Texas Budget and CIOs Signal Major IT Overhauls in 2026

From system replacements to AI deployment, Texas state agencies are moving forward with a wave of major IT modernization efforts following the passage of the state’s $338 billion budget.

Among the largest initiatives is the launch of the Texas Cyber Command, funded at $135 million in Senate Bill 1. The new cybersecurity organization will serve as a centralized authority for protecting critical infrastructure and coordinating threat response statewide.

The Health and Human Services Commission (HHSC) has the largest IT capital budget of any Texas agency, totaling $1.1 billion for the 2026–27 biennium. That funding includes:

• $474 million to continue modernizing the Medicaid Management Information System
• $246 million for ongoing work on the Texas Integrated Eligibility Redesign System (TIERS)
• Nearly $380 million for data center consolidation, cybersecurity, CAPPS upgrades and a transition to online Women, Infants and Children (WIC) EBT services

The Texas Department of Transportation holds the second-largest IT capital budget, at $167.4 million. Projects include:

• Modernizing and replacing information resource technologies
• Data center upgrades and legacy mainframe replacement
• Investments in cybersecurity and enterprise information management

The Department of Public Safety follows with $91.8 million in IT capital funding, supporting:

• Threat detection and advanced analytics tools
• Driver’s license system upgrades
• Maintenance of core IT platforms and cybersecurity improvements

Beyond the top-line budgets, state CIOs are also advancing specific agency initiatives.

The Texas Department of Motor Vehicles (TxDMV) is beginning a full replacement of its registration and title system, backed by $125 million in legislative funding. The project will dismantle a 30-year-old legacy ecosystem with more than 20 applications and re-architect the agency’s data infrastructure to support digital-first service delivery.

At the Department of Family and Protective Services (DFPS), officials are preparing to implement a new Comprehensive Child Welfare Information System. The platform will consolidate outdated systems into a modern foundation that integrates AI and supports improved case management. The agency anticipates launching about 20 related subprojects tied to data quality, system integration and future service expansion.

Meanwhile, the Texas Workforce Commission is scaling its use of AI across more than 150 operational areas, including civil rights case review, legislative analysis and unemployment claims digitization. A new CRM platform will unify customer interactions and incorporate AI-powered chat, live agent support and workflow enhancements.