H.B. No. 63 introduces a new section, 140.014, to the Local Government Code, which establishes a limit on annual expenditures for municipalities and counties in Texas. Under this bill, a political subdivision's total expenditures from all available revenue sources in a fiscal year cannot exceed the greater of its total expenditures from the previous fiscal year or an amount calculated by multiplying the previous year's expenditures by a rate published annually by the Legislative Budget Board. This rate is determined by the product of the population growth rate and the inflation rate, both of which are defined in the bill.

The bill also allows for exceptions to this expenditure limit if the voters of the political subdivision approve additional expenditures at an election or if the governor declares a state of disaster that affects the area. Furthermore, it specifies that certain revenues, such as those from bonds approved by voters or grants, are not considered available sources of revenue for the purpose of this limit. The provisions of this new section will apply to fiscal years beginning on or after December 1, 2025, and the act will take effect 91 days after the end of the legislative session.

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