The bill, H.B. No. 117, introduces a new section, 140.015, to the Local Government Code, which establishes a limit on annual expenditures for political subdivisions that are authorized to impose ad valorem taxes or issue bonds. Under this new provision, 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 determined by multiplying the previous year's expenditures by a rate calculated based on the population growth rate and inflation rate. The bill also mandates that political subdivisions calculate and post this rate on their websites by January 31 each year.

Additionally, the bill allows for exceptions to the expenditure limit if at least two-thirds of the voters in the political subdivision approve additional expenditures through an election. It clarifies that certain funds, such as grants and disaster relief costs, are not considered available revenue or expenditures, respectively. The attorney general is granted the authority to enforce compliance with this section, including seeking injunctive relief or a writ of mandamus. The provisions of this bill will apply to fiscal years beginning on or after December 1, 2025, and it is set to take effect on January 1, 2026.

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