The bill, H.B. No. 46, introduces a new section, 140.015, to the Local Government Code, which establishes a limit on annual expenditures for political subdivisions in Texas. This section defines key terms such as "consumer price index," "disaster relief cost," "inflation rate," "political subdivision," and "population growth rate." It stipulates that a political subdivision's total expenditures from all revenue sources in a fiscal year cannot exceed the greater of its total expenditures from the previous fiscal year or an amount calculated based on the previous year's expenditures adjusted for population growth and inflation. Additionally, political subdivisions must calculate and post this rate on their websites by January 31 each year.

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 also 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 January 1, 2026, and the act is set to take effect on February 1, 2026.

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