SB 1851 seeks to improve municipal accountability and transparency by introducing a financial penalty for cities that fail to comply with annual audit and reporting requirements outlined in the Texas Local Government Code. Specifically, it amends Chapter 103 by adding Section 103.005, establishing that any individual may report suspected noncompliance with Sections 103.001 (annual audit requirement) or 103.003 (filing of the audit report) to the Texas Attorney General. Upon determination of a violation, the bill bars the noncompliant municipality from adopting an ad valorem tax rate that exceeds the "no-new-revenue" rate for the current or future tax years until compliance is restored.
The “no-new-revenue tax rate” is defined as the rate that would generate the same amount of revenue as the previous year, excluding new property added to the tax rolls. This provision serves as a fiscal cap, effectively preventing tax increases in jurisdictions that are not in compliance with their basic financial transparency obligations. The tax limitation remains in effect until the municipality completes the required audit and properly files the auditor’s report with the municipal clerk or secretary, as required by law.
The bill applies to tax rates adopted for fiscal years beginning on or after that date. By creating a direct financial consequence tied to statutory compliance, SB 1851 aims to uphold accountability without expanding government bureaucracy. It strengthens public oversight mechanisms and provides taxpayers with recourse against local governments that fail to meet basic transparency standards.