The bill, H.B. No. 178, introduces a new section to the Local Government Code that mandates efficiency audits for certain political subdivisions in Texas, excluding school districts. An "efficiency audit" is defined as an investigation into the operations of a political subdivision to assess fiscal management, efficiency, and resource utilization. The governing body of a political subdivision that adopts an ad valorem tax rate exceeding the no-new-revenue tax rate for five consecutive tax years is required to conduct such an audit. However, tax years prior to 2022 are not considered in this determination, and this provision will expire on January 1, 2027. Additionally, if a political subdivision is located in a disaster area declared by the governor, it may seek voter approval to exceed the no-new-revenue tax rate without conducting an efficiency audit.

The bill also outlines the responsibilities associated with the efficiency audit, including that the political subdivision must bear the costs of the audit, and the auditor must maintain independence from the subdivision. The audit must be completed within three months of the auditor's selection, and the governing body is required to hold an open meeting to discuss the audit results. Furthermore, the results must be posted on the political subdivision's website within 30 days of the meeting. The bill aims to enhance transparency and accountability in the fiscal management of political subdivisions in Texas.

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