TPTRP FUND SYSTEM ACT
House Bill · The TPTRP Fund System
Establishes the Stabilization Fund, Infrastructure Fund, First Responder Fund, Citizen Dividend Fund, I&S
Reserve Fund, dedicated funds (Article 15), and the sub-rate dedications framework (Article 16).
By: ______________________
H.B. No. ______
A BILL TO BE ENTITLED
AN ACT relating to the establishment, management, capitalization, use, and oversight
of the Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen Dividend Fund of every
taxing entity under the Texas Property Tax Replacement Plan, and to the coordination of disaster
response funding; amending the Government Code, the Tax Code, the Local Government Code, the Education
Code, and the Water Code.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. GENERAL PROVISIONS
Sec. 1.001. SHORT TITLE.
This Act may be cited as the TPTRP Fund System Act.
Sec. 1.002. PURPOSE.
The purpose of this Act is to implement Article VIII, Section 1-s of the Texas
Constitution — the TPTRP Fund System — by establishing the statutory framework governing the
Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen Dividend Fund of every taxing
entity subject to the Texas Property Tax Replacement Plan, and by establishing the statutory disaster
response cascade and Disaster Response Team. This Act:
(1) creates the Stabilization Fund, Infrastructure Fund, First Responder Fund, and
Citizen Dividend Fund structure for all 254 counties, 1,225 municipalities, 1,016 independent school
districts, and approximately 4,000 special purpose districts subject to the TPTRP;
(2) updates the management standards for the State's Economic Stabilization Fund
(ESF) to conform to the TPTRP Fund System constitutional standards;
(3) establishes the Texas Comptroller of Public Accounts as the primary oversight,
certification, and enforcement authority for all funds established by this Act;
(4) defines the Fiscal Distress declaration, the Good Faith Contribution safe harbor,
the Fiscal Recovery Plan, and the fiscal manager appointment process for entities that cannot maintain
their required minimum balance;
(5) establishes the Disaster Response Team and the tiered disaster cascade deployment
protocol for fund draws in response to declared disasters and emergencies, including the transition to
private insurance coverage at Tier 4;
(6) establishes the Citizen Dividend Fund distribution mechanics, including
per-capita distribution, minor custodian accounts, the distribution election method, and the Citizen
Distribution Statement;
(7) establishes fund correspondence rules governing entity merger, consolidation,
dissolution, and annexation; and
(8) creates citizen enforcement rights — against both non-compliant entities and
Comptroller inaction — and the public disclosure requirements for all fund activity under this Act.
Sec. 1.003. DEFINITIONS.
In this Act:
(1) "Taxing entity" has the meaning assigned by Article VIII, Section 1-s(a) of the
Texas Constitution.
(2) "Stabilization Fund" has the meaning assigned by Article VIII, Section 1-s(a)(5)
of the Texas Constitution. For the State of Texas, the Stabilization Fund is the Economic Stabilization
Fund (ESF) established by Article III, Section 49-g of the Texas Constitution as conformingly amended by
the TPTRP Fund System constitutional amendment.
(3) "Infrastructure Fund" has the meaning assigned by Article VIII, Section 1-s(m) of
the Texas Constitution.
(4) "First Responder Fund" has the meaning assigned by Article VIII, Section 1-s(n)
of the Texas Constitution.
(5) "Citizen Dividend Fund" has the meaning assigned by Article VIII, Section 1-s(p)
of the Texas Constitution.
(6) "I&S Reserve Fund" has the meaning assigned by Article VIII, Section 1-o of
the Texas Constitution (TPTRP Bond Management), and is administered under that section and its
implementing legislation, not this Act, except as expressly cross-referenced in Article 7 of this Act.
The I&S Reserve Fund is the single, dual-function entity-level bond reserve fund contemplated by
Article VIII, Section 1-o; no separate or additional bond reserve fund exists. The Stabilization Fund,
Infrastructure Fund, and First Responder Fund established by this Act are not part of the bond backstop
cascade established under Article VIII, Section 1-o of the Texas Constitution and may not be treated,
pledged, or administered as substitutes for the I&S Reserve Fund except to the limited extent
expressly authorized by the Texas Constitution and cross-referenced in this Act.
(7) "Full Budget Funding Amount" means the sum of an entity's most recently
adopted annual Maintenance and Operations budget plus the entity's certified annual Interest and
Sinking bond debt service obligation for the same period.
(8) "Six-Month Minimum Balance" means fifty percent (50%) of the entity's Full
Budget Funding Amount.
(10) "Accumulation Period" means the period beginning on the effective date
applicable to an entity under this Act, or the date of the entity's formation if later, and ending
on the date the entity's Stabilization Fund first reaches the Six-Month Minimum Balance.
(11) "Maintenance Period" means the period beginning on the date a taxing entity's
Stabilization Fund first reaches the Six-Month Minimum Balance and continuing thereafter, including any
later period in which the fund is drawn below that balance.
(12) "Contribution Shortfall" means a fiscal period during an entity's
Accumulation Period in which no amount was available to be deposited to the entity's Stabilization
Fund through Level 1 of the waterfall because the entity had no Comptroller-certified distributable
surplus pool for that fiscal period, notwithstanding the entity's compliance with the Total Budget
Cap and other applicable requirements of the TPTRP.
(13) "Fiscal Distress Condition" means the condition declared when a taxing entity's
Stabilization Fund balance falls below fifty percent (50%) of the required Six-Month Minimum Balance,
except as provided by Sec. 4.001(c) of this Act during an entity's Accumulation Period.
(14) "Declared Disaster" has the meaning established by Article VIII, Section
1-s(a)(11) of the Texas Constitution, and for purposes of this Act includes a state of disaster declared
under Chapter 418, Government Code, and a local disaster declaration issued under Subchapter E, Chapter
418, Government Code.
(15) "Disaster Response Team" means the coordinating body established by Sec. 3.006
of this Act to manage and oversee execution of the tiered disaster cascade, with each escalation
occurring only after the prior tier has been drawn down to or below fifty percent (50%) of its required
Six-Month Minimum Balance.
(16) "Waterfall" means the TPTRP Surplus Waterfall established by Article VIII,
Section 1-s and Section 1-t of the Texas Constitution and the primary TPTRP implementing legislation.
(17) "Transition Fund" and "Transition Board" have the meanings assigned by the TPTRP
Transition Board Act.
(18) "Comptroller" means the Texas Comptroller of Public Accounts.
(19) "Local Government Transparency Portal" means the Local Government Transparency
module of the Texas Sales and Use Tax Portal established under Section 490.073, Government Code,
maintained by the Comptroller under this Act and the primary TPTRP legislative package.
(20) "Chief Financial Officer" or "CFO" means, for each taxing entity, the officer
designated as the entity's chief financial officer under applicable law, or, if no such officer is
designated, the chief administrative officer or equivalent officer responsible for financial management.
(21) "Fiscal Recovery Plan" means the plan required under Sec. 4.003 of this Act when
a Fiscal Distress Condition is declared.
(22) "Qualifying Infrastructure" has the meaning assigned by Article VIII, Section
1-s(m)(2) of the Texas Constitution.
(23) "First Responder Department" has the meaning assigned by Article VIII, Section
1-s(n)(2) of the Texas Constitution.
(24) "Eligible Recipient" means, for purposes of the Citizen Dividend Fund, a natural
person who (A) is a citizen of the United States, (B) is a citizen of the State of Texas, and (C) has
maintained continuous residency in the applicable taxing entity's jurisdiction for not less than
one year immediately preceding the applicable Distribution Date, as further provided by Sec. 6.003 of
this Act. A person who is not a citizen of the United States is not an Eligible Recipient and may not
receive a distribution under Article 6 of this Act by any means, in any amount, or through any other
person. This definition implements Article VIII, Section 1-t(e)(1-A) of the Texas Constitution.
(25) "Distribution Date" means the date, established annually by the Comptroller
under Sec. 6.005 of this Act, on which a taxing entity's Citizen Dividend for the preceding fiscal
period is paid to Eligible Recipients.
(26) "Citizen Distribution Statement" means the annual public disclosure described by
Sec. 6.007 of this Act.
ARTICLE 2. STABILIZATION FUND: ESTABLISHMENT AND STRUCTURE
Sec. 2.001. FUND ESTABLISHMENT — ALL TAXING ENTITIES EXCEPT THE STATE.
(a) Each county, municipality, independent school district, and special purpose
district subject to the TPTRP shall establish a Stabilization Fund as a legally segregated,
purpose-restricted special fund no later than 180 days after the effective date of this Act.
(b) The Stabilization Fund shall be:
(1) maintained in a segregated account separate from all general fund, M&O
operating, I&S, and other fund accounts of the entity;
(2) identified on all financial statements and public reports by its full name —
"[the taxing entity's name] TPTRP Stabilization Fund" — or, for counties, the "County Rainy Day
Fund"; for municipalities, the "City Rainy Day Fund"; for ISDs, the "ISD Rainy Day Fund"; and for
special districts, the "[the district's name] Stabilization Fund";
(3) administered by the entity's CFO subject to the oversight of the governing
body and the Comptroller;
(4) invested in accordance with the investment standards established by Sec. 2.004 of
this Act; and
(5) classified for financial reporting purposes as "restricted" fund balance under
Governmental Accounting Standards Board Statement No. 54, on the basis of the constitutional and
statutory restriction imposed by Article VIII, Section 1-s of the Texas Constitution and this Act. The
Comptroller shall issue guidance confirming this classification for the benefit of entity auditors and
bond rating agencies.
(c) The Comptroller shall issue a registry of all taxing entity Stabilization Funds
on the Local Government Transparency module of the Texas Sales and Use Tax Portal established under
Section 490.073, Government Code, updated no less than annually.
Sec. 2.002. FUND ESTABLISHMENT — STATE OF TEXAS.
The Economic Stabilization Fund (ESF) established by Article III, Section 49-g of the
Texas Constitution is designated as the Stabilization Fund of the State of Texas for all purposes of
this Act, conformingly amended to the standards of Article VIII, Section 1-s of the Texas Constitution.
No new fund account is required for the State. The Comptroller shall recertify the ESF's Six-Month
Minimum Balance within 90 days of the effective date of this Act, using the State's most recently
adopted biennial budget converted to an annual equivalent as the Full Budget Funding Amount.
Sec. 2.003. RELATIONSHIP TO EXISTING COUNTY FUND STRUCTURES.
(a) Nothing in this Act displaces, consolidates, or diminishes the four
constitutional funds established for counties under Article VIII, Section 9 of the Texas Constitution —
the General Fund, the Permanent Improvement Fund, the Road and Bridge Fund, and the Jury Fund.
(b) A county's Stabilization Fund, Infrastructure Fund, and First Responder
Fund established by this Act are additional, separate, and distinct funds and may not be consolidated
with, or substituted for, any of the funds described by subsection (a) of this section, and the
consolidation authority granted to counties under Article VIII, Section 9(d) of the Texas Constitution
does not extend to any fund established by this Act.
(c) The Road and Bridge Fund's existing statutory purpose restriction under
Section 256.001, Transportation Code, remains in full force. Qualifying Infrastructure expenditures
relating to county roads and bridges may be funded from the county's Infrastructure Fund under this
Act in addition to, and without displacing, the Road and Bridge Fund.
Sec. 2.004. RELATIONSHIP TO EXISTING MUNICIPAL FUND STRUCTURES.
(a) Nothing in this Act displaces or diminishes a municipality's existing
General Fund, Debt Service Fund, Capital Projects Funds, Enterprise Funds, Internal Service Funds, or
Special Revenue Funds maintained under Chapter 102, Local Government Code, or under the municipality's
home-rule charter as authorized by Article XI, Section 5 of the Texas Constitution.
(b) A home-rule municipality's charter provisions governing fund structure,
reserve policy, or budget practice remain in effect to the extent they do not conflict with the minimum
requirements of this Act and Article VIII, Section 1-s of the Texas Constitution. Where a charter
provision is inconsistent with this Act, this Act controls, consistent with the limitation in Article
XI, Section 5 that no home-rule charter provision may be inconsistent with the Constitution or the
general laws of this state.
(c) The Stabilization Fund, Infrastructure Fund, and First Responder Fund
established by this Act for a municipality are additional, separate, and distinct funds and do not
replace the municipality's Debt Service Fund obligation under Article XI, Section 5 with respect to
any outstanding bonded debt.
Sec. 2.005. RELATIONSHIP TO EXISTING INDEPENDENT SCHOOL DISTRICT FUND STRUCTURES.
(a) Nothing in this Act displaces or diminishes an independent school district's
General Fund (Fund 199), Special Revenue Funds (Funds 200-499), Debt Service Fund (Fund 511), or Capital
Projects Funds (Funds 600-699) maintained under the Texas Education Agency's Financial
Accountability System Resource Guide (FASRG) as required by Section 44.007, Education Code.
