RAMP)
- GovTech — Texas confirms Tony Sauerhoff as State CIO, DIR Leader
- Office of the Governor — Texas Semiconductor Innovation Fund (TSIF)
- Texas DIR — Cooperative Contracts
- Texas Tribune — Abbott directs PUC to make data centers fund their own power (June 10, 2026)
- Texas DIR — DIR Launches Texas Design System to Modernize State Websites (June 9, 2026)
- Texas DIR — Cybersecurity Functions Transition to the Texas Cyber Command (April 9, 2026 notice)
- Texas Cyber Command — Cybersecurity Transition to TXCC
- GovTech Insider — DIR Plan Highlights AI, Procurement and Cloud Expansion (2026–2030 SSP)
- Office of the Governor — Abbott Announces PUC and ERCOT Actions Protecting Residential Ratepayers from Data Center Costs (July 24, 2026)