Summary of Legislation Relating to Public Finance Enacted by the 89th Texas Legislature (Regular Session)

This article briefly summarizes a select list of legislation relating to public finance enacted by the 89th Legislature (Regular Session) that became law. Bills are arranged by subject matter, in numerical order within each category, beginning with House Bills. This document does not summarize the more than 55 laws enacted to create or regulate a particular special purpose district. In addition, bills limited in application to a single district by use of a classification scheme (i.e., bracket bills) are not summarized.

General Public Finance

HB 21 Relating to housing finance corporations; authorizing a fee. Effective May 28, 2025.

HB 21 reforms how Housing Finance Corporations (HFCs) are authorized to operate in Texas. HFCs may now only finance, develop or own housing within the boundaries of their sponsoring city or county, unless they obtain approval from the local government(s) in which the development is located. At least 50% of the value of any property tax exemption must be passed on to tenants in the development through rent reductions, otherwise the savings are recouped. Developments must reserve specified percentages of units for households earning less than or equal to 80% of the median income of the area in which the development is located, with added requirements for lower-income tiers and voucher acceptance. There will now be mandatory annual independent audits, with reports submitted to the Texas Department of Housing and Community Affairs, which will be made public, and the Department is authorized to charge a fee for its review of the audits. Failure to comply with the audit requirement will trigger non-compliance notices to the HFC and could result in the loss of its tax-exempt status. The bill includes a prohibition on discrimination against tenants using housing choice vouchers and owners must clearly publish voucher acceptance policies, as well as market to voucher holders. HFC’s that are already in existence must meet compliance items such as audits, rent passes, and voucher acceptance by 2027, with full compliance required by 2035.

HB 30 Relating to the repeal of provisions authorizing certain taxing units in the year following the year in which a disaster occurs to adopt an ad valorem tax rate that exceeds the voter-approval tax rate. Effective January 1, 2026.

HB 30 repeals the current provision that allowed taxing units such as cities and counties to exceed the voter-approval tax rate without an election in the year following a disaster. The bill creates a new definition under the Tax Code of “disaster relief costs” associated with the removal of debris or wreckage in the taxing unit and essential assistance such as emergency shelters, overtime and hazardous pay, water testing and treatment, provision of essential supplies, search and rescue efforts, evacuation services, medical care and transport, and security measures, during a disaster declared by the President of the United States or the Governor. These disaster relief costs can be included by local taxing units in calculating the “disaster relief rate” to adjust the voter-approved tax rate reasonably and temporarily after a disaster.

HB 4395 Relating to electronic submission and delivery of public securities and records of proceedings for those securities. Effective January 1, 2026.

HB 4395 modernizes bond and public security processing by requiring an issuer to electronically submit and deliver documents such as public securities, records of proceedings, credit agreements, and their amendments to the Texas Attorney General (“Attorney General”), using legally recognized electronic signatures. The bill assigns the Attorney General with the responsibility to also electronically transmit the finalized documents to the Texas Comptroller with valid e-signatures.

Investment of Public Funds

HB 34 Relating to prohibiting the investment of state money in certain countries and in certain private business entities in those countries. Effective September 1, 2025.

HB 34 amends Texas Government Code, Chapter 2270.0001, by adding the definition of “country of concern,” defined as China, Iran, North Korea, or Russia, with a provision that allows the Governor, in consultation with public safety officials, to designate additional nations. Texas state entities including pension funds and other public investors (each an “Investing Entity”), are prohibited from investing in securities issued by countries of concern or an entity owned or controlled by, or subject to the jurisdiction of, a country of concern. The bill further expands the definition of “scrutinized company” by adding new categories tied to companies that are organized under the laws of, headquartered in, have their principal place of business in, are controlled by, or have the majority of their stock or other ownership interest held or controlled by, a country of concern. Companies identified as a “scrutinized company” will be added to the prohibited investment list maintained by the Texas Comptroller but must be given notice and a chance to appeal such designation. If the listed company continues to operate as a scrutinized company after the period for appeal, Investing Entities must sell, redeem, divest, or withdraw all publicly traded securities of the company, except private equity funds described under the Tax Code.

SB 667 Relating to prohibiting state retirement systems from investing in certain Chinese-affiliated entities. Effective September 1, 2025.