(b) The Stabilization Fund, Infrastructure Fund, and First Responder Fund
established by this Act for an independent school district are maintained as parallel fund structures,
separate from the FASRG fund codes described by subsection (a), and do not affect the district's
PEIMS reporting obligations, its state and federal grant accounting, or its Foundation School Program
funding determinations.
(c) The Texas Education Agency shall assign fund codes for the Stabilization Fund,
Infrastructure Fund, and First Responder Fund consistent with FASRG conventions, in coordination with
the Comptroller, not later than 180 days after the effective date of this Act.
Sec. 2.006. RELATIONSHIP TO EXISTING SPECIAL DISTRICT FUND STRUCTURES.
(a) Nothing in this Act displaces or diminishes a special district's Operations
and Maintenance Fund or Debt Service (Interest and Sinking) Fund maintained under Chapter 49, Water
Code, or under the district's specific enabling legislation.
(b) Surplus Operation and Maintenance Tax revenue that a district would otherwise be
authorized to redirect under Section 49.107(e), Water Code, is instead directed through the TPTRP
Surplus Waterfall as provided by Article VIII, Section 1-s and Section 1-t of the Texas Constitution, to
the extent the district is subject to the TPTRP tiered rate structure. Bond proceeds subject to Texas
Commission on Environmental Quality executive director approval under existing law remain governed by
that approval process and may not be redirected to any fund established by this Act.
(c) The Stabilization Fund, Infrastructure Fund, and First Responder Fund
established by this Act for a special district are additional, separate, and distinct funds from the
district's Operations and Maintenance Fund and Debt Service Fund.
Sec. 2.007. MINIMUM BALANCE — CERTIFICATION.
(a) Within 90 days of the effective date of this Act, the CFO of each taxing entity
shall calculate and certify to the Comptroller the entity's:
(1) Full Budget Funding Amount based on the most recently adopted annual budget and
certified bond debt service schedule; and
(2) resulting Six-Month Minimum Balance.
(b) The Comptroller shall verify each certification and publish results on the Local
Government Transparency module of the Texas Sales and Use Tax Portal established under Section 490.073,
Government Code, within 30 days of receipt.
(c) Recertification occurs annually, within 60 days of each entity's fiscal
year close, based on the most recently adopted annual budget.
(d) If an entity fails to submit a timely certification, the Comptroller shall
calculate the entity's minimum balance using the most recent budget data available and shall treat
the entity as subject to that figure until a corrected certification is filed. Failure to certify within
the required deadline is a compliance violation subject to distribution suspension under Sec. 8.003.
Sec. 2.008. BASELINE CERTIFICATION FOR NEWLY FORMED ENTITIES.
For a taxing entity formed or first authorized to receive a distribution of revenue
from the sales and use tax imposed under the TPTRP Sales and Use Tax Act after the effective date
applicable to that entity under this Act, the entity's initial Full Budget Funding Amount and
Six-Month Minimum Balance shall be determined as follows:
(1) the entity's actual Comptroller-certified collections of the sales and use
tax imposed under the TPTRP Sales and Use Tax Act for its first full fiscal quarter of operation shall
be projected forward on an annualized basis;
(2) that projected figure shall serve as the entity's estimated Full Budget
Funding Amount for the entity's first fiscal year;
(3) the entity's governing body shall adopt its first annual budget using that
projected figure; and
(4) not later than 60 days after the close of the entity's first full fiscal
year, the Comptroller shall recertify the entity's Full Budget Funding Amount and Six-Month Minimum
Balance based on the entity's actual full-year collections, and that recertified figure governs
prospectively in the same manner as the annual recertification required by Sec. 2.007(c).
Sec. 2.009. CERTIFICATION DISPUTE PROCESS.
A taxing entity that disputes a Comptroller certification issued under Sec. 2.007 or
Sec. 2.008 of this Act may contest that certification as follows:
(1) Step One — Comptroller Reconsideration. The entity shall first submit a
written contest to the Comptroller, together with supporting documentation, not later than 30 days after
the certification is issued. The Comptroller shall issue a written determination not later than 30 days
after the contest is filed, either affirming, revising, or withdrawing the disputed certification.
(2) Step Two — Judicial Review. If the entity is not satisfied with the
Comptroller's determination under subdivision (1), the entity may seek judicial review in a
district court of Travis County not later than 30 days after the Comptroller's determination is
issued.
(3) No Automatic Stay. A contest, reconsideration, or judicial review under
this section does not stay the disputed certification, any Fiscal Distress Condition determination, or
any other obligation of this Act pending resolution, except that a court may order interim relief upon a
showing of clear and irreparable harm.
(4) Coordination with Transition Board Act. The Comptroller shall coordinate
the procedures of this section with any parallel dispute process established under the TPTRP Transition
Board Act for Final Year Baseline certifications during the Transition Period, to avoid duplicative or
conflicting proceedings for the same entity.
Sec. 2.010. INVESTMENT STANDARDS.
(a) All amounts in a Stabilization Fund shall be invested in accordance with Chapter
2256, Government Code (the Texas Public Funds Investment Act), and with any investment policy adopted by
the entity's governing body consistent with that chapter.
(b) The investment policy shall prioritize, in order: (1) safety of principal; (2)
liquidity sufficient to meet the fund's disaster response and shortfall coverage functions; and (3)
yield.
(c) All investment earnings on amounts in the Stabilization Fund are credited to the
fund and are not available for withdrawal except through a permitted use under Sec. 3.001 of this Act.
(d) The Comptroller may establish minimum investment standards for Stabilization
Fund portfolios by administrative rule and may require any entity with a fund balance below the
Six-Month Minimum Balance to hold all fund assets in cash or near-cash instruments until the minimum is
reached.
Sec. 2.011. FUND SEGREGATION — ANTI-COMMINGLING.
Amounts in a Stabilization Fund may not be combined, pooled, transferred, pledged, or
otherwise commingled with any other fund of the taxing entity, except as expressly provided by this Act.
Any transfer of Stabilization Fund money to a general fund, M&O account, I&S account, or any
other fund of the entity that is not a permitted use under Sec. 3.001 of this Act is void ab initio and
the governing body member or officer who authorized the transfer is personally liable to the fund for
the full amount transferred, plus interest at the prime rate plus two percent (2%), from the date of the
transfer to the date of restoration.
ARTICLE 3. STABILIZATION FUND: CAPITALIZATION AND PERMITTED USES
Sec. 3.001. CAPITALIZATION — WATERFALL (PRIMARY MECHANISM).
(a) The primary capitalization mechanism for every taxing entity's
Stabilization Fund is Level 1 of the TPTRP Surplus Waterfall, as constitutionally mandated by Article
VIII, Section 1-s of the Texas Constitution.
(b) At Level 1, not more than fifty percent (50%) of the entity's distributable
surplus pool for the fiscal period may be contributed to the Stabilization Fund. The remainder of the
Level 1 amount passes to Level 2.
(c) At Level 2, not more than fifty percent (50%) of the Level 1 pass-through may be
contributed to the I&S Reserve Fund, applied to the payment or accelerated retirement of existing
debt, or both, in accordance with the Chief Financial Officer's written recommendation and the
governing body's recorded decision. The remainder of the Level 2 pass-through cascades to Level 3.
(d) At Level 3, not less than five percent (5%) of the Level 2 pass-through shall be
deposited in the Citizen Dividend Fund. Not more than forty-five percent (45%) may be deposited in the
Infrastructure Fund at the Chief Financial Officer's recommendation and governing body's
decision, and not more than forty-five percent (45%) may be deposited in the First Responder Fund at the
Chief Financial Officer's recommendation in coordination with the respective departments. All funds
not distributed to the Infrastructure Fund or the First Responder Fund shall be deposited in the Citizen
Dividend Fund.
(e) Each fund established under this Act may accumulate indefinitely, may be
invested as provided by Article 14, and may be appropriated annually by the governing body or
accumulated for larger projects as an alternative to bond issuance. No fund established by this Act is
subject to a maximum balance cap.
Sec. 3.002. CAPITALIZATION — DIRECT APPROPRIATIONS.
(a) A taxing entity's governing body may appropriate unobligated general fund
balances, surplus balances, or other lawfully available funds to the Stabilization Fund at any time by
recorded vote at a public meeting.
(b) For the State of Texas, the Legislature may appropriate general revenue or other
lawfully available funds to the ESF at any time under the appropriation authority of Article III,
Section 49-g, as supplemented by Article VIII, Section 1-s(e)(1) of the Texas Constitution.
(c) A direct appropriation to the Stabilization Fund does not require a voter
election, provided it does not require a rate increase.
Sec. 3.003. CAPITALIZATION — TRANSITION FUND SUPPORT.
(a) During the TPTRP Transition Period established by the TPTRP Transition Board
Act, the Transition Board may provide Stabilization Fund capitalization assistance, from the Transition
Fund, to any taxing entity that satisfies the Assistance Eligibility Standard established under Section
490.032, Government Code, established by the TPTRP Transition Board Act, in accordance with Transition
Fund deployment priorities. The requirements of that Section, including the seven-element eligibility
standard, Tier 5 variant, restoration, anti-waiver, rejection disqualification, and economic development
carve-out, apply to assistance under this Section without further restatement.
(b) Transition Fund capitalization assistance is provided as a non-interest-bearing
grant — not a loan — and does not create a repayment obligation for the recipient entity, provided the
entity remains in compliance with all TPTRP fiscal discipline requirements.
(c) If an entity receiving Transition Fund capitalization assistance subsequently
fails to maintain its Stabilization Fund at or above the Six-Month Minimum Balance through no fault of
the Transition Fund disbursement — meaning the fund is drawn down by the entity for non-permitted
purposes — the entity's future waterfall distributions shall be offset by the amount of the
improperly drawn assistance until fully recovered.
Sec. 3.004. PERMITTED USES — PROCEDURES.
(a) Revenue Shortfall Draw. An entity may draw from its Stabilization Fund
to cover a revenue shortfall only when:
(1) the CFO has certified in writing to the governing body that actual M&O
collections for the current fiscal period are projected to be insufficient to fund the adopted M&O
budget plus the 5% minimum operating buffer;
(2) the governing body has adopted a resolution authorizing the draw by recorded vote
at a public meeting;
(3) the resolution identifies the amount of the draw, the shortfall it covers, and
the projected date by which collections are expected to recover; and
(4) the resolution is filed with the Comptroller within 30 days of the draw.
(b) Disaster Response Draw. An entity may draw from its Stabilization Fund
for disaster response costs only as provided by Article 5 of this Act (Tiered Disaster Cascade).
(c) Fiscal Distress Draw. An entity in a declared Fiscal Distress Condition
may draw from its Stabilization Fund as provided by Article 4 of this Act.
(d) Debt Service Temporary Draw. An entity may draw from its Stabilization
Fund for temporary I&S coverage only upon filing written notice with the Comptroller and the Bond
Review Board within 10 business days of the draw, and subject to the repayment and floor requirements of
Article VIII, Section 1-s(f)(4) of the Texas Constitution.
Sec. 3.005. PROHIBITED USES — ENFORCEMENT.
(a) In addition to the prohibited uses established by Article VIII, Section 1-s(g)
of the Texas Constitution, no governing body member, officer, or employee may authorize, direct, or
cause a withdrawal from a Stabilization Fund for any purpose not expressly permitted by Sec. 3.004 of
this Act.
(b) A governing body member who votes to authorize a prohibited withdrawal is
personally liable to the entity for the amount of the prohibited withdrawal plus interest at the prime
rate plus two percent (2%), from the date of withdrawal to the date of restoration. Personal liability
under this subsection is not covered by any governmental indemnity or insurance of the entity.
(c) The Comptroller shall refer any confirmed prohibited withdrawal to the Office of
the Attorney General for civil recovery action. The Attorney General may also pursue criminal
prosecution under applicable provisions of the Penal Code for misapplication of fiduciary property.
(d) Any Texas citizen who resides in or pays taxes in the jurisdiction may bring a
civil action to recover a prohibited withdrawal on behalf of the entity, with a prevailing citizen
entitled to reasonable attorneys' fees and costs from the governing body member personally.
ARTICLE 4. FISCAL DISTRESS CONDITION AND GOOD FAITH CONTRIBUTION SAFE HARBOR
Sec. 4.001. FISCAL DISTRESS DECLARATION.
(a) A Fiscal Distress Condition is declared automatically by operation of law when a
taxing entity's Stabilization Fund balance falls below fifty percent (50%) of its certified
Six-Month Minimum Balance.
(b) The Comptroller shall monitor all Stabilization Fund balances through the
mandatory quarterly reporting required by Sec. 8.001 of this Act and shall issue a written Fiscal
Distress Notice to the entity's governing body and CFO within 10 days of identifying a triggering
condition.
(c) Exception During Accumulation Period. During an entity's
Accumulation Period, a Contribution Shortfall does not by itself trigger a Fiscal Distress Condition.
Instead, the Good Faith Contribution safe harbor of Sec. 4.002 of this Act applies, and a Fiscal
Distress Condition is declared only as provided by that section.
