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Texas has launched one of the most significant municipal accountability efforts in its history. Attorney General Ken Paxton (R) is investigating nearly 1,000 cities after uncovering widespread violations of Senate Bill 1851 (SB 1851), the new state law that prohibits noncompliant municipalities from adopting tax rates above the no-new-revenue rate. The review focuses on whether cities have failed to complete their annual audits or file the required financial statements that give taxpayers insight into local spending.
This unprecedented investigation began after the Attorney General’s Office discovered patterns of noncompliance across Texas. Many cities appear to have missed statutory filing deadlines, withheld required financial disclosures, or attempted to adopt property tax increases without meeting basic transparency requirements. Paxton has instructed all cities receiving information requests to respond promptly and warned that failure to comply places municipalities at significant legal risk.
The statewide sweep reflects the central purpose of SB 1851. Taxpayers deserve full transparency before local governments demand additional revenue. Cities that do not meet their obligations cannot raise tax burdens on Texans.
October Enforcement Actions Revealed the Scope of the Problem
The broader investigation followed an earlier enforcement effort in October 2025. Paxton ordered the cities of La Marque, Odessa, Tom Bean, and Whitesboro to halt potentially illegal property tax increases. Each city attempted to raise taxes despite failing to meet the audit and reporting requirements that safeguard taxpayer visibility into municipal finances. Some increases exceeded 50%, an action prohibited under SB 1851 when a municipality is out of compliance.
Paxton warned that he had “grave concerns” that municipalities were ignoring state law in an effort to increase property tax burdens. His office made clear that any city that has not completed its audit or filed its financial statement cannot adopt a tax rate above the no new revenue rate until the violation is corrected. These initial cases revealed that the problem extended far beyond four cities. As the Attorney General began reviewing municipal filings statewide, it became evident that a substantial number of cities were ignoring statutory transparency requirements.
This realization prompted the December initiative to evaluate nearly 1,000 municipalities.
How SB 1851 Protects Taxpayers
SB 1851 was enacted to create a direct and enforceable consequence for cities that fail to meet their statutory obligations. Under the law, a municipality that has not had its records and accounts audited as required by Section 103.001 or has not filed its financial statement and auditor’s opinion within 180 days of the end of its fiscal year, as required by Section 103.003, may not adopt a tax rate that exceeds the no new revenue tax rate.
This restriction applies to the tax year that begins on or after the Attorney General’s determination of noncompliance and continues into subsequent years until the municipality completes and files the required audit and financial statements.
The law also empowers any person to submit a complaint to the Attorney General if they suspect a violation. This gives Texans a direct avenue to ensure local governments follow basic transparency rules and reinforces public oversight.
The premise is simple and fair. Cities cannot increase tax burdens while concealing essential financial information from the public.
Major Cities Are Included in the Statewide Review
The Attorney General’s investigation includes cities of every size, from small communities to some of the largest municipalities in Texas. Houston, San Antonio, Dallas, Fort Worth, Lubbock, Wichita Falls, McAllen, Beaumont, Amarillo, El Paso, Corpus Christi, Laredo, Texarkana, Brownsville, Waco, and Tyler are among those that have received formal requests for financial documents.
This demonstrates that transparency failures are not limited to any particular geographic or political region. SB 1851 applies equally to every city in Texas, and the Attorney General is enforcing its requirements uniformly.
Why Transparency Failures Threaten Taxpayers
Municipal audits serve a critical purpose. They provide residents with a clear understanding of how their tax dollars are being managed. When a city fails to conduct its required audit or delays filing its financial statements, taxpayers lose insight into spending patterns, debt levels, and fiscal conditions. Without these disclosures, property tax increases can be adopted without meaningful justification or public awareness.
SB 1851 ensures that taxpayers cannot be asked to fund higher levels of government spending until basic transparency is restored. This creates a natural and proportional incentive for cities to complete their audits on time and follow existing law. It also prevents hidden or unjustified tax increases that would otherwise fall on property owners without adequate explanation.
How Texans Can Participate in Oversight
To assist with enforcement, the Attorney General has created a complaint portal that allows residents to report suspected violations. Texans who believe their city has failed to meet audit requirements or has attempted to raise taxes illegally can submit information directly to the state for review.
This mechanism reinforces public participation and helps ensure SB 1851 is enforced statewide.
Texas is Reinforcing Transparency and Protecting Property Owners
The investigation into nearly 1,000 cities confirms the necessity of SB 1851 and validates the concerns raised by TPR during the legislative session. Municipal transparency is foundational to responsible government, and taxpayers should never face higher property tax burdens from cities that have failed to disclose how they spend public dollars.
By enforcing SB 1851, Texas is making it clear that audit laws matter, transparency is mandatory, and property owners have a right to understand and evaluate municipal finances before tax increases are adopted. The statewide investigation sends a strong message that no city, regardless of size or influence, is above the law.
Texans deserve accountable government. SB 1851 delivers the tools to ensure it.
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