By: Hinojosa of Hidalgo S.B. No. 427
A BILL TO BE ENTITLED
AN ACT
relating to the eligibility of certain political subdivisions to
receive a state loan or grant following the political subdivision's
failure to comply with certain financial reporting requirements.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 140, Local Government Code, is amended
by adding Section 140.014 to read as follows:
Sec. 140.014. ELIGIBILITY FOR STATE LOANS OR GRANTS
FOLLOWING FAILURE TO COMPLY WITH CERTAIN ANNUAL FINANCIAL REPORTING
REQUIREMENTS. (a) In this section:
(1) "Annual financial statement or report" means:
(A) a municipality's annual financial statement
required to be filed under Section 103.003;
(B) a county's:
(i) annual report required to be filed
under Section 114.025; or
(ii) annual financial exhibit required to
be published under Section 114.022 if the county does not have a
county auditor; or
(C) a political subdivision's annual financial
statement required to be published under Section 140.006.
(2) "Disaster" has the meaning assigned by Section
418.004, Government Code.
(b) Except as provided by Subsection (e), a political
subdivision that fails to file or publish an annual financial
statement or report as required by law is not eligible to receive a
state loan or grant under a state program for the political
subdivision's fiscal year in which the political subdivision was
required to file or publish the statement or report.
(c) Except as provided by Subsection (e), a political
subdivision created under Section 52, Article III, or Section 59,
Article XVI, Texas Constitution, is not eligible to receive a state
loan or grant in a fiscal year in which:
(1) the political subdivision is required by financial
reporting requirements prescribed by the agency administering the
state loan or grant to publish a financial statement or report; and
(2) the political subdivision fails to file or publish
the financial statement or report described by Subdivision (1).
(d) Each application for a state program for which a
political subdivision may not be eligible for a loan or grant under
this section must:
(1) include a statement notifying the applicant of the
requirement of this section; and
(2) require the political subdivision to demonstrate
compliance in the manner prescribed by the state agency
administering the loan or grant.
(e) Subsections (b) and (c) do not apply to a political
subdivision that:
(1) fails to file or publish a financial statement or
report because of a disaster; and
(2) provides the following to the agency administering
the state loan or grant:
(A) written notice detailing the circumstances
of the disaster and its impact on the compliance with the financial
reporting requirements;
(B) a disaster declaration issued by the governor
under Chapter 418, Government Code, or any documentation from a
federal, state, or local authority confirming the occurrence of the
disaster;
(C) a plan for compliance, including an estimated
timeline for filing or publishing the required financial statement
or report; and
(D) any additional documentation required by the
agency responsible for administering the loan or grant.
SECTION 2. The change in law made by this Act applies only
to a financial statement or report required to be filed or published
on or after January 1, 2026.
SECTION 3. This Act takes effect September 1, 2025.