(d) The Fiscal Distress Notice shall state: (1) the entity's name and
jurisdiction; (2) the current fund balance; (3) the entity's certified Six-Month Minimum Balance;
(4) the percentage of minimum balance represented by the current balance; and (5) the deadlines for the
entity's required responses.
Sec. 4.002. GOOD FAITH CONTRIBUTION SAFE HARBOR.
(a) An entity that experiences a Contribution Shortfall during its Accumulation
Period shall notify the Comptroller in writing within 30 days of the close of the fiscal period in which
the shortfall occurred.
(b) Upon a first Contribution Shortfall, the Comptroller shall refer the entity to
the Transition Board, or, if the Transition Period has concluded, shall provide direct Comptroller
technical and administrative assistance, rather than issuing a Fiscal Distress Notice. The entity is not
treated as noncompliant solely because of a first Contribution Shortfall attributable to genuine
economic conditions. Assistance under this subsection is available only to an entity that satisfies the
Assistance Eligibility Standard established under Section 490.032, Government Code, established by the
TPTRP Transition Board Act. The requirements of that Section, including the seven-element eligibility
standard, Tier 5 variant, restoration, anti-waiver, rejection disqualification, and economic development
carve-out, apply to assistance under this Section without further restatement.
(c) A Fiscal Distress Condition is declared with respect to an Accumulation Period
entity only upon:
(1) a second consecutive Contribution Shortfall; or
(2) a Comptroller finding, after written notice and an opportunity for the entity to
respond within 15 days, that a Contribution Shortfall was not attributable to genuine economic
conditions but resulted from noncompliance with the Total Budget Cap, waterfall requirements, or other
applicable requirements of the TPTRP.
(d) Nothing in this section relieves an entity of its obligation to comply with the
Total Budget Cap sequence, the waterfall requirements, or any other TPTRP requirement not directly
related to the Contribution Shortfall itself.
Sec. 4.003. FISCAL RECOVERY PLAN — CONTENT AND DEADLINE.
(a) Within 10 days of receiving a Fiscal Distress Notice, the entity's
governing body shall notify the Comptroller in writing with a full accounting of the causes of the fund
drawdown.
(b) Within 60 days of receiving a Fiscal Distress Notice, the entity's
governing body shall adopt a Fiscal Recovery Plan by recorded vote and file it with the Comptroller.
(c) The Fiscal Recovery Plan must:
(1) identify and explain the causes of the fund shortfall;
(2) specify the exact steps the entity will take to restore the Stabilization Fund to
the Six-Month Minimum Balance;
(3) state a timeline for each step, with no single step deferred beyond 24 months
without written Comptroller approval based on documented extraordinary hardship;
(4) identify any draws on the Transition Fund, ESF, or other assistance mechanisms
being requested or expected;
(5) be adopted by recorded vote of the governing body, with the CFO's written
recommendation included in the public record alongside the vote; and
(6) be published on the entity's official website no later than the date of
filing with the Comptroller.
(d) The Fiscal Recovery Plan may not:
(1) propose a rate increase election as a substitute for required Stabilization Fund
restoration steps;
(2) propose a draw from the entity's Infrastructure Fund, First Responder Fund,
I&S Reserve Fund, or Citizen Dividend Fund to cover M&O operating shortfalls;
(3) defer required steps beyond the current fiscal year except as provided in
subsection (c)(3); or
(4) include one-time accounting adjustments or revenue reclassifications that do not
reflect real cash flow improvements.
Sec. 4.004. DISTRIBUTION SUSPENSION DURING FISCAL DISTRESS.
(a) Upon issuance of a Fiscal Distress Notice, the Comptroller shall suspend the M&O
component of the entity's quarterly TPTRP waterfall distribution and hold suspended amounts in a
Comptroller-managed escrow account. Notwithstanding any other provision of this Act or of general law,
the I&S component of an entity's quarterly distribution — the entity's Bond Service Levy —
shall not be withheld, suspended, offset, delayed, or otherwise diminished for any reason, including but
not limited to a determination of Fiscal Distress, a late or deficient report, an enforcement action, or
a finding of noncompliance with any other requirement of this Act. This subsection implements Article
VIII, Section 1-n(l), Section 1-s(i)(4), Section 1-s(k)(7), and Section 1-o of the Texas Constitution.
(b) Suspended distributions are released when: (1) the entity's Fiscal Recovery
Plan has been filed and certified as sufficient by the Comptroller; and (2) the entity has demonstrated
compliance with at least one full fiscal quarter of Plan milestones.
(c) If the entity fails to file a sufficient Fiscal Recovery Plan within 60 days,
suspended distributions continue to accumulate in escrow and are not released until compliance is
restored.
(d) If the entity returns to compliance and the Fiscal Distress Condition is
resolved, any remaining escrowed distributions are released to the entity, with priority application to
Stabilization Fund restoration.
Sec. 4.005. EXPENDITURE RESTRICTIONS DURING FISCAL DISTRESS.
During a declared Fiscal Distress Condition, and until the Fiscal Recovery Plan has
been filed, certified, and the entity's Stabilization Fund balance restored to the Six-Month
Minimum Balance, the governing body may not:
(1) approve any new non-essential expenditure not included in the most recently
adopted annual budget;
(2) approve new non-emergency personnel positions or salary increases not previously
adopted;
(3) enter new contracts for non-essential services;
(4) begin new capital projects not already under contract; or
(5) approve compensation, bonuses, or incentive payments to elected officials or
appointed officers beyond those established prior to the Fiscal Distress Notice.
Sec. 4.006. FISCAL MANAGER APPOINTMENT.
(a) If a Fiscal Distress Condition is not resolved — meaning the entity's
Stabilization Fund has not been restored to its Six-Month Minimum Balance — within one fiscal year of
the date of the Fiscal Distress Notice, the Comptroller may initiate the fiscal manager appointment
process.
(b) Due Process Requirements:
(1) The Comptroller issues a written Notice of Trigger Determination to the entity;
(2) The governing body has 30 days to submit a written response;
(3) The Comptroller issues a Final Determination within 15 days;
(4) The governing body may appeal to a Travis County district court within 15 days of
the Final Determination;
(5) The court shall rule within 30 days of the appeal being filed;
(6) If no appeal is filed or the appeal is denied, the Comptroller proceeds with
fiscal manager appointment.
(c) The fiscal manager operates alongside the elected governing body — not in place
of it. The elected governing body retains its elected status throughout the period of fiscal management.
The fiscal manager has authority over the entity's financial operations, budget execution, and fund
management, but may not override governance decisions on service delivery, personnel, or policy that do
not directly affect financial operations, without a court order.
(d) Costs of fiscal management are paid from the entity's general fund and are
not paid from the Stabilization Fund, the Infrastructure Fund, the First Responder Fund, the Citizen
Dividend Fund, the Transition Fund, or any other TPTRP fund.
ARTICLE 5. TIERED DISASTER CASCADE AND THE DISASTER RESPONSE TEAM
Sec. 5.001. PURPOSE AND RELATIONSHIP TO EXISTING EMERGENCY MANAGEMENT LAW.
(a) This Article implements the tiered disaster cascade established by Article VIII,
Section 1-s(h) and (h-1) of the Texas Constitution. This Article does not create a new, parallel
emergency management or disaster declaration system. It integrates the fund-deployment cascade with the
existing declaration authority, coordination structure, and response protocols established under Chapter
418, Government Code (the Texas Disaster Act of 1975), and with the Texas Emergency Management Council,
the Texas Division of Emergency Management (TDEM), the State Operations Center, and the Disaster
District Committee structure operating under Section 418.113, Government Code, and the State of Texas
Emergency Management Plan.
(b) The intent of this Article is that a taxing entity within a declared disaster
area may access its Stabilization Fund, Infrastructure Fund, and First Responder Fund promptly and
without unnecessary administrative delay once a Declared Disaster covers its jurisdiction, and that fund
access, coordination of state resources, and compliance oversight proceed simultaneously rather than
sequentially, consistent with existing Texas emergency management practice.
Sec. 5.002. DISASTER DECLARATION AS PREDICATE FOR TIER 1 ACCESS.
(a) A municipality's or independent school district's access to its own
Stabilization Fund, Infrastructure Fund, and First Responder Fund for disaster response purposes under
Tier 1 of the cascade is available immediately upon:
(1) issuance of a local disaster declaration by the mayor or county judge under
Subchapter E, Chapter 418, Government Code, covering the entity's jurisdiction; or
(2) issuance of a state of disaster declaration by the Governor under Section
418.014, Government Code, covering the entity's jurisdiction; or
(3) an imminent threat advisory issued by the National Weather Service, the Texas
Division of Emergency Management, or another federal or state agency with forecasting or warning
authority, that leads the entity's governing body or presiding officer to reasonably anticipate a
Declared Disaster, provided that a formal declaration under subdivision (1) or (2) is obtained within 72
hours of the entity's initial fund access under this subdivision. Pre-disaster deployment under
this subdivision is limited to preparation, mitigation, and pre-positioning of resources and may not
exceed ten percent (10%) of the entity's Six-Month Minimum Balance absent a subsequent formal
declaration.
(b) Tier 1 fund access under this section requires no Comptroller pre-approval, no
waiting period, and no advance percentage-of-minimum-balance test. The fund balance thresholds described
by Article VIII, Section 1-s(h) and Sec. 5.005 of this Act govern only the escalation of the cascade to
Tier 2 and above — not an affected entity's initial ability to access its own funds under Tier 1.
Sec. 5.003. DISASTER RESPONSE TEAM — ESTABLISHMENT.
(a) Upon issuance of a Declared Disaster under Sec. 5.002 of this Act, a Disaster
Response Team is established for that disaster to manage and oversee the effective, lawful, and
efficient execution of the tiered disaster cascade, with each escalation occurring only after the prior
tier has been drawn down to or below fifty percent (50%) of its required Six-Month Minimum Balance.
(b) The Disaster Response Team is convened and coordinated through the existing
structure of the State Operations Center and, where applicable, the Disaster District Committee for the
affected disaster district or districts, and consists of:
(1) the CFO or designated financial officer of each affected taxing entity;
(2) a representative of the Office of the Comptroller, serving as fund-compliance
liaison;
(3) the chair of the Disaster District Committee for the affected disaster district,
or that chair's designee;
(4) a representative of the Texas Division of Emergency Management;
(5) where a county-level or state-level fund has been activated under Tier 2 or Tier
3, a representative of the affected county's or the State's financial administration; and
(6) any additional agency, volunteer organization, or subject-matter representative
that the Disaster District Committee chair determines necessary, consistent with the composition of the
Texas Emergency Management Council under Section 418.013, Government Code.
(c) The Disaster Response Team does not replace or supersede the incident command,
emergency operations, or resource coordination authority of TDEM, the State Operations Center, the
Disaster District Committee, or any Incident Management Team operating under existing law, including
Section 88.122, Education Code. The Disaster Response Team's function is limited to the
coordination, documentation, and compliance oversight of fund draws and disaster response expenditures
under this Article, operating alongside and in support of existing incident command structures.
(d) The Disaster Response Team shall:
(1) maintain a real-time accounting of fund draws by each affected entity, organized
by cascade tier and by priority category under Sec. 5.006 of this Act;
(2) coordinate with each affected entity's CFO to ensure fund draws are
documented, filed, and published as required by this Act without imposing delay on the entity's
disaster response operations;
(3) identify, as early as practicable, whether a disaster is likely to be fully
addressed at Tier 1 or Tier 2, or is likely to require escalation, and communicate that assessment to
the Comptroller and, where applicable, the Governor's office; and
(4) prepare a post-disaster compliance report, filed with the Comptroller within 90
days of the termination of the Declared Disaster, summarizing all fund draws, their priority
classification, and compliance with this Act.
(e) The Disaster Response Team dissolves upon filing of the post-disaster compliance
report required by subsection (d)(4), or upon a determination by the Disaster District Committee chair
that the disaster has been fully resolved, whichever occurs first.
Sec. 5.004. NO ADMINISTRATIVE PRE-CONDITION TO TIER 1 FUND ACCESS.
Consistent with the constitutional design of Article VIII, Section 1-s(h) and the
intent of this Article, an affected taxing entity's access to its own Stabilization Fund,
Infrastructure Fund, and First Responder Fund at Tier 1 is self-executing upon a Declared Disaster under
Sec. 5.002 of this Act. The documentation, filing, and publication requirements of Sec. 3.004(b) and
Sec. 5.006 of this Act are compliance and transparency obligations to be satisfied concurrently with or
promptly after a fund draw — they are not pre-conditions that delay an entity's ability to begin
disaster response, cleanup, or rebuilding activity.
Sec. 5.005. TIERED DISASTER CASCADE — ESCALATION THRESHOLDS.
(a) The tiered disaster cascade established by Article VIII, Section 1-s(h) of the
Texas Constitution escalates as follows:
Tier 1 — City and ISD Funds: Available immediately upon a Declared
Disaster under Sec. 5.002 of this Act, without further condition, as provided by Sec. 5.004.
