The bill proposes an amendment to the Local Government Code by adding Section 140.015, which establishes a limit on annual expenditures for municipalities and counties in Texas. Under this new section, 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 published annually by the Legislative Budget Board. This rate is calculated based on the population growth rate and the inflation rate, which are defined within the bill.

Additionally, the bill allows for exceptions to this expenditure limit if the voters of the political subdivision approve additional spending at an election or if the governor declares a state of disaster affecting the area. It also specifies that certain revenues, such as those from bond issuances or grants, are not considered available sources of revenue for the purpose of this expenditure limit. The provisions of this section will apply to fiscal years beginning on or after January 1, 2026, and the bill will take effect 91 days after the end of the legislative session.

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