SB 667 amends the Texas Government Code by adding Section 809A prohibiting Texas governmental entities, specifically public retirement systems, from investing in certain Chinese-affiliated entities, including a publicly traded entity that is both (i) incorporated or headquartered in China, and (ii) publicly confirmed to be controlled by China, the Chinese Communist Party, or a provincial division, municipality, governmental agency, sovereign wealth fund, or political instrumentality of China, unless divestment would risk violating the entity’s fiduciary duties. The Comptroller must maintain a list of such restricted entities, to be updated no less than annually. State retirees, systems, employees, officers, and contractors are indemnified from legal or financial liability for any actions taken in good faith under the new law. Additionally, individuals cannot sue state entities for compliance or non-compliance.

Local Government/Municipalities

HB 223 Relating to exemptions to competitive requirements for purchases of certain services by a municipality. Effective September 1, 2025.

HB 223 removes the “no bid” exemption from the Local Government Code, which currently allows municipalities to contract for lobbying, government relations, or similar services without competitive bidding. The bill narrows the existing exemption for “personal, professional, or planning services” by excluding lobbying and government relations from that exception. These contracts are now explicitly subject to competitive procurement requirements under Chapter 252 of the Local Government Code.

SB 840 Relating to certain municipal and county regulation of certain multifamily and mixed-use residential development projects and conversion of certain commercial buildings. Effective September 1, 2025.

SB 840 amends the Local Government Code to allow by-right mixed-use or multifamily housing in zones currently permitted for office, retail, warehouse, commercial or mixed-use without requiring rezoning, variances, special use permits, or public hearings. It applies only to municipalities with a population of over 150,000 located in counties with a population of over 300,000, such as Dallas, Houston, Austin, and San Antonio. The bill sets clear development standards by preventing municipalities from enforcing (i) density caps lower than the municipality’s highest allowed density, or 36 units per acre; (ii) height limits below the tallest allowed for commercial or office developments, or less than 45 feet; (iii) setbacks stricter than those for commercial development, or over 25 feet. It further prohibits municipalities from requiring a mixed-use residential or multifamily residential development to provide more than one parking spaced per dwelling unit or a multilevel parking structure. For existing office, retail, or warehouses built at least 5 years ago and converting to greater than or equal to 65% residential, municipalities cannot impose permit fees, impact fees, parkland dedication or fees in lieu, traffic studies, mitigation measures, additional parking, utility updates, or stricter design standards beyond International Building Code minimums. A housing organization or other person adversely affected or aggrieved by a violation of this new chapter may bring an action for declaratory or injunctive relief against the municipality.

Property Taxes

HB 9 Relating to an exemption from ad valorem taxation of a portion of the appraised value of tangible personal property a person owns that is held or used for the production of income. Effective tax year 2025, if the related Constitutional Amendment, HJR 1, is approved (see below).

HB 9 establishes a new exemption under the Tax Code for tangible personal property used in income production, increasing the exemption to $125,000 per location or related entity, up from the previous $2,500 or lower threshold. The bill aims to reduce property-tax burdens for small businesses and promote economic growth by enabling reinvestment in operations.

HB 22 Relating to the exemption from ad valorem taxation of intangible personal property. Effective January 1, 2026.

HB 22 establishes that all intangible personal property is exempt from ad valorem taxation in Texas by repealing sections of the Tax Code that previously excepted the exemption for specific intangibles. The bill is effectively a blanket exemption, affirming that no intangible personal property can be taxed.

SB 4 Relating to an increase in the amount of the exemption of residence homesteads from ad valorem taxation by a school district and the protection of school districts against certain losses in local revenue. Effective retroactively to the 2025 tax year if the related Constitutional Amendment, SJR 2, is approved (see below).

SB 4 would amend the Tax Code to increase the homestead exemption for school district property taxes from $100,000 to $140,000, and to $150,000 for seniors or disabled homeowners. Since the bill only applies to independent school districts, it does not apply to charter schools. The bill includes a “hold-harmless” provision for school districts which guarantees that school districts will be reimbursed through additional state funding to cover any local revenue lost due to the higher exemption. As a temporary provision, it would expire on January 1, 2027, subject to further legislation or constitutional amendments.