Tier 2 — County Fund: A county's Stabilization Fund,
Infrastructure Fund, and First Responder Fund activate for disaster assistance to affected
municipalities and ISDs, and for county-level disaster response operations, when the Disaster Response
Team or the Comptroller certifies that any municipality or ISD within the county has drawn its
Stabilization Fund down to or below fifty percent (50%) of its required Six-Month Minimum Balance in
connection with the Declared Disaster. Upon activation:
(1) the county's funds are available for draws by the county judge's order,
in coordination with the Disaster Response Team; and
(2) the county must file a Disaster Assistance Resolution with the Comptroller within
10 days of any draw, identifying recipient entities and amounts.
Tier 3 — State Fund / ESF: The State Economic Stabilization Fund
activates for disaster response when the Disaster Response Team or the Comptroller certifies that any
county's Stabilization Fund has been drawn down to or below fifty percent (50%) of its required
Six-Month Minimum Balance in connection with the Declared Disaster. Upon certification:
(1) the Governor may authorize ESF draws for disaster relief under the applicable
disaster declaration authority; and
(2) legislative appropriation from the ESF follows the requirements of Article III,
Section 49-g and this Act.
Tier 4 — Private and Entity-Level Insurance Coverage: Once the State
ESF has been drawn down to or below fifty percent (50%) of its required Six-Month Minimum Balance in
connection with the Declared Disaster, the government reserve cascade of Tiers 1 through 3 is considered
substantially exhausted for purposes of that disaster, and primary financial responsibility for
remaining recovery costs shifts to existing private and entity-level insurance coverage, as follows:
(1) Citizen and Business Property Insurance. For the Restoration of Citizen
Property and Local Business under Sec. 5.006(4) of this Act, the private homeowners, renters, commercial
property, flood, and windstorm insurance policies held by individual citizens and businesses — including
coverage obtained through the private market, the Texas Windstorm Insurance Association (TWIA), the
National Flood Insurance Program, or any successor program — become the primary source of recovery
funding at this tier. Nothing in this Article displaces, reduces, or substitutes for a citizen's or
business's existing private insurance coverage; the government reserve cascade of Tiers 1 through 3
is structured to be exhausted before private coverage is relied upon as the primary recovery mechanism,
not after.
(2) Entity-Level Asset Insurance. For publicly owned buildings, vehicles,
equipment, and other insurable assets of a taxing entity, and for state-owned assets, the property and
casualty insurance coverage maintained by that entity or by the state under existing law and Texas
Department of Insurance (TDI) regulation becomes the primary source of recovery funding for damage to
those specific insured assets at this tier, in coordination with any applicable federal disaster
assistance.
(3) Relationship to Existing Insurance Law. This tier does not create a new
insurance program, does not alter the regulatory authority of TDI under the Insurance Code, and does not
modify TWIA, the Texas FAIR Plan Association, or any other existing state insurance mechanism, including
the ESF-TWIA financing arrangement authorized under Sections 404.0241 and 404.0242, Government Code.
(4) Anticipated Effect on Insurance Cost. TDI shall study and report to the
Legislature, not less than once every two years, on the effect of this Act on statewide property
insurance rates and on claims frequency and severity following Declared Disasters.
(5) Coordination Protocols. The Disaster Response Team shall coordinate with
TDI, TWIA, and applicable federal disaster assistance programs to minimize duplicative claims processes
and paperwork burden on citizens and affected entities, and shall publish a standard coordination
protocol not later than one year after the effective date of this Act.
(b) Cascade De-escalation. A disaster that is fully addressed by
the resources available at a given tier does not escalate to the next tier. The Disaster Response Team
shall document the basis for any determination that a disaster has been substantially addressed at its
current tier such that further escalation is unnecessary.
Sec. 5.006. USE-OF-FUNDS PRIORITY SEQUENCE — STATUTORY IMPLEMENTATION.
Consistent with Article VIII, Section 1-s(h-1) of the Texas Constitution, disaster
response expenditures from a Stabilization Fund, First Responder Fund, or Infrastructure Fund at any
tier of the cascade shall be applied in the following order, subject to concurrent action where the
emergency requires it:
(1) First Priority — Essential Utilities.
(2) Second Priority — Health and Safety.
(3) Third Priority — Public Infrastructure Repair.
(4) Fourth Priority — Restoration of Citizen Property and Local
Business, administered to minimize the cost of recovery borne by citizens and local businesses
and to reduce reliance on private insurance and federal disaster assistance as the primary means of
recovery, to the extent funds remain available above the Six-Month Minimum Balance of the fund or funds
being drawn upon.
The Comptroller, in coordination with the Disaster Response Team, shall establish by
administrative rule the specific documentation, monitoring, and citizen application procedures necessary
to carry out this priority sequence efficiently and without unnecessary delay to citizens and local
businesses in the affected area.
Sec. 5.007. CASCADE STATUS MODULE.
(a) The Comptroller shall publish and maintain real-time cascade status indicators
on the Cascade Status module of the Texas Sales and Use Tax Portal established under Section 490.073,
Government Code, showing each affected entity's fund balance, percentage of minimum balance, and
cascade activation status, updated no less than weekly during any active Declared Disaster.
(b) During a Declared Disaster, the Disaster Response Team shall provide the
Comptroller with the underlying data necessary to satisfy subsection (a) without requiring affected
entities to interrupt disaster response operations to generate the report.
ARTICLE 6. CITIZEN DIVIDEND FUND
Sec. 6.001. FUND ESTABLISHMENT.
(a) Every taxing entity subject to the TPTRP shall establish and maintain a Citizen
Dividend Fund as a legally segregated, purpose-restricted special fund, separate from the Stabilization
Fund, Infrastructure Fund, First Responder Fund, I&S Reserve Fund, and general fund of the entity,
no later than 180 days after the effective date of this Act.
(b) The Citizen Dividend Fund holds the guaranteed minimum share of surplus revenue
described by Article VIII, Section 1-s(p) of the Texas Constitution pending distribution to Eligible
Recipients under this Article.
(c) The Citizen Dividend Fund is classified as "restricted" fund balance under GASB
Statement No. 54 on the same basis described in Sec. 2.001(b)(5) of this Act.
Sec. 6.002. CAPITALIZATION.
(a) The Citizen Dividend Fund is capitalized by the guaranteed minimum share — not
less than five percent (5%) — of each entity's distributable surplus pool at the final level of the
TPTRP Surplus Waterfall, together with any additional amount passed through to the Citizen Dividend Fund
from an upstream waterfall level under Article VIII, Section 1-s(m)(5) or (n)(6) of the Texas
Constitution.
(b) The Citizen Dividend is contingent upon the existence of an actual,
Comptroller-certified distributable surplus for the fiscal period. No Citizen Dividend is payable, and
no amount is required to be deposited to the Citizen Dividend Fund, in any fiscal period in which no
distributable surplus exists.
(c) Amounts in the Citizen Dividend Fund carry forward without lapsing until
distributed under this Article, and any investment earnings on undistributed amounts are credited to the
Citizen Dividend Fund.
Sec. 6.003. ELIGIBLE RECIPIENTS.
(a) A natural person is an Eligible Recipient with respect to a taxing entity's
Citizen Dividend for a given Distribution Date only if the person:
(1) is a citizen of the United States;
(2) is a citizen of the State of Texas; and
(3) has maintained continuous residency in the taxing entity's jurisdiction —
or, for the State's Citizen Dividend, in the State of Texas — for not less than one year
immediately preceding the Distribution Date.
(b) A person who is not a citizen of the United States may not receive a
distribution under this Section by any means, in any amount, or through any other person, including
through a joint account, custodial account, trust, or other arrangement designed to indirectly transfer
distribution value to a non-citizen.
(c) A minor who otherwise meets the requirements of subsection (a) is an Eligible
Recipient, and the minor's dividend share is deposited into a Minor Custodian Account established
under Sec. 6.004 of this Act.
(d) The Comptroller shall establish, by administrative rule, a standardized
eligibility and residency verification method using existing state records — including but not limited
to proof of United States citizenship, Texas driver's license and identification records maintained
by the Department of Public Safety, and voter registration records — to minimize duplicative
applications and administrative burden on Eligible Recipients while ensuring compliance with subsections
(a) and (b).
(e) This section implements Article VIII, Section 1-t(e)(1-A) of the Texas
Constitution.
Sec. 6.004. MINOR CUSTODIAN ACCOUNTS.
(a) The dividend share of an Eligible Recipient who is a minor shall be deposited
into a custodial account established under the Texas Uniform Transfers to Minors Act (Chapter 141,
Property Code), with the minor's parent or legal guardian serving as custodian unless a court of
competent jurisdiction directs otherwise.
(b) Funds held in a Minor Custodian Account under this section are subject to the
same restrictions on use, and the same custodial duties, as any other account established under Chapter
141, Property Code, and terminate in favor of the minor upon the minor reaching the age of majority,
consistent with that chapter.
(c) The Comptroller shall provide standardized custodial account establishment forms
and guidance for use by taxing entities and financial institutions administering Minor Custodian
Accounts under this section.
Sec. 6.005. DISTRIBUTION DATE AND METHOD.
(a) The Comptroller shall establish an annual Distribution Date for each taxing
entity's Citizen Dividend, not later than 120 days after the close of the entity's fiscal
year, to allow time for surplus certification and Eligible Recipient verification.
(b) Method of Receipt — The Eligible Recipient's Election. Consistent
with Article VIII, Section 1-t(e)(3) of the Texas Constitution, the method by which a Citizen Dividend
is received is the election of the individual Eligible Recipient. The Comptroller shall make each of the
following methods of receipt available to every Eligible Recipient not later than 60 days before the
applicable Distribution Date, and the Eligible Recipient shall elect among them and designate the
receiving account, payment destination, or mailing address:
(1) direct deposit to an account at a financial institution designated by the
Eligible Recipient, which account the Eligible Recipient establishes and maintains on whatever terms the
Eligible Recipient arranges with that institution;
(2) deposit to a Texas Family Fund Account established under applicable law;
(3) a payment instrument issued by the Comptroller, including a check mailed to the
address designated by the Eligible Recipient or a Comptroller-issued payment card;
(4) application of the dividend as a credit against the Eligible Recipient's
state or local TPTRP sales and use tax liability, where administratively feasible; or
(5) any additional method of receipt the Comptroller makes available by rule.
(b-1) No Condition on Method of Receipt; No Fees. An Eligible Recipient may
not be required to accept any particular method of receipt, to use any particular financial institution,
or to open or maintain any particular type of account as a condition of receiving a Citizen Dividend,
and a dividend may not be withheld, reduced, or delayed because of the method of receipt the Eligible
Recipient elects. No processing fee, administrative charge, or deduction of any kind may be assessed
against an Eligible Recipient's dividend by a taxing entity, by the Comptroller, or by a financial
institution or other institution distributing dividends under this Article. The Comptroller shall carry
out this subsection by rule and shall include the prohibitions of this subsection as a term of any
agreement with an institution engaged to distribute Citizen Dividends.
(c) An Eligible Recipient who fails to make a distribution method election by the
deadline under subsection (b) receives the dividend by the default method established by Comptroller
rule, which shall be the method most likely to ensure successful, low-cost delivery of the dividend.
(d) The Comptroller shall offer multi-entity dividend coordination — combining,
where an Eligible Recipient is entitled to a dividend from more than one taxing entity for the same
Distribution Date, those dividends into a single combined payment — as a default administrative support
service available to any taxing entity that elects to use it, to minimize administrative cost and
recipient confusion for entities lacking the administrative capacity to manage distribution
independently.
(e) A taxing entity may elect, by resolution of its governing body filed with the
Comptroller not later than 90 days before the applicable Distribution Date, to administer and distribute
its own Citizen Dividend directly rather than through the Comptroller's coordinated payment service
under subsection (d). An electing entity remains subject to all other requirements of this Article,
including the Distribution Date, distribution method options, unclaimed-dividend handling, and Citizen
Distribution Statement requirements of this Article, and shall report distribution completion to the
Comptroller for Local Government Transparency module purposes under Article 8 of this Act. Nothing in
this section shall be construed to authorize the Comptroller to compel a taxing entity to use the
coordinated payment service, or to condition any distribution, waterfall allocation, or certification
upon an entity's use or non-use of that service.
Sec. 6.006. UNCLAIMED DIVIDENDS.
(a) A Citizen Dividend that remains unclaimed or undeliverable for a period of three
years after the applicable Distribution Date is treated as unclaimed property under Chapter 72, Property
Code, and reported to the Comptroller under that chapter.
(b) Nothing in this section extends the entity's Citizen Dividend Fund
obligation beyond the three-year period described by subsection (a); amounts properly reported as
unclaimed property under Chapter 72 are considered fully distributed for purposes of this Act.
Sec. 6.007. CITIZEN DISTRIBUTION STATEMENT.
