Sparks’s bill limits local borrowing through anticipation notes

The text as introduced · 588 words

2025S0047-1 01/29/25

By: Sparks
S.B. No. 1037

A BILL TO BE ENTITLED

AN ACT

relating to the issuance of certain anticipation notes and

certificates of obligation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1431.002, Government Code, is amended by

adding Subsections (d) and (e) to read as follows:

(d) Except as provided by Subsection (e), the governing body

of an issuer may not authorize an anticipation note to pay a

contractual obligation to be incurred if:

(1) a bond proposition to authorize the issuance of

bonds for the same purpose was submitted to the voters during the

preceding five years and failed to be approved;

(2) the total amount of the anticipation note exceeds

five percent of the governing body's total outstanding bonded

indebtedness at the time of the issuance, including the amount of

principal and interest to be paid on the outstanding bonds until

maturity; or

(3) the municipal secretary or clerk or person with

similar authority receives a petition signed by at least five

percent of the registered voters of the issuer that protests the

issuance of the anticipation note before the later of the date

tentatively set for the adoption of the order or ordinance to

authorize the anticipation note or the date the order or ordinance

is adopted.

(e) The governing body of an issuer may authorize an

anticipation note that the governing body is otherwise prohibited

from authorizing under Subsection (d):

(1) in a case described by Section 271.056(1), (2), or

(3), Local Government Code; and

(2) to comply with a state or federal law, rule, or

regulation if the issuer has been officially notified of

noncompliance with the law, rule, or regulation.

SECTION 2. Section 1431.003(b), Government Code, is amended

to read as follows:

(b) Notwithstanding anything in this chapter to the

contrary and except as provided by Section 1431.002(d) , the

governing body may exercise the authority granted to the governing

body of an issuer with regard to issuance of obligations under

Chapter 1371, except that the prohibition in that chapter on the

repayment of an obligation with ad valorem taxes does not apply to

an issuer exercising the authority granted by this section.

SECTION 3. Section 271.047(d), Local Government Code, is

amended to read as follows:

(d) Except as provided by this subsection, the governing

body of an issuer may not authorize a certificate to pay a

contractual obligation to be incurred if a bond proposition to

authorize the issuance of bonds for the same purpose was submitted

to the voters during the preceding five [ three ] years and failed to

be approved. A governing body may authorize a certificate that the

governing body is otherwise prohibited from authorizing under this

subsection:

(1) in a case described by Section 271.056(1), (2), or

(3) [ Sections 271.056(1)-(3) ]; and

(2) to comply with a state or federal law, rule, or

regulation if the political subdivision has been officially

notified of noncompliance with the law, rule, or regulation.

SECTION 4. The changes in law made by this Act apply only to

an anticipation note or certificate of obligation authorized to be

issued on or after the effective date of this Act. An anticipation

note or certificate of obligation authorized to be issued before

the effective date of this Act is governed by the law in effect

immediately before the effective date of this Act, and the former

law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2025.