The bill, H.B. No. 226, introduces a new provision to the Texas Government Code that limits the authority of political subdivisions to issue public securities. Specifically, it adds Section 1201.006, which establishes a cap on the annual debt service that can be authorized by local governments. According to this new section, a political subdivision is prohibited from incurring additional debt if the resulting annual debt service exceeds 10 percent of the average property tax collections from the previous three fiscal years. This measure aims to ensure fiscal responsibility and prevent excessive debt accumulation by local governments.

The bill emphasizes that this limitation applies regardless of any other laws or municipal charter provisions that may allow for higher debt levels. By setting this restriction, the legislation seeks to promote financial stability within local governments and protect taxpayers from potential overreach in public borrowing. The act is set to take effect 91 days after the conclusion of the legislative session.

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