(a) Not later than 30 days before each Distribution Date, the Comptroller shall
publish, and each taxing entity shall publish on its official website, a Citizen Distribution Statement
for that entity, containing:
(1) the entity's total distributable surplus for the applicable fiscal period;
(2) the amount and percentage of that surplus allocated to the Citizen Dividend Fund
at each applicable waterfall level;
(3) the total number of Eligible Recipients and the per-recipient dividend amount;
(4) a plain-language explanation of how the surplus was calculated, including the
entity's Total Budget Cap compliance for the period; and
(5) instructions for Eligible Recipients to verify eligibility, elect a distribution
method, and report a change of address or residency.
(b) The Citizen Distribution Statement is a public record and shall remain published
on the entity's official website and the Local Government Transparency module of the Texas Sales
and Use Tax Portal established under Section 490.073, Government Code, for not less than three years
after the applicable Distribution Date.
Sec. 6.008. PROHIBITION ON SUSPENSION OR REDIRECTION.
Consistent with Article VIII, Section 1-s(p) of the Texas Constitution, Citizen
Dividend distributions may not be suspended, withheld, reduced, or redirected to the Stabilization Fund,
the Infrastructure Fund, the First Responder Fund, or any other fund, under any circumstances, including
during a declared Fiscal Distress Condition or a Declared Disaster, except to the extent the dividend
for a given fiscal period is properly zero because no distributable surplus existed for that period
under Sec. 6.002(b) of this Act.
ARTICLE 7. INFRASTRUCTURE FUND AND FIRST RESPONDER FUND
Sec. 7.001. INFRASTRUCTURE FUND — ESTABLISHMENT.
(a) Every taxing entity subject to the TPTRP shall establish and maintain an
Infrastructure Fund as a legally segregated, purpose-restricted special fund, separate from the
Stabilization Fund, First Responder Fund, I&S Reserve Fund, Citizen Dividend Fund, and general fund
of the entity, no later than 180 days after the effective date of this Act.
(b) The Infrastructure Fund is dedicated exclusively to Qualifying Infrastructure as
defined by Article VIII, Section 1-s(m)(2) of the Texas Constitution. Implementing rules adopted by the
Comptroller shall further define Qualifying Infrastructure consistent with that subsection's
distinction between public infrastructure and citizen-facing service facilities, on the one hand, and
general government administrative facilities, on the other.
(c) The Infrastructure Fund is classified as "restricted" fund balance under GASB
Statement No. 54 on the same basis described in Sec. 2.001(b)(5) of this Act, and carries no maximum
balance cap.
Sec. 7.002. INFRASTRUCTURE FUND — CAPITALIZATION.
(a) The Infrastructure Fund is capitalized through Level 3 of the TPTRP Surplus
Waterfall. Not more than forty-five percent (45%) of the Level 2 pass-through may be deposited in the
Infrastructure Fund, only on the Chief Financial Officer's written recommendation and the governing
body's recorded decision. All Level 3 amounts not deposited in the Infrastructure Fund or the First
Responder Fund are deposited in the Citizen Dividend Fund as provided by Section 3.001(d).
(b) The Infrastructure Fund may additionally be capitalized through direct governing
body appropriation, gifts, grants, and investment earnings, in the same manner as provided for the
Stabilization Fund by Sec. 3.002 and Sec. 2.010(c) of this Act.
(c) Amounts in the Infrastructure Fund carry forward without lapsing and do not
revert to the general fund at the close of any fiscal period. The fund has no maximum balance cap, may
accumulate indefinitely, may be invested as provided by Article 14, and may be appropriated annually or
accumulated for larger projects as an alternative to bond issuance.
Sec. 7.003. INFRASTRUCTURE FUND — PERMITTED AND PROHIBITED USES.
(a) Money in the Infrastructure Fund may be used only for the planning, design,
acquisition, construction, reconstruction, major rehabilitation, and directly associated financing costs
of Qualifying Infrastructure, including repair or reconstruction of Qualifying Infrastructure damaged in
a Declared Disaster as provided by Article 5 of this Act.
(b) Money in the Infrastructure Fund may not be used for routine maintenance,
general operating expenditures, or any purpose not constituting Qualifying Infrastructure.
(c) Money in the Infrastructure Fund may not be transferred to the general fund,
used for M&O expenditures, or redirected to any other fund established by this Act, except that a
governing body may, by recorded public vote upon the written recommendation of the CFO, determine that a
specific portion of funds is not needed for any currently planned or reasonably anticipated Qualifying
Infrastructure project, in which case that portion flows to the Citizen Dividend Fund as provided by
Article VIII, Section 1-s(m)(5) of the Texas Constitution and Sec. 6.002 of this Act.
Sec. 7.004. FIRST RESPONDER FUND — ESTABLISHMENT.
(a) Every taxing entity subject to the TPTRP shall establish and maintain a First
Responder Fund as a legally segregated, purpose-restricted special fund, separate from the Stabilization
Fund, Infrastructure Fund, I&S Reserve Fund, Citizen Dividend Fund, and general fund of the entity,
no later than 180 days after the effective date of this Act.
(b) The First Responder Fund is dedicated exclusively to the capital, equipment,
training, and emergency-event cost-recovery needs of First Responder Departments as defined by Article
VIII, Section 1-s(n)(2) of the Texas Constitution, including, for the State of Texas, the Texas Military
Department and other state agencies with First Responder Department functions.
(c) The First Responder Fund is classified as "restricted" fund balance under GASB
Statement No. 54 on the same basis described in Sec. 2.001(b)(5) of this Act.
Sec. 7.006. RELATIONSHIP TO EXISTING ENTITY FUND STRUCTURES — INFRASTRUCTURE AND FIRST RESPONDER FUNDS.
The relationship of the Infrastructure Fund and First Responder Fund to each entity
type's existing constitutional and statutory fund structures is governed by Sec. 2.003 (counties),
Sec. 2.004 (municipalities), Sec. 2.005 (independent school districts), and Sec. 2.006 (special
districts) of this Act, which apply with equal force to the Infrastructure Fund and First Responder Fund
established by this Article.
ARTICLE 8. REPORTING AND OVERSIGHT
[EDIT NOTE: Per Stage 0.5 decision, the Article VIII, Section 1-v annual performance
publication requirement is implemented at Sec. 490.10X, Government Code (Monitoring Division),
established by the TPTRP Transition Board Act, and not in this Act. No Sec. 1-v performance publication
section is added here.]
Sec. 8.001. MANDATORY QUARTERLY REPORTING.
Each taxing entity shall report the following information, for each fund established
by this Act, to the Comptroller and publish it on the entity's official website within 30 days of
the close of each fiscal quarter:
(1) current fund balance;
(2) for the Stabilization Fund, certified Six-Month Minimum Balance and percentage of
minimum balance currently held;
(3) amount of waterfall deposits received in the quarter, by fund;
(4) any draws made from each fund during the quarter, with the permitted use category
and the governing body resolution authorizing each draw;
(5) any Fiscal Distress Condition status, Fiscal Recovery Plan filing status, and
Plan milestone compliance;
(6) for the Citizen Dividend Fund, the accumulated undistributed balance and the
projected per-recipient dividend for the upcoming Distribution Date; and
(7) CFO certification that all required waterfall deposits have been made and that no
prohibited uses have occurred.
Sec. 8.002. LOCAL GOVERNMENT TRANSPARENCY MODULE.
The Comptroller shall maintain on the Local Government Transparency module of the
Texas Sales and Use Tax Portal established under Section 490.073, Government Code, updated no less than
quarterly:
(1) current fund balances for all taxing entities, by fund;
(2) each entity's percentage of minimum balance for its Stabilization Fund;
(3) cascade activation status for all active Declared Disasters;
(4) all filed Fiscal Recovery Plans;
(5) all Fiscal Distress Notice issuances and resolution dates;
(6) all published Citizen Distribution Statements; and
(7) a statewide summary showing the aggregate balance of each fund across all
entities, by tier.
Sec. 8.003. DISTRIBUTION SUSPENSION FOR NON-REPORTING.
(a) Failure by a taxing entity to file the quarterly report required by Sec. 8.001
within the required deadline triggers automatic suspension of the M&O component of the entity's
quarterly TPTRP waterfall distribution until the report is filed and the Comptroller certifies
compliance restored.
(b) Notwithstanding any other provision of this Act or of general law, the I&S
component of an entity's quarterly distribution — the entity's Bond Service Levy — shall not
be withheld, suspended, offset, delayed, or otherwise diminished for any reason, including but not
limited to a determination of Fiscal Distress, a late or deficient report, an enforcement action, or a
finding of noncompliance with any other requirement of this Act. This subsection implements Article
VIII, Section 1-n(l), Section 1-s(i)(4), Section 1-s(k)(7), and Section 1-o of the Texas Constitution.
Sec. 8.004. ANNUAL FUND AUDIT.
Each taxing entity's funds established by this Act shall be included in the
entity's annual financial audit conducted under applicable law. The auditor's report shall
include: (1) a certification of each fund's balance; (2) a verification that all deposits were made
consistent with waterfall requirements; (3) an identification of any draws and their classification; and
(4) a determination of whether any prohibited uses occurred. The audit report shall be filed with the
Comptroller and published on the entity's official website within 60 days of completion.
ARTICLE 9. CITIZEN ENFORCEMENT
Sec. 9.001. CITIZEN STANDING AGAINST TAXING ENTITIES.
Any adult Texas citizen who resides in or pays taxes in a taxing entity's
jurisdiction shall have standing to bring a civil action in the district court of the county where the
entity is located to enforce any provision of this Act, including to:
(1) compel establishment of any fund not yet created under this Act;
(2) compel waterfall deposits improperly withheld or redirected;
(3) compel Fiscal Recovery Plan adoption or compliance;
(4) seek injunctive relief against a prohibited use of fund money;
(5) recover improperly withdrawn fund amounts on behalf of the entity;
(6) compel any public disclosure required by this Act, including publication of a
Citizen Distribution Statement; and
(7) compel payment of a Citizen Dividend improperly withheld in violation of Sec.
6.008 of this Act.
Sec. 9.002. CITIZEN STANDING AGAINST COMPTROLLER INACTION.
Any adult Texas citizen described by Sec. 9.001 of this Act shall additionally have
standing to bring a civil action in a district court of Travis County to compel the Comptroller to
perform any non-discretionary duty imposed by this Act, including but not limited to:
(1) timely certification or recertification of an entity's Six-Month Minimum
Balance;
(2) timely issuance of a Fiscal Distress Notice upon identification of a triggering
condition;
(3) maintenance and update of the Local Government Transparency module of the Texas
Sales and Use Tax Portal as required by Sec. 8.002 of this Act; and
(4) timely establishment of an annual Distribution Date and administration of the
Citizen Dividend distribution process.
Sec. 9.003. ATTORNEY'S FEES.
A citizen who prevails in an action brought under Sec. 9.001 or Sec. 9.002 of this
Act shall be awarded reasonable attorneys' fees and costs from the defendant entity, the
Comptroller, or the responsible governing body member personally, as appropriate. A citizen who does not
prevail bears no penalty beyond denial of the claim.
Sec. 9.004. EXPEDITED HEARING.
Courts shall expedite hearings on actions brought under this Article. No bond or
security deposit may be required of a citizen plaintiff as a condition of filing or of seeking
injunctive relief in an action brought under this Article.
ARTICLE 10. RELATIONSHIP TO THE IS RESERVE FUND AND THE TRANSITION FUND
Sec. 10.001. RELATIONSHIP TO THE IS RESERVE FUND.
The Stabilization Fund (this Act's "Rainy Day Fund" for purposes of Article
VIII, Section 1-o(a)(5) of the Texas Constitution) is separate from, senior in the bond shortfall
cascade to, and may not be commingled with, the I&S Reserve Fund established under Article VIII,
Section 1-o (TPTRP Bond Management). The I&S Reserve Fund is purpose-locked exclusively for bond
debt service (serving simultaneously as the entity's bond debt service operating account and its
first-line emergency reserve for shortfalls) and is administered exclusively under Section 1-o and its
implementing legislation, including the I&S Reserve Fund's fifty percent minimum-balance floor
and the tiered shortfall cascade of Section 1-o(f), under which a taxing entity's Stabilization
Fund is accessed only as Tier B, after the entity's own I&S Reserve Fund has been drawn to its
floor under Tier A. No taxing entity is required to establish, fund, or maintain any separate or
additional bond reserve fund. The Stabilization Fund may provide temporary I&S coverage outside that
cascade only under the strictly limited conditions of Sec. 3.004(d) of this Act.
Sec. 10.002. RELATIONSHIP TO THE TRANSITION FUND.
The Transition Fund established by the TPTRP Transition Board Act is the primary
source of external financial assistance for entities in fiscal distress or experiencing a Contribution
Shortfall during the TPTRP Transition Period. Entities should apply to the Transition Board for
Transition Fund support before any request for State ESF assistance. Assistance under this section is
available only to an entity that satisfies the Assistance Eligibility Standard established under Section
490.032, Government Code, established by the TPTRP Transition Board Act. The requirements of that
Section, including the seven-element eligibility standard, Tier 5 variant, restoration, anti-waiver,
rejection disqualification, and economic development carve-out, apply to assistance under this Section
without further restatement. The Comptroller shall provide the Transition Board with real-time fund
balance data for all entities to facilitate Transition Board deployment decisions.