SB 23 Relating to an increase in the amount of the exemption from ad valorem taxation by a school district of the appraised value of the residence homestead of a person who is elderly or disabled and the protection of school districts against certain losses in local revenue. Effective for the 2025 tax year if the related Constitutional Amendment, SJR 85, is approved (see below).

SB 23 would amend the Tax Code to increase the homestead exemption for school district property taxes from $10,000 to $60,000 for elderly or disabled homeowners. This bill also only applies to independent school districts and not charter schools. The bill also includes a “hold-harmless” such as the provision described above. If SB 23 is approved at the November 2025 election, it would apply retroactively for the 2025 tax year. Since it is a temporary provision, it would only apply through January 1, 2027, subject to future constitutional amendments.

Transparency/Public Disclosure

HB 103 Relating to the creation and maintenance of a database of taxing unit bond, tax, and bond-related project information; providing a civil penalty. Effective September 1, 2025.

HB 103 amends the Government Code to require the Texas Comptroller to consult with the Bond Review Board (BRB) to develop and maintain a free statewide, public database for current and historical information regarding local tax and bond data for all taxing units in the state, including cities, counties, school districts, and municipal utility districts. The information to be published must include:

• For each bond proposed or issued by a taxing unit, (i) the language of the ballot proposition to approve the bond; (ii) the projected interest and sinking fund tax rate or projected tax rate for debt service; (iii) the result of any election held for the purpose of approving the issuance of the bond; (iv) a list of projects to be funded from proceeds of the bond; (v) an accounting of the use of the proceeds of any issued bond, including a description of any project paid for with the proceeds; (vi) a description of any increase in the interest and sinking fund tax rate or tax rate for debt service, as applicable, resulting from the issuance of the bond; and (vii) an estimate of the minimum dollar amount required to be spent annually for debt service resulting from the issuance of the bond.
• The language of the ballot proposition must include the taxing unit’s adopted tax rate and voter-approval tax rate, the difference between the adopted tax rate and the voter-approval tax rate, the tax rate for the preceding year, the number of votes cast in the election in favor and against the proposition, and if the proposition is not approved by the voters, the taxing unit’s tax rate for the tax year.
• For maintenance taxes levied or proposed by a school district, the school district’s proposed or approved tax rate and the language of the ballot proposition required under the Education Code.

Additionally, the database must include a report generation function that allows the Comptroller to generate a report of the information described above, as well as a function that allows for the proposal of updates or correction to information from outside sources. Taxing units are required to submit current-year data annually by August 7 and historical data from 2015-25 by January 1, 2026. Non-compliant taxing units may be assessed a civil penalty of $1,000.

HB 1522 Relating to notice of a meeting held under the open meetings law. Effective September 1, 2025.

HB 1522 amends the Open Meetings Act, chapter 551 of the Texas Government Code, to enhance notice requirements before public meetings of governmental bodies, such as the state, county commissioners, municipalities, school districts, county boards, and special districts. The bill requires notice to be posted in a place readily accessible to the public for at least three business days (replacing the existing 72-hour requirement) prior to the meeting date. If the meeting will involve a discussion on, or the adoption of, a budget, the posted notice must include a physical copy of the proposed budget or a clear link to the budget if the notice is posted online, and a “taxpayer impact statement” comparing the median home’s current tax bill to the projected tax bill under the proposed budget and under any no-new-revenue tax rate. The new requirements do not apply to general academic teaching institutions or universities.

HB 1991 Relating to information regarding certain charges for services provided by municipally owned utility systems. Effective September 1, 2025.

HB 1991 amends the Local Government Code to enhance transparency around utility fees by requiring municipalities imposing operating, maintenance, replacement, or improvement charges to publish the terms and conditions of the charges on both the utility’s website and the municipality’s website no later than the 30^th day after the date the municipality adopts a change to such terms and conditions.

HB 2520 Relating to the open meetings law. Effective September 1, 2025.

HB 2520 expands the definitions under the Open Meetings Act of the Government Code by adding “board of managers appointed under Chapter 39A of the Education Code” to the definition of a governmental body. It further increases public notice requirements by requiring that meeting notices include a sufficiently specific agenda so the public can clearly understand all topics to be considered, including special or unusual matters and items of particular public interest. For any closed portion of the meeting, the notice must specifically describe the topics to be discussed. The exception allowing closed-session discussion for personnel matters now applies only to specific individuals, but if the topic affects a class or group of employees such as changing duties or compensation for multiple employees, that discussion must remain open.

