HB 4972

relating to the authority of a municipality to transfer revenue of a
municipal utility to the general fund of the municipality.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 1502.059, Government Code, is amended to
Sec. 1502.059.  TRANSFER OF REVENUE TO GENERAL FUND.
Notwithstanding Section 1502.058(a) of this chapter, Section
552.049 or Section 552.916, Local Government Code, or a similar law
or municipal charter provision, a municipality and its officers and
utility trustees may transfer to the municipality's general fund
and may use for general or special purposes revenue of any
municipally owned utility system in the amount and to the extent
authorized in the indenture, deed of trust, or ordinance providing
for and securing payment of public securities issued under this
SECTION 2.  Section 552.049, Local Government Code, is
Sec. 552.049.  SEGREGATION OF INCOME.  (a)  The income of a
drainage utility system must be segregated and completely
identifiable in municipal accounts.
(b)  A [If drainage charges are solely for the cost of
service, the] municipality may not transfer the income of a
drainage utility system [charges in whole or in part] to the
municipal general fund [, except for any part collected outside
municipal boundaries and except for any part pledged to retire any
outstanding indebtedness or obligation incurred, or as a reserve
for future construction, repair, or maintenance of the drainage
system.  If the governing body has levied, in the drainage charge,
an amount in contribution to the funding of future system
improvements, including replacement, new construction, or
extension, that amount is not transferable to the general fund].
SECTION 3.  Subchapter Z, Chapter 552, Local Government
Code, is amended by adding Section 552.916 to read as follows:
Sec. 552.916.  PROHIBITION ON TRANSFER OF MUNICIPAL UTILITY
REVENUE.  (a)  In this section, "municipal utility" means any
utility owned, operated, or controlled by a municipality or by a
nonprofit corporation whose directors are appointed by one or more
(b)  Notwithstanding any other law, a municipality may not
transfer revenue from a municipal utility to the general fund of the
SECTION 4.  This Act takes effect September 1, 2025.