A Bill to be entitled An Act relating to the limitation and transparency of regulatory fees imposed by local governments.

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

SECTION 1. SHORT TITLE 

This Act may be cited as the Regulatory Fee Integrity Act.

SECTION 2. PURPOSE

The purpose of this Act is to ensure that regulatory fees imposed by local governments reflect only the actual cost of administering the regulation, and to prevent the creation of unjustified rules that artificially inflate administrative costs.

SECTION 3. DEFINITIONS

In this Act:

“Regulatory fee” means any fee imposed by a local government for the purpose of licensing, permitting, inspecting, or enforcing compliance with health, safety, or operational standards.

“Local government” includes municipalities, counties, and any other political subdivisions authorized to impose regulatory fees.

“Actual cost” means the direct and necessary expenses incurred in administering the regulation, including labor, materials, and overhead.

SECTION 4. COST-BASED FEE REQUIREMENT

(a) A local government may not impose a regulatory fee that exceeds the actual cost of administering the regulation. (b) Any increase in a regulatory fee must be supported by a documented increase in actual cost. (c) Fees may not be used to generate revenue beyond the cost of regulation.

SECTION 5. TRANSPARENCY AND DISCLOSURE

(a) Each local government shall publish an annual report detailing the cost basis for each regulatory fee. (b) The report must include:

Itemized expenses

Number of inspections or enforcement actions

Fee revenue collected (c) The report shall be made publicly available on the jurisdiction’s website and submitted to the Texas Comptroller.

SECTION 6. INDEPENDENT REVIEW OF FEE INCREASES

(a) If a regulatory fee increases by more than 10% in a fiscal year, the jurisdiction must commission an independent audit to justify the increase. (b) The audit shall be submitted to the Texas Comptroller and made available for public review.

SECTION 7. ANTI-INFLATION CLAUSE FOR REGULATORY RULES

(a) No rule, procedure, or requirement shall be adopted or maintained for the primary purpose of increasing administrative costs used to justify regulatory fees. (b) Any new rule must demonstrate a clear and necessary public health or safety benefit. (c) The cost impact of any new rule must be disclosed and reviewed by the Texas Small Business Advisory Board prior to implementation. (d) Rules that increase administrative costs shall sunset after two years unless reauthorized following review.

SECTION 8. LEGAL STANDING AND REMEDIES

(a) Any business or individual subject to a regulatory fee may challenge the fee through an administrative hearing process established by the Texas Comptroller. (b) If a fee is found to exceed the actual cost of regulation, the jurisdiction shall refund the excess amount and may be subject to civil penalties not to exceed $10,000 per violation.

SECTION 9. PREEMPTION

Any local ordinance, rule, or regulation that conflicts with this Act is void and unenforceable.

SECTION 10. EFFECTIVE DATE

This Act takes effect September 1, 2026