HB 3526 Relating to fiscal transparency for bonds issued by local governmental entities. Effective September 1, 2025.

HB 3526 enhances fiscal transparency by amending the Government Code to require the creation of a public, searchable database of local government bond proposals and issues. The Attorney General is required to forward bond data to the BRB for inclusion in biennial and repayment reports detailing each voter-approved bond’s repayment status and associated tax rate impacts, instead of the previous general debt statistics report. The BRB must establish a user-friendly searchable public database listing each bond’s principal, estimated interest, estimated total repayment including principal and interest, and minimum annual debt services. The bill requires municipalities and other local entities to submit both pre- and post-election reports regarding bond elections, detailing the date of the election, the proposition number for each proposed bond issuance, the total estimated cost of issuance, the estimated debt service, a description of the purpose of the bonds, election results, and any updates, all of which will also be included in the database. The bill further mandates annual reporting of outstanding but unissued debt, as well as biennial reporting on December 31 of each even-numbered year regarding the status of repayment of bonds issued by local governments.

SB 843 Relating to a Texas Education Agency database of school district bonds, taxes, and bond-related projects. Effective September 1, 2025.

SB 843 amends the Education Code to require the Texas Education Agency to develop and maintain a public database regarding bonds, taxes, and bond-related capital projects for school districts and open-enrollment charter schools, including charter districts, including:

• For each bond planned, proposed, or issued by a school district, the database must include the language of the ballot proposition, the projected interest and sinking fund tax rate associated with the proposed bond, the result of an election held for the purpose of issuing a proposed bond, a list of projects to be funded with the bond proceeds, an accounting of the use of bond proceeds, other data related to capital projects, and any increase in the interest and sinking fund tax rate resulting from issued bonds.
• For each bond issued by an open-enrollment charter school or charter district, the database must include a list of projects to be funded from the bond proceeds and an accounting of the use of proceeds of any issued bond.
• For maintenance taxes levied or proposed by a school district, each school district’s proposed or approved tax rate and the language of the ballot proposition.

The database must also have a reporting tool to generate region-specific summaries, and an update/correction submission function for public input.

SB 1023 Relating to the calculation of certain ad valorem tax rates. Effective January 1, 2026.

SB 1023 increases transparency and accuracy in property tax rate calculations by amending the Tax Code to require the enhancement of electronic forms used by counties and taxing units. The bill requires that all tax rate calculation forms now be hyperlink-enabled.

SB 1851 Relating to the penalty for noncompliance with certain audit requirements by a municipality. Effective September 1, 2025.

SB 1851 amends the Local Government Code to introduce a penalty for municipalities that fail to complete and file annual financial audits on time. If the Attorney General determines that a municipality has not had its records and accounts audited and an annual financial statement prepared based on the audit or has not filed the financial statement and auditor’s opinion as required, the municipality may not adopt an ad valorem tax rate that exceeds the municipality’s no-new-revenue tax rate.

Elections and Measures

SB 506 Relating to requirements for certain ballot propositions and to related procedures and provisions. Effective September 1, 2025.

SB 506 amends the Election Code to standardize ballot language requiring that a proposition be drafted with “definiteness, certainty, and facial neutrality” so voters are not misled. The bill authorizes mandamus actions for court-ordered new elections due to misleading ballot language and allows a registered voter eligible to vote in the election or an authorized representative of a home-rule city to submit the proposition for review by the Secretary of State. Lastly, the bill prohibits a political subdivision from proposing a measure, including a charter amendment, that would appear on the same ballot as a petition-initiated measure if the two measures generally address the same subject matter or a provision of a proposed measure would invalidate or conflict with any portion of a petition-initiated measure.

SB 1025 Relating to the text of ballot propositions that increase taxes. Effective May 24, 2025.

For any local ballot proposition that imposes or increases a tax, SB 1025 amends the Election Code to require the ballot to state the amount or maximum tax rate for which approval is sought, as well as the phrase “THIS IS A TAX INCREASE” in capital letters of the same font size as the rest of the text at the top of the proposition. This bill applies broadly to cities, counties, and special purpose districts, and aligns their requirements with school districts, which were already required to include this in ballot propositions.

