HB 563

relating to the establishment of the small municipality revenue
recovery grant program to provide financial assistance for economic
development to small municipalities facing severe economic
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subtitle A, Title 4, Local Government Code, is
amended by adding Chapter 110 to read as follows:
CHAPTER 110.  MISCELLANEOUS FINANCIAL PROVISIONS AFFECTING
Sec. 110.001.  SMALL MUNICIPALITY REVENUE RECOVERY GRANT
PROGRAM.  (a)  In this section:
(1)  "Grant" means a grant authorized to be awarded by
the comptroller under the small municipality revenue recovery grant
program established under this section.
(2)  "Qualified municipality" means a municipality
with a population of 10,000 or less that experienced a decrease in
total revenue of at least 15 percent during the preceding municipal
fiscal year as the result of a reduction or termination of contracts
(b)  The comptroller shall establish and administer the
small municipal revenue recovery grant program to support the state
purpose of ensuring the vitality of small municipalities throughout
the state by providing financial assistance for economic
development to qualified municipalities.
(c)  To receive a grant, a municipality must submit an
application to the comptroller in the manner prescribed by
(d)  The comptroller may award a grant to a qualified
municipality that applies for the grant using money appropriated to
the comptroller for that purpose or other available money,
including federal funds, that may be used for purposes of this
section.  A grant must be in an amount of:
(1)  not more than $7 million for economic development
(2)  not less than $100,000 or more than $7 million to
fund an economic development project described by Subsection
(e)  A municipality that is awarded a grant may not use grant
money for a purpose other than:
(1)  economic development programs; or
(2)  to fund one or more specific projects to create or
promote the creation of jobs in the municipality, which may include
the purchase of real and personal property and the construction or
improvement of new buildings, facilities, infrastructure, or other
(f)  The comptroller shall adopt rules necessary to
implement this section, including rules that establish:
(1)  a standardized application process, including the
form to be used to apply for a grant, the manner of submitting the
form, and the information required to be submitted with the
(B)  disbursement of grant money; and
(A)  monitoring the disbursement of grant money to
ensure compliance with this section; and
(B)  the return of grant money that was not used by
a municipality for a purpose authorized by this section.
SECTION 2.  A qualified municipality, as defined by Section
110.001, Local Government Code, as added by this Act, may not apply
for a small municipality revenue recovery grant before January 1,
SECTION 3.  Not later than January 1, 2026, the comptroller
of public accounts shall comply with the requirements of Section
110.001, Local Government Code, as added by this Act.
SECTION 4.  This Act takes effect September 1, 2025.