HB 325 limits the annual expenditures of Texas municipalities and counties to either the previous fiscal year's total expenditures or a calculated amount based on the prior year’s expenditures adjusted by the sum of the inflation rate and the population growth rate, as determined by the Legislative Budget Board. Exceptions to the expenditure cap include voter-approved spending increases or emergency expenditures authorized by a gubernatorial disaster declaration. Excluded from this cap are funds received from voter-approved bonds, grants, donations, or gifts.