SB 1453 Relating to the current debt rate and tax rate of a taxing unit for ad valorem tax purposes. Effective January 1, 2026.

SB 1453 amends the Tax Code to allow taxing units to exceed current debt rates if the taxing unit states the standard rate, proposed higher rate, the difference, and the specific use of excess revenue, and obtains at least a 60% majority vote. Once approved, this higher rate becomes the current debt rate for that tax year, and the voter‑approval tax rate is recalculated accordingly.

SB 2753 Relating to the time, place, and manner of voting, including abolishing early and absentee voting, providing for a voting period, and establishing voting centers. Effective September 1, 2025.

SB 2753 amends certain provisions of the Election Code regarding polling place use, voter registration office hours, and funding eligibility for counties conducting early voting to streamline election procedures and increase efficiency. In counties not participating in the countywide polling place program, election offices must now use the same early voting sites as election day polling places. Additionally, if changes in county election precinct boundaries to give effect to a redistricting plan result in county election precincts with fewer than 3,000 registered voters, the county election precincts can be combined.

Schools

HB 2 Relating to public education and public school finance. Effective September 1, 2025.

HB 2 provides $8.5 billion in new funding for Texas public schools and charter schools, to be used as follows:

• $4 billion for pay raises for teachers and support staff and increases to the Teacher Incentive Allotment;
• operational expenses such as insurance, transportation, and utilities;
• special education funding;
• support for developing reading and math skills in younger students;
• teacher preparation and certification programs;
• fund early childhood learning;
• additional funding for small and rural schools; and
• campus safety.

Additionally, uncertified teachers in non-charter public schools will no longer be allowed to teach core subjects. The bill increases the Tier II funding formula base amount that schools receive from the state per student each school year from $6,160 to $6,380. It also increases facilities funding for charter schools to 0.06x the new basic allotment of $6,380 per average daily attendance.

SB 2 Relating to the establishment of an education savings account (ESA) program. Effective September 1, 2025.

SB 2 establishes a universal ESA program under the Education Code. Under the bill, families can receive public taxpayer dollars to fund their children’s tuition at an accredited private school as well as other expenses like textbooks, transportation, and therapy. It provides taxpayers up to $10,000 per student, $11,500 for students with disabilities, and $2,000 for students who are homeschooled, to spend on approved private-education services. Families will receive the money through state-managed education savings accounts. Funding for the ESA program is capped at $1 billion for the 2026-27 year.

SB 1502 Relating to the authority of the governing body of a school district to adopt an ad valorem tax rate that exceeds the district's voter-approval tax rate. Effective January 1, 2026.

SB 1502 prohibits a school district from adopting a tax rate higher than the voter-approved rate if (i) the school district previously adopted a tax rate that exceeded the district’s voter-approved tax rate; (ii) an election was held on the higher tax rate; and (iii) the proposition to adopt the higher tax rate was not approved.

SB 2185 Relating to the bilingual education allotment under the public school finance system. Effective September 1, 2025.

Senate Bill 2185 clarifies and expands funding for school districts, including charter schools, that implement alternative language instruction methods, particularly dual language immersion programs. The bill addresses a gap in the existing funding structure that did not fully account for districts using state-approved alternative language instruction methods. Specifically, the bill will provide a funding weight of 0.15 per emergent bilingual student in an approved dual language immersion program and a 0.05 weight for non-emergent bilingual students in similar programs.

SB 2361 Relating to the transfer of the University of Houston—Victoria to The Texas A&M University System. Effective September 1, 2025.

SB 2361 transfers University of Houston—Victoria (UHV) from the University of Houston System to Texas A&M University—Victoria (TAMUV) under the Texas A&M University System. The transfer of TAMUV will align the campus with the resources and support of the Texas A&M System, potentially leading to new academic programs and opportunities for students. It also has the potential to boost the local economy and workforce development.

Water and Infrastructure

HB 4370 Relating to the projects that may be undertaken by a public improvement district, municipal utility district, fresh water supply district, water control and improvement district or municipal management district. Effective September 1, 2025.

