Relating to rates established by municipalities for water or sewer service for certain entities.
Summary
HB 685 prohibits municipalities from charging a higher water or sewer utility rate to entities that qualify for a sales tax or ad valorem tax exemption than the rate charged to other entities receiving comparable utility service. In practical terms, the bill bars local governments from using utility pricing to impose a higher charge on tax-exempt organizations, such as certain nonprofits or other exempt entities, when the service provided is comparable.
The bill amends the Local Government Code by adding a new section to Chapter 552, creating a statewide rule that limits municipal discretion in setting water and sewer rates for these entities. It applies only to rate differentials based on sales tax or property tax exemption status and does not otherwise change general municipal authority over utility rates. The act takes effect September 1, 2025.
Impact
HB 685 adds Section 552.916 to the Local Government Code and preempts municipalities from establishing discriminatory water or sewer rates for entities that qualify for sales tax or ad valorem tax exemptions. This affects local utility rate-setting practices by requiring comparable treatment for exempt entities and other similarly served customers, potentially benefiting nonprofits, charitable organizations, and other tax-exempt users of municipal water or sewer systems.
Sentiment
The bill appears to have been broadly supported and noncontroversial. It passed the House 145-0 and the Senate 31-0, with no recorded opposition in the available votes. The absence of committee transcript discussion suggests the measure was likely viewed as a straightforward fairness or parity issue in municipal utility billing.
Contention
No significant contention is reflected in the available record. The main policy issue is whether municipalities should be allowed to charge higher utility rates to entities that receive tax exemptions, but the unanimous votes indicate little to no organized opposition. Any potential concern would likely come from municipalities that prefer flexibility in rate design, while supporters would favor equal treatment for tax-exempt entities receiving comparable service.