H.B. No. 203 introduces a framework to limit annual expenditures for political subdivisions in Texas that are authorized to impose ad valorem taxes or issue bonds. The bill establishes a new section in the Local Government Code that defines key terms such as "consumer price index," "disaster relief cost," "inflation rate," and "population growth rate." It stipulates that total expenditures cannot exceed the greater of the previous year's expenditures or an adjusted amount based on population growth and inflation. Political subdivisions may exceed this limit only if two-thirds of their voters approve the additional expenditures in an election.

The bill also amends various sections of the Health and Safety Code and the Tax Code, changing the voting requirement for approving tax rates from a majority to at least two-thirds of registered voters. It ensures that governing bodies cannot disapprove tax rates approved by voters based solely on those rates and clarifies that certain provisions of the Tax Code do not apply to voter-approved tax rates. Additionally, it allows property owners to file complaints with the attorney general regarding non-compliance with tax rate requirements. The bill modifies tax rate regulations, allowing voters to petition for an election to reduce tax rates exceeding 1.06 times the previous year's rate on a residence homestead, and it repeals several provisions from the Education Code, Local Government Code, and Tax Code to streamline the approval process. The new regulations will take effect on February 1, 2026, with the comptroller tasked with creating a form for the publication of related information.

Statutes affected:
Introduced: Health and Safety Code 281.124, Special District Local Laws Code 1101.254, Special District Local Laws Code 3828.157, Special District Local Laws Code 8876.152, Tax Code 26.04, Tax Code 26.041, Tax Code 26.05, Tax Code 26.07, Tax Code 31.112, Water Code 49.107, Water Code 49.108, Water Code 49.236, Water Code 49.23601, Water Code 49.23602, Water Code 49.23603 (Health and Safety Code 281, Special District Local Laws Code 8876, Tax Code 26, Special District Local Laws Code 3828, Tax Code 31, Water Code 49, Special District Local Laws Code 1101)