HB 4370 amends the Local Government Code to add to the list of public improvement projects that public improvement districts, municipal management districts, water control and improvement districts, fresh water supply districts, or municipal utility districts can undertake to include geothermal water-conveyance projects and related infrastructure. The bill clarifies that these districts can purchase, construct, acquire, own, operate, repair, improve and extend geothermal systems within their district. Districts can issue bonds payable from ad valorem taxes, revenues, or a combination of the two to fund such geothermal projects.

SB 7 Relating to the oversight and financing of certain water infrastructure matters under the jurisdiction of the Texas Water Development Board. Effective September 1, 2025, other than those provisions that only become effective upon approval of HJR 7 (see below).

SB 7 marks a financial and strategic shift in how the state, through the Texas Water Development Board, plans, builds, and funds water infrastructure. The bill makes several revisions to the Texas Water Code to address increased water demand in the state, including:

• providing funding to create new water sources including water and wastewater reuse projects, acquisition of water or water rights originating from outside the state, and reservoir projects;
• expanding the types of projects the Texas Water Board can fund to include conveyance such as pipelines and regional distribution systems;
• increasing coordination among project sponsors, utilities, governmental entities, and carriers to increase interconnectivity and interoperability, and reuse existing utility easements to reduce project costs and the need for eminent domain;
• standardizing design; and
• facilitating the development of standards, best practices, and guidance on infrastructure specifications, materials, and interconnectivity.

If HJR 7 (see below) is approved by the voters at the next election, SB 7 provides for an additional $1 billion per year of funding to the Texas Water Fund beginning September 1, 2027.

SB 1169 Relating to the provision of water or sewer service by public entities operating jointly or concurrently. Effective May 20, 2025.

SB 1169 enables improved joint operation of water and sewer services by public utility agencies, utilities, or water supply or sewer service corporations, by clarifying their powers and establishing new governance, finance, and procedural rules. The bill adds anticipation notes to the list of obligations a public utility agency is authorized to issue and allows a public utility agency to finance or refund the acquisition, construction, expansion and improvement of all or a portion of a facility relating to the agency’s purpose. However, the bill specifically states that a public utility agency does not have the power of eminent domain. It further adds to the list of allowable sources to pledge to the payment of the obligations to include (i) revenues received from a public entity by contract authorized by a concurrent ordinance; (ii) special assessments imposed by a public entity and provided by contract to the agency; or (iii) any other funds of the agency. Any public utility agency can create a funding mechanism to jointly invest in and leverage funding for water infrastructure with the North American Development Bank.

The Public Utility Commission may allow a public utility agency that includes a water supply or sewer service corporation as a participant in the agency to render retail water or sewer service without a certificate of public convenience and necessity. The public utility agency must provide individual written notice to each ratepayer within 60 days after a final decision on a rate change.

Additionally, the bill authorizes the Attorney General to bring suit for the appointment of a receiver to collect the assets and carry on the business of a failing utility or water supply or sewer service corporation.

SB 1194 Relating to creating the Central Texas Water Alliance; providing authority to issue bonds; granting the power of eminent domain; providing authority to impose fees. Effective May 15, 2025.

SB 1194 amends the Special District Local Laws Code to add Chapter 11020 regarding the creation of the Central Texas Water Alliance (CTWA) as a regional water authority. The initial sponsors of the CTWA include Bell County, Bell County Water Control and Improvement District No. 1, Clearwater Underground Water Conservation District, and McLennan County. Other local governments or private entities can petition to become sponsors.

The bill grants the CTWA the authority to:

• acquire, purchase, own, hold, lease, construct, improve, and maintain a reservoir, groundwater well, or other source of water supply;
• issue refunding bonds, revenue bonds and other obligations payable from user fees, contracts, or grants, but explicitly prohibits the pledge of ad valorem taxes;
• impose fees on sponsors and customers based on service classes or projects;
• exercise eminent domain, but only for rights-of-way, not for acquiring land for water rights or land for groundwater; and
• enter into interlocal agreements with local governments to operate and manage water infrastructure.

SB 1261 Relating to the financing of water supply projects included in the state water plan, authorizing the issuance of obligations. Effective September 1, 2025.

