The bill, H.B. No. 178, introduces a new section, Section 140.015, to the Local Government Code, which mandates efficiency audits for certain political subdivisions that exceed the no-new-revenue tax rate for five consecutive tax years. The bill defines "efficiency audit" as an investigation into the fiscal management and resource utilization of a political subdivision, excluding school districts. It specifies that any tax year prior to 2022 will not be considered in determining whether a political subdivision has exceeded the no-new-revenue tax rate for the required five years, with this provision set to expire on January 1, 2027. Additionally, political subdivisions located in disaster areas may seek voter approval to exceed the no-new-revenue tax rate without conducting an efficiency audit.

The bill outlines the responsibilities of the governing body of the political subdivision regarding the audit process, including the requirement to select an independent auditor who must complete the audit within three months. It mandates that the results of the audit be discussed in an open meeting and posted on the political subdivision's website within 30 days. Furthermore, the political subdivision is responsible for covering the costs associated with the audit and must provide all necessary documents and personnel to facilitate the audit process. The act is set to take effect 91 days after the conclusion of the legislative session.

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