HB 3537

relating to a limit on local government expenditures.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Chapter 140, Local Government Code, is amended
by adding Section 140.014 to read as follows:
Sec. 140.014.  LIMIT ON ANNUAL EXPENDITURES.  (a)  In this
(1)  "Board" means the Legislative Budget Board.
(2)  "Consumer price index" means the average over a
calendar year of the index the board considers to most accurately
report changes in the purchasing power of the dollar for consumers
(3)  "Inflation rate" means the amount, expressed in
decimal form rounded to the nearest thousandth, computed by
determining the previous three-year average percentage change in
the chained consumer price index for the three preceding calendar
years published by the Bureau of Labor Statistics.
(4)  "Population growth rate" means the rate of growth
of the state's population during the preceding three-year average
percentage change for the last three calendar years, expressed in
decimal form rounded to the nearest thousandth, determined by the
board in accordance with the most recent population estimates
published by the United States Census Bureau.
(b)  This section applies to all political subdivisions.
(c)  Except as provided by Subsection (e), a political
subdivision's total expenditures from all available sources of
revenue in a fiscal year may not exceed the greater of:
(1)  the political subdivision's total expenditures
from all available sources of revenue in the preceding fiscal year;
(2)  an amount determined by multiplying:
(A)  the political subdivision's total
expenditures from all available sources of revenue in the preceding
(B)  the sum of one and the rate most recently
published by the board under Subsection (d).
(d)  Not later than January 31 of each year, the board shall
publish a rate equal to the sum of the population growth rate and
(e)  A political subdivision's total expenditures from all
available sources of local revenue in a fiscal year may exceed the
amount described by Subsection (c) if:
(1)  the political subdivision's voters approve the
additional expenditures for that fiscal year at an election called
for that purpose and held on a uniform election date.
(f)  For purposes of this section, the following are not
considered an available source of revenue:
(1)  money received from the issuance of bonds approved
(2)  a grant, donation, or gift.
SECTION 2.  Section 140.014, Local Government Code, as added
by this Act, applies only to a fiscal year of a municipality or
county or special purpose district that begins on or after December
SECTION 3.  This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.