SB 1261 provides for a new financing tool for large water infrastructure projects by creating a new Chapter under the Government Code, allowing an agency, authority, board, body politic, department, district, instrumentality, municipal corporation, political subdivision, public corporation, or subdivision of the state (an “Issuer”) to (i) finance or refinance an eligible project (defined as one or more related water supply projects that are identified as recommended water management strategies in the State Water Plan, of which the cumulative capital costs are not less than $650 million); (ii) refund obligations, other indebtedness, or contractual obligations of the Issuer issued or incurred in connection with an eligible project; and (iii) pay the costs of issuance or delivery of the obligations.

Such obligations will be payable from obligations payable or secured by taxes other than ad valorem taxes, revenues, or a combination of the two. The maximum maturity or term of an obligation may not exceed the lesser of (i) the reasonably expected weighted average useful life of the eligible project as certified by a licensed professional engineer selected by the Issuer; or (ii) 50 years from the date of issuance or incurrence of the obligation. Before an obligation can be issued or incurred, it must be approved by the Attorney General.

Proposed Constitutional Amendments

Each of the constitutional amendments set forth below will only go into effect as indicated if approved by the voters at the November 4, 2025 Election.

HJR 1 Proposing a constitutional amendment to authorize the legislature to exempt from ad valorem taxation a portion of the market value of tangible personal property a person owns that is held or used. Effective retroactively to the 2025 tax year.

Pursuant to HB 9, discussed above, HJR 1 seeks to amend Article VIII, Section 1(g) of the Texas Constitution to authorize the exemption of up to $250,000 of the market value of tangible personal property used for income production from ad valorem taxes. As a temporary provision, it expires on January 1, 2027, barring any further amendments or legislation.

HJR 4 Proposing a constitutional amendment prohibiting the enactment of a law imposing an occupation tax on certain entities that enter into transactions conveying securities or imposing a tax on certain securities transactions. Effective retroactively to the 2025 tax year.

HJR 4 would add Section 30 to Article VIII (Taxation and Revenue) of the Texas Constitution to prohibit the Legislature from enacting a law that imposes (i) an occupation tax on a registered securities market operator; or (ii) a tax on securities transactions conducted by those operators.

HJR 7 Proposing a constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas Water Fund. Effective September 1, 2026.

As discussed regarding SB 7 above, HJR 7 authorizes a proposed constitutional amendment to create a dedicated funding stream for the Texas Water Fund by earmarking a portion of the State Sales and Use Tax revenue. Specifically, each fiscal year starting in 2027, the first $1 billion of tax revenue above $48 billion in state sales-tax collections will be automatically deposited to the Texas Water Fund. The amendment would cap the annual deposit at $1 billion but provides flexibility for the Legislature to increase the amount up to 100% or decrease the amount by up to 50% with a two-thirds concurrent resolution. Additionally, such funds may not be transferred to the New Water Supply for Texas Fund for the purpose of financing the construction of infrastructure to transport groundwater that was produced from a well in the state that, at the time of production, was not brackish. Funding is only authorized through August 31, 2025, with provisions allowing extensions in 10-year increments via a simple majority resolution. During a state of disaster, allocation to the Texas Water Fund under HJR 7 may be suspended by a concurrent resolution of each House of the Legislature. As a temporary provision, it expires on September 1, 2028, barring any further amendments or legislation.

SJR 2 Proposing a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district. Effective for the 2025 tax year.

As discussed regarding SB 4 above, SJR 2 is a proposed constitutional amendment to increase the homestead exemption from $100,000 to $140,000 for ad valorem taxes for general elementary and secondary public school purposes, with a “hold-harmless” provision guaranteeing that school districts will still receive the full reimbursement for any lost revenue due to the increase in the exemption. As a temporary provision, it expires on January 1, 2027, subject to further constitutional amendments.

SJR 85 Proposing a constitutional amendment authorizing the legislature to increase the amount of the exemption from ad valorem taxation by a school district of the market value of the residence homestead of a person who is elderly or disabled. Effective retroactively to the 2025 tax year.

Pursuant to SB 23 discussed above, SJR 85 is a proposed constitutional amendment that would increase the homestead exemption for school district property taxes for homeowners aged 65 or older and those with disabilities from the current $10,000 to $60,000. It also includes a “hold-harmless” provision. Since it is a temporary provision, it will only apply through January 1, 2027, subject to future constitutional amendments.