The bill, H.B. No. 161, amends Chapter 402 of the Government Code by adding a new Subchapter E, which establishes the authority of the Texas Attorney General to investigate and take action against local governments for violations of law. The new provisions define "local government" as municipalities or counties and outline the Attorney General's ability to investigate alleged violations, bring actions in the name of the state, and enforce compliance. The bill also specifies that during the pendency of such actions, the local government involved will face restrictions, including the withholding of state funds and limitations on tax rates.

Additionally, the bill sets forth the burden of proof for local governments defending against these actions, requiring them to demonstrate compliance with the law. It designates the First Business Court Division as having exclusive original jurisdiction over these cases, with the Fifteenth Court of Appeals handling appeals. If the Attorney General prevails, the local government will be prohibited from adopting certain tax rates and receiving state grant funds for five years, and penalties may be imposed. Conversely, if the local government prevails, it will receive the balance of its suspense account. The provisions apply only to violations occurring after the bill's effective date, which is set for 91 days after the legislative session concludes.

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