BILL ANALYSIS

C.S.H.B. 5267

By: Bell, Cecil

Intergovernmental Affairs

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that the growth of budgets in some counties and municipalities has far exceeded the growth of population and inflation, and while current law imposes spending limits on state spending, the only meaningful limit imposed on local spending is the voter-approval-tax-rate that limits property tax revenue growth, but not expenditure growth. The bill author has also informed the committee that the budgeting process can be very difficult for taxpayers to engage with because many municipal and county budgets are complicated and there is no standardized format. C.S.H.B. 5267 seeks to address this issue by establishing expenditure limits in city and county budgets and creating the Taxpayer's Budget Summary to provide for simple and transparent taxpayer review of budgets.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 5267 amends the Local Government Code to cap the total expenditures from all available sources of revenue in a fiscal year of a political subdivision that is a municipality or county at the greater of the following:

· the political subdivision's total expenditures from all available sources of revenue in the preceding fiscal year; or

· an amount determined by multiplying the following:

o the political subdivision's total expenditures from all available sources of revenue in the preceding fiscal year; and

o the sum of one and the rate most recently published by the Legislative Budget Board (LBB) that is equal to the sum of the population growth rate and the inflation rate.

The bill requires the LBB to publish that rate not later than January 31 of each year. The bill excepts a political subdivision from that cap on total expenditures for a fiscal year under the following circumstances:

· 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; or

· the governor declares or renews a declaration of a state of disaster in that fiscal year, and the governor's designation of the area threatened includes all or part of the geographic territory of the political subdivision.

The bill limits the amount by which the total applicable expenditures of a political subdivision under a declaration of a state of disaster may exceed the cap on total expenditures to an amount equal to the actual costs incurred by the political subdivision as a result of the declared disaster. For purposes of these provisions, money received from the issuance of bonds approved by the voters and grants, donations, and gifts are not considered an available source of revenue.

C.S.H.B. 5267 requires a political subdivision that is a municipality or county and that maintains a website, not later than the 20th day after the date the governing body of the political subdivision adopts a budget for the fiscal year, to post on the political subdivision's website, or make publicly available if the political subdivision does not maintain a website, a summary of the adopted budget that includes the following:

· the total amount of the budget adopted for that fiscal year;

· the amount budgeted for the fiscal year in each of the following categories:

o general government;

o public health;

o public safety;

o parks and recreation;

o business and economic development;

o transportation;

o debt service;

o capital improvements; and

o other expenditures; and

· a taxpayer impact statement that does the following:

o lists the name of each fee and property tax, as applicable, imposed by the governmental body on a typical residential ratepayer;

o states the amount of each such fee or tax for a typical residential ratepayer for the fiscal year preceding the year applicable to the proposed budget and the fiscal year applicable to the proposed budget;

o states the difference in those amounts for each such fee or tax;

o briefly defines a typical residential ratepayer for each such fee and property tax;

o includes an aggregated total for the fee and tax amounts and the difference in those amounts, stated separately; and

o includes aggregate amounts for each fee, property tax, or other source of revenue, broken down by the revenue type that will be used to fund expenditures in the proposed and adopted budget.

The bill requires such a political subdivision, not later than the 20th day before the date the governing body of the political subdivision holds a public hearing on the adoption of a budget for the upcoming fiscal year, to post on the political subdivision's website, or make publicly available if the political subdivision does not maintain a website, a summary of the proposed budget that includes the budgeted amount for the preceding fiscal year and the proposed amount for the upcoming fiscal year for each category described by the bill in a manner that allows comparison of the amounts across categories. The bill requires that summary to include a total budget amount that is equal to the sum of the budget amounts provided for each category but prohibits the summary from including an expenditure in more than one budget category.

C.S.H.B. 5267 defines the following terms for purposes of its provisions:

· "consumer price index" as the average over a calendar year of the index the LBB considers to most accurately report changes in the purchasing power of the dollar for consumers in Texas;

· "inflation rate" as the amount, expressed in decimal form rounded to the nearest thousandth, computed by determining the percentage change in the consumer price index for the preceding calendar year as compared to the consumer price index for the calendar year preceding that calendar year; and

· "population growth rate" as the rate of growth of the state's population during the preceding calendar year, expressed in decimal form rounded to the nearest thousandth, determined by the LBB in accordance with the most recent population estimates published by the U.S. Census Bureau.

C.S.H.B. 5267 applies only to a fiscal year of a municipality or county that begins on or after December 1, 2025.

EFFECTIVE DATE

September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 5267 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute revises the provision from the introduced that gives the option to cap total expenditures in a fiscal year at an amount determined by multiplying the political subdivision's total expenditures in the preceding fiscal year and the product of one and the LBB rate described by the bill by instead specifying that the amount is determined by multiplying the political subdivision's total expenditures in the preceding fiscal year and the sum of one and the LBB rate.

The substitute includes a provision absent from the introduced limiting the amount by which the total expenditures of a political subdivision under a declaration of a state of disaster may exceed the cap on total expenditures to an amount equal to the actual costs incurred by the political subdivision as a result of the declared disaster.

With respect to the requirements for a political subdivision to post on the political subdivision's website a summary of an applicable adopted budget and applicable proposed budget, the substitute requires a political subdivision that does not maintain a website to make those summaries publicly available, whereas the introduced did not. The substitute also includes provisions absent from the introduced that includes a taxpayer impact statement among the contents of the summary of the adopted budget and establishes that the impact statement does the following:

· lists the name of each fee and property tax, as applicable, imposed by the governmental body on a typical residential ratepayer;

· states the amount of each such fee or tax for a typical residential ratepayer for the fiscal year preceding the year applicable to the proposed budget and the fiscal year applicable to the proposed budget;

· states the difference in those amounts for each such fee or tax;

· briefly defines a typical residential ratepayer for each such fee and property tax;

· includes an aggregated total for the fee and tax amounts and the difference in those amounts, stated separately; and

· includes aggregate amounts for each fee, property tax, or other source of revenue, broken down by the revenue type that will be used to fund expenditures in the proposed and adopted budget.