Senate Bill No. 878 aims to impose limitations on the use of public funds in economic development agreements or programs by municipalities and counties in Texas. The bill introduces several new sections to the Local Government Code, specifically prohibiting municipalities and counties from granting ad valorem tax exemptions or relief under these chapters. However, it allows for loans or grants in conjunction with tax abatement agreements under Chapter 312 of the Tax Code. Additionally, the bill mandates public meeting and notice requirements before any loans or grants can be made, ensuring transparency and public participation in the decision-making process.

The bill also establishes performance metrics that must be included in any agreement for loans or grants, which must be met for any renewal of the agreement. The duration of such agreements is limited to a maximum of 10 years, with the possibility of three renewals, each not exceeding five years, and a total combined period of 25 years. Furthermore, it includes provisions for the confidentiality of proprietary information related to loan or grant applications until the agreement is executed. The changes introduced by this bill will take effect on September 1, 2025, and will only apply to agreements entered into after that date.

Statutes affected:
Introduced: Tax Code 312.207 (Tax Code 312)
Senate Committee Report: Tax Code 312.207 (Tax Code 312)
Engrossed: Tax Code 312.207 (Tax Code 312)