HB 46 would add a new section to the Local Government Code imposing a cap on annual expenditures by certain political subdivisions in Texas, including counties, municipalities, school districts, junior college districts, hospital districts, and other special districts. The cap generally limits a subdivision’s total expenditures from all available revenue to the greater of its prior-year spending or prior-year spending increased by a formula tied to population growth and inflation.
Each year by January 31, affected political subdivisions would have to calculate and post on their websites a combined growth rate based on population growth and inflation, using a comptroller-prescribed form. The bill also creates an exception process: expenditures may exceed the cap if approved by at least two-thirds of voters at an election held on a uniform election date. Grants, donations, and gifts would not count as available revenue, and disaster relief costs would not count as expenditures.
Impact
The bill would significantly constrain local government budgeting authority by tying spending growth to population and inflation unless voters approve higher spending. It would apply only to political subdivisions authorized to levy ad valorem taxes or issue bonds, and it would affect how those entities plan, report, and justify annual expenditures beginning with fiscal years starting on or after January 1, 2026. The attorney general would be empowered to enforce the cap through injunctive relief, mandamus, or declaratory judgment actions, creating a new state-level enforcement mechanism over local fiscal decisions.
Sentiment
Because there are no committee transcripts or recorded votes provided, the available context does not show direct debate or measured support/opposition. Based on the bill’s structure, it appears designed to appeal to fiscal restraint and taxpayer protection concerns by limiting local spending growth and requiring voter approval for exceptions. At the same time, the measure would likely draw concern from local governments and public service providers that rely on flexible budgeting to respond to changing needs, especially in fast-growing or inflationary conditions.
Contention
The main points of contention are likely to be the breadth of the spending cap, the formula used to calculate allowable growth, and the requirement for a two-thirds voter approval threshold to exceed the limit. Local governments, school districts, and special districts may argue that the cap could restrict their ability to fund essential services, capital needs, or unexpected costs, while supporters are likely to emphasize taxpayer accountability and limits on government expansion. Another likely issue is the attorney general’s enforcement authority, which could be viewed as increasing state oversight of local fiscal policy.
Payment rates established for certain substance use disorder treatment services, and vendor eligibility recodified for payments from the behavioral health fund.
Cover Outstanding Vulnerable Expansion-eligible Residents Now Act or the COVER Now Act This bill establishes a demonstration program to allow local governments to provide health benefits to the Medicaid expansion population in states that have not expanded Medicaid. Under the program, local governments may provide coverage for individuals who are newly eligible for Medicaid under the Patient Protection and Affordable Care Act (i.e., the Medicaid expansion population) for a maximum of 10 years, or until their respective states expand Medicaid. The bill provides a 100% federal matching rate for the first three years of program participation. The bill prohibits states from taking certain actions against participating localities, such as withholding funding, increasing taxes, or restricting provider participation. States that violate these requirements are subject to certain funding penalties.