Sec. 10.003. FUND SEGREGATION ACROSS ALL TPTRP FUNDS.
The Stabilization Fund, Infrastructure Fund, First Responder Fund, Citizen Dividend
Fund, and I&S Reserve Fund established under the TPTRP are each independently purpose-restricted. No
provision of this Act authorizes commingling of any of these funds for a purpose outside that fund's
own constitutional and statutory purpose, except as expressly provided by this Act.
ARTICLE 11. FUND CORRESPONDENCE ON MERGER, CONSOLIDATION, DISSOLUTION, AND ANNEXATION
Sec. 11.001. GENERAL RULE.
When a taxing entity subject to this Act is merged, consolidated, dissolved, or
annexed by or into another taxing entity, or is otherwise reorganized under applicable law, the balances
of its Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen Dividend Fund shall
correspond to the successor entity or entities as provided by this Article, and shall not lapse,
escheat, or become part of any general fund except as expressly provided.
Sec. 11.002. MUNICIPAL ANNEXATION.
(a) When a municipality annexes territory previously served by a special district or
another municipality that is dissolved as a result of the annexation, the dissolved entity's
Stabilization Fund, Infrastructure Fund, and First Responder Fund balances transfer to the annexing
municipality's corresponding funds in full.
(b) The annexing municipality's Six-Month Minimum Balance and Full Budget
Funding Amount shall be recertified by the Comptroller within 180 days of the annexation's
effective date to reflect the combined entity's budget.
(c) Citizen Dividend Fund balances attributable to the dissolved entity's
residents transfer to the annexing municipality's Citizen Dividend Fund, and affected residents
become Eligible Recipients of the annexing municipality for subsequent Distribution Dates.
Sec. 11.003. INDEPENDENT SCHOOL DISTRICT CONSOLIDATION.
(a) When two or more independent school districts consolidate into a single
district, the fund balances of each constituent district's Stabilization Fund, Infrastructure Fund,
and First Responder Fund transfer in full to the corresponding funds of the consolidated district.
(b) The consolidated district's Full Budget Funding Amount and Six-Month
Minimum Balance shall be recertified by the Comptroller not later than 180 days after the consolidation's
effective date, based on the consolidated district's first adopted combined budget.
(c) A consolidation does not require the distribution, reduction, or
reclassification of a transferred fund balance solely because of the amount of the balance. The
consolidated district remains subject to the ordinary waterfall, investment, appropriation, and use
rules of this Act.
Sec. 11.004. SPECIAL DISTRICT DISSOLUTION.
(a) When a special district is dissolved and its functions and territory are assumed
by a county, municipality, or another special district, the dissolved district's Stabilization
Fund, Infrastructure Fund, and First Responder Fund balances transfer in full to the corresponding funds
of the assuming entity.
(b) If the dissolved district's functions and territory are divided among more
than one assuming entity, the Comptroller shall apportion the transferred fund balances among the
assuming entities in proportion to the assessed value of the TPTRP sales and use tax base attributable
to the territory each entity assumes, unless the entities agree in writing to a different apportionment
method approved by the Comptroller.
(c) Citizen Dividend Fund balances attributable to the dissolved district's
residents transfer and apportion in the same manner as provided by subsection (b), and affected
residents become Eligible Recipients of the assuming entity or entities for subsequent Distribution
Dates.
Sec. 11.005. NO WINDFALL OR LOSS TO CITIZENS.
In administering this Article, the Comptroller shall apply the general principle that
no fund correspondence determination under this Article may result in the loss of a resident's
accrued but undistributed Citizen Dividend interest, nor in a windfall duplication of dividend interest,
solely as a result of a merger, consolidation, dissolution, or annexation.
ARTICLE 12. STATE ESF CONFORMING AMENDMENTS
Sec. 12.001. GOVERNMENT CODE CHAPTER 316 — ESF CONFORMING PROVISIONS.
Subchapter C, Chapter 316, Government Code (the existing statutory administration
provisions for the Economic Stabilization Fund under Article III, Section 49-g of the Texas
Constitution), is amended to add the following section:
Sec. 316.093. ESF FULL BUDGET FUNDING AMOUNT AND TPTRP CONFORMING BALANCE STANDARDS.
(a) For purposes of the TPTRP Fund System established by Article VIII, Section 1-s
of the Texas Constitution, the Full Budget Funding Amount of the State of Texas is the annual equivalent
of the State's most recently enacted biennial general appropriations, calculated as the total of
the most recently enacted biennial M&O appropriations divided by two, plus the State's
certified annual bond debt service for state-level bonds.
(b) The Comptroller shall certify the State's Full Budget Funding Amount,
Six-Month Minimum Balance, within 90 days of the effective date of this Act and shall recertify annually
within 60 days of the close of each state fiscal year.
(c) The ESF may accumulate and be appropriated in accordance with Article III,
Section 49-g, of the Texas Constitution and other applicable law. Nothing in this section establishes a
TPTRP fund-balance cap.
(d) Nothing in this section alters the existing appropriation-vote thresholds of
Article III, Section 49-g(k), (l), and (m), the temporary cash-flow transfer authority of Section
49-g(j), or the ESF-TWIA financing arrangement authorized under Sections 404.0241 and 404.0242,
Government Code.
Drafting Note: Bond-specific ESF minimum-balance floors, backstop-cascade
access rules, and any reconciliation between those bond-management provisions and the TPTRP Fund System
standards of this Article are governed by Section 316.0935, Government Code, as added by the TPTRP Bond
Management implementing legislation.
Sec. 12.002. REPEAL OF CONFLICTING PROVISIONS.
To the extent any prior conforming amendment to Chapter 404, Government Code,
purporting to implement TPTRP Fund System standards for the ESF is inconsistent with Sec. 12.001 of this
Act, that prior amendment is repealed and superseded by this Article.
ARTICLE 13. EFFECTIVE DATE AND TRANSITION
Sec. 13.001. EFFECTIVE DATE.
This Act takes effect on the same date as the primary TPTRP implementing legislation
— the date the TPTRP constitutional amendment is ratified by Texas voters and certified by the Secretary
of State, or January 1 of the year following ratification, as specified by the primary TPTRP legislative
package.
Sec. 13.002. TRANSITION — FUND ESTABLISHMENT DEADLINE.
Each taxing entity shall establish its Stabilization Fund, Infrastructure Fund, First
Responder Fund, and Citizen Dividend Fund accounts, file its initial balance certification with the
Comptroller, and publish its fund information on the Local Government Transparency module of the Texas
Sales and Use Tax Portal established under Section 490.073, Government Code, within 180 days of the
effective date of this Act.
Sec. 13.003. TRANSITION — INITIAL BALANCE BUILDING PERIOD.
No entity is expected to have a full Six-Month Minimum Balance on the effective date
of this Act. The Transition Period waterfall structure, and the Good Faith Contribution safe harbor of
Sec. 4.002 of this Act, are the designed mechanisms for building initial fund balances without premature
Fiscal Distress declarations. The Comptroller and the Transition Board shall cooperate to provide
capitalization support to entities with particularly thin initial balances, prioritizing entities with
the lowest percentage of minimum balance.
Sec. 13.004. TRANSITION — ESF CONFORMING PERIOD.
The Comptroller shall publish a conforming analysis of the current ESF balance
against the TPTRP Six-Month Minimum Balance standards within 90 days of the effective date of this Act.
If the ESF already meets or exceeds the Six-Month Minimum Balance under the new standards, the State is
in compliance on Day 1 with no further action required. If the ESF does not meet the Six-Month Minimum
Balance, the State's Level 1 waterfall will direct surplus toward the ESF in the same manner as all
other taxing entities.
Sec. 13.005. TRANSITION — DISASTER RESPONSE TEAM COORDINATION.
Not later than one year after the effective date of this Act, the Texas Division of
Emergency Management, in coordination with the Comptroller, shall issue guidance integrating the
Disaster Response Team function established by Article 5 of this Act into the existing State of Texas
Emergency Management Plan and Disaster District Committee operating procedures.
ARTICLE 14. INVESTMENT OF FUNDS AND RESIDUAL CAPITALIZATION
Sec. 14.001. INVESTMENT AUTHORITY — GENERAL.
(a) A taxing entity may invest, and shall manage the investment of, balances in the
entity's Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen Dividend Fund
in accordance with:
(1) Chapter 2256, Government Code (Public Funds Investment Act), including the
investment officer, investment policy, training, reporting, and oversight requirements of that chapter;
(2) Chapter 2257, Government Code (Collateral for Public Funds), governing
collateralization of public funds on deposit; and
(3) any other provision of general law governing the investment of a public entity's
funds that applies to the entity based on its type, including without limitation Section 2256.005 of the
Public Funds Investment Act (authorized investments) and Section 2256.007 of that Act (investment
training).
(b) The investment authority granted by this section does not enlarge, restrict, or
modify the substantive authorized-investment categories, portfolio constraints, or fiduciary duties that
apply to the taxing entity under Chapter 2256, Government Code, or under any other provision of general
law that would apply to the investment of the entity's public funds if the funds were held in the
entity's general fund or other special fund. The Stabilization Fund, Infrastructure Fund, First
Responder Fund, and Citizen Dividend Fund are subject to the same investment framework, and the same
fiduciary and prudent-person standards, as the entity's other public funds.
(c) Investment earnings on a fund established by this Act accrue to and remain in
the fund that generated the earnings, and are not transferred to the entity's general fund or to
any other fund, except that:
(1) investment earnings on the Citizen Dividend Fund remain in the Citizen Dividend
Fund and are treated as additional distributable amounts for purposes of the citizen dividend
distribution mechanics of Article 6 of this Act; and
(2) investment earnings on the Stabilization Fund remain in that fund and are
available only for the purposes authorized by this Act; no automatic diversion is required solely
because of the fund balance.
(d) The entity's governing body shall include in the entity's investment
policy adopted under Section 2256.005, Government Code, express provisions governing the investment of
each fund established by this Act. The comptroller may adopt rules providing model investment-policy
language for the funds established by this Act, but a taxing entity is not required to adopt the model
language and may adopt its own language consistent with Chapter 2256.
(e) Investment losses on a fund established by this Act are absorbed by the fund
that suffered the loss and are not transferred to any other fund of the entity, except to the extent
Chapter 2256, Government Code, or another applicable law otherwise requires.
Sec. 14.002. I&S RESERVE FUND — LIQUIDITY REQUIREMENT.
(a) Notwithstanding Section 14.001 of this Act, an entity's I&S Reserve
Fund is not subject to the investment authority granted by that section. I&S Reserve Fund balances
shall be held in cash, in demand deposits, or in investments that are readily convertible to cash
without material loss of principal within one business day, in each case in an amount at all times
sufficient to meet the entity's next scheduled bond debt service payment and any I&S Reserve
Fund minimum-balance requirement imposed by the TPTRP Bond Management Act.
(b) The comptroller shall coordinate with the entity's bond registry maintained
under the TPTRP Bond Management Act to certify that I&S Reserve Fund balances remain in a liquid
form consistent with this section. Any investment of an I&S Reserve Fund balance beyond the
readily-convertible-to-cash standard of Subsection (a) requires prior written certification by the
entity's investment officer that the investment satisfies both this section and the TPTRP Bond
Management Act.
(c) This section reflects the design principle that bond debt service obligations
must be met on schedule from immediately-available funds, and that market-value fluctuation risk on
investments is inappropriate for bond reserves whose function is to guarantee timely bond payment.
Sec. 14.003. INFRASTRUCTURE FUND — POST-FINAL-BOND-RETIREMENT CAPITALIZATION.
(a) In addition to the primary capitalization mechanism for the Infrastructure Fund
established by Article 7 of this Act and by the TPTRP Surplus Waterfall, an entity's Infrastructure
Fund receives, at the close of the fiscal period in which the entity's final outstanding bond is
retired, any residual balance in the entity's I&S Reserve Fund at that time.
(b) The transfer required by Subsection (a) of this section is effected by the
following mechanics:
(1) On the retirement of the entity's final outstanding bond, the entity's
Interest and Sinking sub-rate automatically decreases to zero as provided by Section 151A.605(g), Tax
Code, and by Section 404.00537, Government Code, as enacted by the TPTRP Bond Management Act;
(2) On the close of the fiscal period in which the final bond is retired, the entity's
chief financial officer shall certify to the comptroller the residual I&S Reserve Fund balance;
(3) The comptroller shall transfer the certified residual balance from the entity's
I&S Reserve Fund to the entity's Infrastructure Fund established by this Act, effective the
first day of the next fiscal period;
(4) The transferred balance is credited to the Infrastructure Fund as restricted fund
balance under GASB Statement No. 54, subject to the same dedication and use restrictions applicable to
any other Infrastructure Fund balance under this Act; and
(5) The transferred balance is not subject to the surplus waterfall for the fiscal
period in which the transfer occurs and remains available for Qualifying Infrastructure expenditures
without a further waterfall step.
