H.B. No. 140 introduces a new provision to the Texas Government Code that limits the authority of political subdivisions to issue public securities. Specifically, it adds Section 1201.006, which establishes a cap on the annual debt service that can be authorized by local governments. Under this new section, a political subdivision is prohibited from incurring additional debt if the resulting annual debt service would exceed 10 percent of the average property tax collections from the previous three fiscal years. This limitation applies regardless of any existing provisions in municipal charters.

The bill aims to promote fiscal responsibility among local governments by ensuring that their debt obligations remain manageable and do not exceed a specified threshold based on historical tax revenue. The legislation is set to take effect 91 days after the conclusion of the legislative session.

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