The bill amends the Local Government Code by adding two new sections, 140.015 and 140.016, which establish financial requirements for municipalities and counties in Texas. Section 140.015 introduces a limit on annual expenditures for political subdivisions, stipulating that total expenditures from all available revenue sources in a fiscal year cannot exceed the greater of the previous year's total expenditures or an amount determined by multiplying the previous year's expenditures by a rate published annually by the Legislative Budget Board, which accounts for population growth and inflation. Exceptions to this limit are provided if voters approve additional expenditures or if a state of disaster is declared by the governor.

Section 140.016 mandates that municipalities and counties must post a summary of their adopted and proposed budgets on their websites or make them publicly available. This summary must include the total budget amount, budgeted amounts for various categories (such as public safety and transportation), and a taxpayer impact statement detailing fees and property taxes for typical residential ratepayers. The provisions of these new sections will apply to fiscal years beginning on or after December 1, 2025, and the act will take effect 91 days after the legislative session concludes.

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