(c) The design intent of this section is to preserve, for the benefit of the entity
and its taxpayers, the value of amounts previously collected to fund infrastructure-related debt
service. On retirement of the underlying debt, residual reserve amounts remain available for the same
infrastructure purpose without the entity being required to issue new debt for that purpose.
(d) If the entity subsequently issues a new bond following retirement of its final
outstanding bond, the entity may re-establish an Interest and Sinking sub-rate only under Section
151A.606, Tax Code (New Bond Issuance; I&S Rate Pre-Certification), and the entity's
Infrastructure Fund is not required to return any transferred balance to the entity's I&S
Reserve Fund except to the extent required by the TPTRP Bond Management Act as part of the new bond's
issuance conditions.
(e) This section implements Article VIII, Sections 1-o and 1-s(m), of the Texas
Constitution.
ARTICLE 15. DEDICATED FUNDS AND SALES TAX EARMARKS
Sec. 15.001. PURPOSE AND SCOPE.
(a) This article establishes each dedicated fund that received revenue under a tax
abolished by the TPTRP Tax Abolition and Conformity Act, and directs the Comptroller to earmark a
corresponding portion of the tax imposed by Chapter 151-A, Tax Code, from the underlying transactions to
the same fund. The design principle is preservation of every constitutional or statutory dedication that
existed under prior law, translated into a proportional dedication of the successor sales tax.
(b) All earmarks under this article use hard-rate matching: the historical
proportion of the abolished tax that flowed to a dedicated fund is preserved as the same proportion of
the new sales tax on the underlying transactions. The Legislature may adjust earmarks in future sessions
via Article 16 sub-rate dedications, based on actual revenue outcomes.
(c) This article implements Article VIII, Sections 1-o and 7-a, of the Texas
Constitution, together with the constitutional preservation of the Permanent School Fund, Available
School Fund, Permanent University Fund, and Economic Stabilization Fund.
Sec. 15.002. STATE HIGHWAY FUND EARMARK.
(a) Three-quarters of the tax imposed by Chapter 151-A, Tax Code, on the sale of
motor fuel, as motor fuel is defined by former Chapter 162, Tax Code, immediately before its repeal, is
dedicated to the State Highway Fund established by Section 222.001, Transportation Code, and by Article
VIII, Section 7-a, of the Texas Constitution.
(b) The Comptroller shall deposit the earmarked revenue into the State Highway Fund
on the same schedule as general sales tax collections, and shall report earmark performance quarterly
through the Texas Sales and Use Tax Portal.
(c) This section preserves the operative dedication of Article VIII, Section 7-a, of
the Texas Constitution.
Sec. 15.003. AVAILABLE SCHOOL FUND — MOTOR FUEL SHARE.
(a) One-quarter of the tax imposed by Chapter 151-A, Tax Code, on the sale of motor
fuel, as motor fuel is defined by former Chapter 162, Tax Code, immediately before its repeal, is
dedicated to the Available School Fund established by Article VII, Section 5, of the Texas Constitution,
in preservation of the motor fuel dedication of Article VIII, Section 7-a, of the Texas Constitution.
(b) The Comptroller shall deposit the earmarked revenue into the Available School
Fund on the same schedule as general sales tax collections.
Sec. 15.004. AVAILABLE SCHOOL FUND — INSURANCE PREMIUM TAX REPLACEMENT SHARE.
(a) The historical share of insurance premium tax revenue dedicated to the Available
School Fund under former Chapters 221 through 229, Insurance Code, is preserved as a proportional
dedication of the tax imposed by Chapter 151-A, Tax Code, on insurance products. The Comptroller shall
determine, by rule, the applicable proportion based on the three-year average share of insurance premium
tax revenue that flowed to the Available School Fund immediately before the Implementation Date.
(b) The Comptroller shall deposit the earmarked revenue into the Available School
Fund on the same schedule as general sales tax collections.
Sec. 15.005. FARM-TO-MARKET / LATERAL ROAD FUND (FMLRF).
(a) The Farm-to-Market and Lateral Road Fund established under Chapter 251,
Transportation Code, receives replacement revenue as follows: a portion of the county share of the tax
imposed by Chapter 151-A, Tax Code, collected on transactions sourced under Section 151A.206 or 151A.207
of that Act to Texas locations in unincorporated county areas, is dedicated to the FMLRF at a proportion
determined by rule by the Comptroller based on the historical share of county ad valorem tax revenue on
real property in unincorporated areas that flowed to the FMLRF immediately before the Implementation
Date.
(b) Each county's contribution to the FMLRF under this section is remitted
directly to the Comptroller for deposit in the FMLRF, and the balance of the county share for that
county is distributed under Article 7 of the TPTRP Sales and Use Tax Act.
(c) This section preserves the funding of the FMLRF that was lost through the
abolition of county ad valorem taxes on real property in unincorporated areas.
Sec. 15.006. RURAL VOLUNTEER FIRE DEPARTMENT ASSISTANCE FUND.
(a) The Rural Volunteer Fire Department Assistance Fund, established under Section
614.101, Government Code, receives replacement revenue equal to the sum of:
(1) the historical share of fireworks tax revenue that flowed to the fund under
former Chapter 161, Tax Code, immediately before the Implementation Date, translated as a proportional
dedication of the tax imposed by Chapter 151-A, Tax Code, on fireworks transactions; and
(2) the historical share of insurance premium tax revenue that flowed to the fund
under former Chapters 221 through 229, Insurance Code, translated as a proportional dedication of the
tax imposed by Chapter 151-A, Tax Code, on insurance products.
(b) The Comptroller shall determine, by rule, the applicable proportions based on
three-year historical averages, and shall deposit the earmarked revenue into the fund on the same
schedule as general sales tax collections.
Sec. 15.007. STATE PARKS ACCOUNT AND STATE HISTORIC SITES ACCOUNT.
(a) The State Parks Account established under Section 11.035, Parks and Wildlife
Code, and the State Historic Sites Account established under Section 442.073, Government Code, receive
replacement revenue proportional to their historical share of hotel occupancy tax revenue under former
Chapter 156, Tax Code, and former Chapters 351 and 352, Tax Code, immediately before the Implementation
Date.
(b) The Comptroller shall dedicate a proportional share of the tax imposed by
Chapter 151-A, Tax Code, on lodging transactions to these accounts, in the ratios determined by rule
based on the three-year historical average of pre-Implementation Date dedications.
Sec. 15.008. VOLUNTEER FIRE DEPARTMENT INSURANCE FUND.
(a) The Volunteer Fire Department Insurance Fund receives replacement revenue
proportional to its historical share of insurance premium tax revenue immediately before the
Implementation Date, translated as a proportional dedication of the tax imposed by Chapter 151-A, Tax
Code, on insurance products.
(b) The Comptroller shall determine the applicable proportion by rule based on
three-year historical average.
Sec. 15.009. PROPERTY TAX RELIEF FUND — DISSOLUTION.
(a) The Property Tax Relief Fund, whose purpose was to reduce the burden of ad
valorem property taxes, is dissolved on the Implementation Date. Its residual balances on that date
transfer to the Transition Fund administered under the TPTRP Transition Board Act.
(b) All dedications to the Property Tax Relief Fund from former Chapters 154, 155,
171, and other Tax Code chapters repealed by the TPTRP Tax Abolition and Conformity Act are terminated
on the Implementation Date. The revenue that would have flowed to the Property Tax Relief Fund from
those chapters is instead treated as general revenue from the tax imposed by Chapter 151-A, Tax Code,
subject to the general allocation and distribution mechanics of Article 7 of that Act.
Sec. 15.010. ECONOMIC STABILIZATION FUND (RAINY DAY FUND).
(a) The Economic Stabilization Fund established under Article III, Section 49-g, of
the Texas Constitution, is preserved without modification.
(b) The replacement funding streams for the Economic Stabilization Fund, formerly
the oil and gas production tax dedications under former Chapters 201 and 202, Tax Code, are provided as
proportional dedications of the tax imposed by Chapter 151-A, Tax Code, on oil and gas production sales.
(c) The Comptroller shall determine the applicable proportion by rule based on
three-year historical average of oil and gas production tax revenue that flowed to the Economic
Stabilization Fund immediately before the Implementation Date.
Sec. 15.011. TEXAS EMISSIONS REDUCTION PLAN (TERP) ACCOUNT.
(a) The TERP Account receives replacement revenue proportional to its historical
share of tobacco tax revenue under former Chapters 154 and 155, Tax Code, and motor vehicle certificate
title fees immediately before the Implementation Date, translated as a proportional dedication of the
tax imposed by Chapter 151-A, Tax Code, on the applicable transactions.
(b) The Comptroller shall determine the applicable proportion by rule based on
three-year historical average.
Sec. 15.012. BOAT AND OUTBOARD MOTOR FUND ALLOCATIONS.
(a) Historical dedications of boat and boat motor tax revenue under former Chapter
160, Tax Code, to the Texas Parks and Wildlife Department are preserved as proportional dedications of
the tax imposed by Chapter 151-A, Tax Code, on boat and boat motor sales.
(b) The Comptroller shall determine the applicable proportion by rule based on
three-year historical average, in consultation with the Texas Parks and Wildlife Department.
Sec. 15.013. LEGISLATIVE REVIEW AND ADJUSTMENT.
(a) After each biennium beginning with the first full biennium after the
Implementation Date, the Comptroller shall report to the Legislature the actual revenue flowing to each
earmarked fund under this article and compare it to the historical revenue that flowed to the fund under
prior law.
(b) The Legislature may, by enactment, adjust any earmark under this article using
the Article 16 sub-rate dedication mechanism to achieve historical revenue-level matching. Adjustments
that would increase the state tier rate above its ceiling require voter approval as provided by Article
VIII, Section 1-n(f), of the Texas Constitution.
ARTICLE 16. SUB-RATE DEDICATIONS
Sec. 16.001. PURPOSE.
(a) This article implements Article VIII, Section 1-o, of the Texas Constitution,
providing the operational rules under which the Legislature and the governing body of each taxing entity
may dedicate a portion of the tax imposed by Chapter 151-A, Tax Code, to a specific fund, department, or
purpose.
(b) A sub-rate dedication under this article is a formal component of the entity's
certified rate structure, published in the Texas Sales and Use Tax Portal, and collected and distributed
by the Comptroller under the general allocation and distribution mechanics of Article 7 of the TPTRP
Sales and Use Tax Act.
Sec. 16.002. TYPES OF DEDICATIONS.
(a) A reallocation dedication reallocates a portion of the entity's current
combined rate to a specific fund, department, or purpose, without increasing the entity's combined
rate. A reallocation dedication is adopted by the same procedure that governs a rate reduction under the
entity's applicable rate-change rules, as those rules are established by Article 2 of the TPTRP
Sales and Use Tax Act.
(b) An additional-rate dedication adds a new sub-rate to the entity's current
combined rate, dedicated to a specific fund, department, or purpose. An additional-rate dedication
increases the entity's combined rate and is subject to the voter-approval requirement that governs
a rate increase under the entity's applicable rate-change rules, as those rules are established by
Article 2 of the TPTRP Sales and Use Tax Act.
(c) All dedications under this article are subject to the tier rate ceilings
established by Article VIII, Section 1-n, of the Texas Constitution, and to the Combined Constitutional
Rate cap of six percent (6.00%) established by Article VIII, Section 1-m, of the Texas Constitution. A
proposed dedication that would cause the total combined rate to exceed the Combined Constitutional Rate
cap is not permitted, unless another tier's rate is simultaneously reduced by an offsetting amount
so that the total combined rate remains at or below six percent (6.00%).
Sec. 16.003. PROCEDURE FOR ADOPTION.
(a) A reallocation dedication is adopted by:
(1) at the state level, an act of the Legislature;
(2) at the county level, an ordinance of the Commissioners Court;
(3) at the municipal level, an ordinance of the City Council;
(4) at the independent school district level, a resolution of the Board of Trustees;
and
(5) at the special district level, an adopted rule of the governing body.
(b) An additional-rate dedication is adopted by voter approval at an election called
for that purpose, in the manner prescribed by Section 151A.303 of the TPTRP Sales and Use Tax Act, and
in the case of the state tier, by voter approval at a statewide referendum.
(c) Each enacting instrument shall specify: (1) the sub-rate being dedicated,
expressed as a percentage of one percent; (2) the fund, department, or purpose to which the dedication
flows; (3) the effective date of the dedication; and (4) any provision for amendment or repeal.
Sec. 16.004. COMPTROLLER ACCOUNTING AND REPORTING.
(a) The Comptroller shall track each sub-rate dedication for each entity and publish
it as a formal component of the entity's certified rate structure in the Texas Sales and Use Tax
Portal under Section 151A.802A of the TPTRP Sales and Use Tax Act.
(b) The Comptroller shall report annually to the Legislature and to the public each
entity's sub-rate dedications, the revenue collected under each dedication, and the disposition of
that revenue.
(c) The Comptroller may adopt rules governing the form of the enacting instrument,
the notice required for the adoption or amendment of a dedication, the integration of a dedication into
rate certification and portal publication, and the resolution of disputes about a dedication's
proper administration.
Sec. 16.005. AMENDMENT AND REPEAL.
(a) A reallocation dedication may be amended or repealed by the same procedure that
governs its adoption under Section 16.003(a) of this article.
(b) An additional-rate dedication may be amended or repealed by voter approval, in
the manner prescribed by Section 151A.303 of the TPTRP Sales and Use Tax Act, or, if the amendment or
repeal would not increase the entity's combined rate, by the same procedure that governs a rate
reduction under the entity's applicable rate-change rules.
Sec. 16.006. RELATIONSHIP TO OTHER ARTICLES.
(a) A sub-rate dedication under this article is separate from and independent of the
surplus waterfall of Article 3 of this Act. Revenue dedicated under this article does not enter the
surplus waterfall; it flows directly to the dedicated fund, department, or purpose.
(b) A sub-rate dedication under this article does not affect the Actual Need Ratio
calculation of Section 151A.310, Tax Code, except to the extent it changes the entity's combined
rate.
(c) A sub-rate dedication under this article does not affect the Interest and
Sinking sub-rate or the Bond Service Levy, which are separately governed by Section 151A.607 of the
TPTRP Sales and Use Tax Act.
Change Log — Stage 1 Conformity Edits (2026-08-02)
| # | Section | Edit description |
|---|---|---|
| 2.1 | Sec. 6.003(a)-(e) | Rewrote Citizen Dividend eligibility to the three-part test (U.S. citizen, Texas citizen, one-year continuous residency in the taxing entity's jurisdiction); added subsection (b) barring any non-U.S.-citizen from receiving a distribution by any means, in any amount, or through any other person; cited Article VIII, Section 1-t(e)(1-A) as the source of the standard. Most serious defect in the package. |
| 2.1 | Sec. 1.003(24) | Rewrote the "Eligible Recipient" definition to the same three-part citizenship/residency test and added the non-citizen bar, citing Article VIII, Section 1-t(e)(1-A). |
| 2.2 | Sec. 4.004(a) | Limited the Fiscal Distress distribution suspension to the M&O component and inserted the verbatim Bond Service Levy inviolability boilerplate, citing Article VIII, Section 1-n(l), Section 1-s(i)(4), Section 1-s(k)(7), and Section 1-o. |
| 2.2 | Sec. 8.003 | Split into subsections (a)-(b); limited the non-reporting distribution suspension to the M&O component and inserted the verbatim Bond Service Levy inviolability boilerplate. |
| 2.3 | Sec. 3.003(a) | Replaced the independently stated Transition Fund assistance criterion with a cross-reference to the Assistance Eligibility Standard under Section 490.032, Government Code (TPTRP Transition Board Act). |
| 2.3 | Sec. 4.002(b) | Added a cross-reference to the Section 490.032 Assistance Eligibility Standard governing Transition Board/Comptroller assistance upon a first Contribution Shortfall. |
| 2.3 | Sec. 10.002 | Added a cross-reference to the Section 490.032 Assistance Eligibility Standard governing Transition Fund assistance. |
| 2.4 | Sec. 1.002, 1.003(1)-(5),(14),(16),(22)-(23) | Resolved 10 Section [X] citations in Article 1 to Article VIII, Section 1-s
(fund system definitions); the Waterfall definition (1.003(16)) additionally cites Section
1-t and is flagged "resolved by context — verify."
|
| 2.4 | Sec. 2.001(b)(5), 2.002, 2.004(b) | Resolved 3 Section [X] citations to Article VIII, Section 1-s (fund-system
restricted-balance basis and conforming standards).
|
| 2.4 | Sec. 2.006(b) | Resolved Section [X] and Section 1-A to Section 1-s and Section 1-t; flagged
"resolved by context — verify."
|
| 2.4 | Sec. 3.001(a) | Resolved Section [X](d) (Level 1 waterfall mandate) to Section 1-t(d); flagged
"resolved by context — verify."
|
| 2.4 | Sec. 3.002(b), 3.004(d), 3.005(a) | Resolved 3 Section [X] citations to Article VIII, Section 1-s (appropriation
authority, debt-service draw floor, prohibited uses).
|
| 2.4 | Sec. 5.001(a), 5.002(b), 5.004, 5.005(a), 5.006 | Resolved 5 Section [X] citations in the disaster cascade Article to Article
VIII, Section 1-s(h)/(h-1) (citation resolution only; no substantive change to cascade
mechanics).
|
| 2.4 | Sec. 6.001(b), 6.002(a), 6.005(b), 6.008, 7.001(b), 7.003(c), 7.004(b) | Resolved 7 Section [X] citations to Article VIII, Section 1-s (Citizen Dividend
Fund, Qualifying Infrastructure, First Responder Department); the Sec. 6.002(a) and Sec.
6.005(b) citations are flagged "resolved by context — verify."
|
| 2.4 | Sec. 7.002(a) | Resolved 2 Section [X] and Section 1-A citations (Infrastructure/First
Responder Fund Level 3 capitalization) to Section 1-s and Section 1-t; flagged "resolved by
context — verify."
|
| 2.4 | Sec. 12.001(a) | Resolved Section [X] (TPTRP Fund System, ESF conforming) to Article VIII,
Section 1-s.
|
| 2.4 | (Total) | All 32 Section [X] citations and all 4 Section 1-A/Section
[X-A] citations resolved per the EDITSPEC mapping; 7 resolutions flagged [EDIT
NOTE: resolved by context — verify] where subsection-level inference was required.
|
| 2.5 | Sec. 3.001(d) | Added statement that Level 2 (I&S Reserve Fund refill) is administered under Article VIII, Section 1-o and its implementing legislation; set the Level 2 allocation percentage under the adopted waterfall rule. |
| 2.6 | Sec. 7.002(a) | Set the 45%/45% Level 3 allocations for the Infrastructure Fund and First Responder Fund under the adopted waterfall rule. |
| 2.7 | Art. 8 (preceding Sec. 8.001) | Added EDIT NOTE confirming Sec. 1-v annual performance publication is implemented in the Transition Board Act (Sec. 490.10X, Government Code) and intentionally not added to this Act. |
| 2.8 | Sec. 2.008 | Replaced two "Unified Transaction Tax" occurrences with "the sales and use tax imposed under the TPTRP Sales and Use Tax Act." |
| 2.8 | Sec. 6.005(b)(4) | Replaced "Unified Transaction Tax liability" with "TPTRP sales and use tax liability." |
| 2.8 | Sec. 11.004(b) | Replaced "Unified Transaction Tax base" with "TPTRP sales and use tax base." |
| 2.9 | Sec. 2.001(b)(2) | Replaced [Entity Name] and [District Name] placeholders with
generic defined-term phrasing ("the taxing entity's name" / "the district's
name").
|
| 2.10 | Sec. 5.007 | Renamed "CASCADE STATUS PORTAL" to "CASCADE STATUS MODULE" and redefined it as the Cascade Status module of the Texas Sales and Use Tax Portal established under Section 490.073, Government Code, rather than a standalone portal. |
| 2.11 | Sec. 1.003(19), 2.001(c), 2.007(b), 6.005(e), 6.007(b), 8.002, 9.002(3), 13.002 | Renamed all eight "Local Government Transparency Portal" references to the Local Government Transparency module of the Texas Sales and Use Tax Portal established under Section 490.073, Government Code; retitled Sec. 8.002 accordingly. |
| 2.12 | (Whole Act) | Grepped for "SNAP" — no Supplemental Nutrition Assistance Program references exist in this Act. No action needed; logged per instruction. |
| 2.13 | (Whole Act) | Completed the placeholder sweep; none were found in this Act. No action needed. |
| 2.14 | Sec. 2.003-2.006, Arts. 11 | Verified existing municipal/county/ISD/special-district/home-rule fund preservation and
merger/consolidation/dissolution/annexation correspondence rules were not modified in
substance; only in-place Section [X] citation resolutions (Edit 2.4) touched
Sec. 2.006(b), which is a citation-only conformity edit.
|
| 2.15 | Arts. 4 | Reviewed Fiscal Distress declaration (Sec. 4.001), Good Faith Contribution safe harbor (Sec. 4.002), Fiscal Recovery Plan (Sec. 4.003), distribution suspension (Sec. 4.004), expenditure restrictions (Sec. 4.005), and fiscal manager appointment (Sec. 4.006). No internal contradictions found; provisions are internally consistent. No rewrite made beyond the Edit 2.2 Bond Service Levy carve-out in Sec. 4.004(a). |
| 2.4-CLOSEOUT (2026-08-02) | Sec. 1.003(16), 2.006(b), 3.001(a), 6.002(a), 6.005(b), 7.002(a), 7.005(a) | Verified the 7 flagged "resolved by context — verify" citations against the authoritative
consolidated HJR (HJR_authoritative.md). Result: 5 confirmed correct as
originally resolved (Sec. 1.003(16) Waterfall def. citing Section 1-s and 1-t; Sec. 2.006(b)
citing Section 1-s and 1-t; Sec. 6.005(b) citing Section 1-t(e)(3), which matches the HJR's
"Method of Receipt — The Citizen's Election" language verbatim; Sec. 7.002(a) and Sec.
7.005(a) citing Section 1-s and 1-t for Level 3 capitalization); 2 corrected (Sec. 3.001(a)
changed from Section 1-t(d) to Section 1-s(d), since HJR Sec. 1-s(d) — not 1-t(d) — is
titled "Capitalization of the Stabilization Fund — Primary Mechanism: The Waterfall" and is
the actual source of the Level 1 primary-mechanism mandate, while 1-t(d) is the unrelated
"Constitutional Guarantee Against Discretionary Retention" provision; Sec. 6.002(a) changed
from Section 1-s(d), (m)(5), or (o) to Section 1-s(m)(5) or (n)(6), since the HJR's
actual upstream pass-through-to-Citizen-Dividend-Fund provisions are the Infrastructure Fund's
and First Responder Fund's respective "No Diversion" subsections — 1-s(m)(5) and
1-s(n)(6) — not 1-s(d), which governs Stabilization Fund capitalization only, or 1-s(o),
which governs the I&S Reserve Fund and does not pass through to the Citizen Dividend
Fund); 0 remain flagged for counsel review, as the authoritative HJR text resolved every
citation without residual ambiguity. All [EDIT NOTE: resolved by context —
verify] flags have been cleared from the operative text.
|
FUND SYSTEM ACT — STAGE 3 EDIT LOG (2026-08-06)
| # | Section | Edit description |
|---|---|---|
| fsa.s3.1 | Portal rename (10 occurrences) | Renamed "Texas Sales and Use Tax Portal" to "Texas Sales and Use Tax Portal" throughout. |
| fsa.s3.2 | New Article 14 (Sec. 14.001) | Added investment authority for Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen Dividend Fund under Chapter 2256, Government Code (Public Funds Investment Act) and Chapter 2257, Government Code (Collateral for Public Funds). Investment earnings accrue to the source fund; Citizen Dividend Fund earnings remain in the CDF and add to distributable amounts; Stabilization Fund earnings above the constitutional maximum divert through the surplus waterfall. No new investment categories introduced; existing PFIA framework governs. Article numbering advanced to 14 to avoid collision with existing Articles 8-13 of this Act. |
| fsa.s3.3 | New Sec. 14.002 | I&S Reserve Fund liquidity requirement: notwithstanding general investment authority, I&S Reserve Fund balances held in cash or readily-convertible-to-cash form to guarantee timely bond debt service payment. |
| fsa.s3.4 | New Sec. 14.003 | Post-final-bond-retirement capitalization of the Infrastructure Fund: on retirement of the entity's final outstanding bond, the I&S sub-rate zeros out per Sec. 151A.605(g), Tax Code, and any residual I&S Reserve Fund balance transfers to the Infrastructure Fund at the close of the fiscal period. Preserves the design principle that bond proceeds and reserves exist to fund infrastructure and remain available for that purpose without new debt issuance. |
Change Log — Version 3 (2026-08-07)
| # | Section | Edit description |
|---|---|---|
| v3.1 | Whole Act | Conformed temporary constitutional citations and standardized I&S Reserve Fund terminology. |
| v3.2 | Secs. 2.003, 3.001, 7.002, 7.005 | Removed the former Farm-to-Market Fund constitutional reference; adopted the three-level waterfall allocations; eliminated fund caps; and stated indefinite accumulation, investment, annual appropriation, and project accumulation rules. |
| v3.3 | Article 14 | Moved Article 14 from post-log material into the operative sequence and conformed I&S Reserve Fund references. |
| v3.4 | Articles 15–16 | Added dedicated-fund sales-tax earmarks and the sub-rate-dedications framework. |