According to the Legislative Budget Board (LBB), SB 1851 is designed to improve financial accountability at the municipal level by enforcing compliance with audit and reporting requirements through the application of a property tax limitation. While the bill does not create new spending or expand government programs, it does have potential fiscal implications for municipalities that fail to meet the statutory deadlines for conducting audits and filing financial statements.

For noncompliant municipalities, the key fiscal consequence is a cap on their ability to adopt an ad valorem tax rate above the “no-new-revenue” rate. This restriction effectively freezes revenue growth from existing properties and could significantly limit a city’s budget flexibility. Municipalities relying on annual tax rate increases to fund growing expenditures—such as public safety, infrastructure, or debt service—may face revenue shortfalls if they are penalized under this law. The longer a city remains noncompliant, the more severe the compounding fiscal constraint becomes, potentially requiring reductions in services or the reallocation of funds.

From a state-level perspective, the fiscal impact is minimal. The Attorney General’s Office may incur minor administrative costs to receive and evaluate complaints, issue determinations, and monitor compliance. However, these responsibilities are well within the agency’s existing scope and can likely be absorbed without the need for additional appropriations. Because enforcement is reactive and triggered by citizen complaints, it avoids the creation of a continuous oversight mandate.

Overall, SB 1851 incentivizes timely municipal financial reporting by tying it directly to the local taxing authority. While it could impose fiscal pressure on cities that are delinquent in their reporting duties, it is designed to safeguard taxpayers from increases in property taxes by local governments operating without current and transparent financial disclosures.

Texas Policy Research recommends that lawmakers vote YES on SB 1851. The bill introduces a straightforward and enforceable consequence for municipalities that fail to comply with statutory requirements to conduct annual audits and file financial statements in a timely manner. Specifically, if the Texas Attorney General finds a municipality in violation of Section 103.001 or 103.003 of the Local Government Code, the city will be prohibited from adopting an ad valorem tax rate above its no-new-revenue rate until it rectifies the noncompliance. This ensures that local governments remain fiscally transparent before asking taxpayers for additional revenue.

The bill is structured to avoid creating new bureaucratic burdens or granting new rulemaking authority. Instead, it relies on an existing state office (the Attorney General) to act upon complaints submitted by the public. This citizen-driven oversight mechanism empowers residents to hold their local governments accountable without requiring state-mandated audits or new enforcement agencies. The penalty is proportional and tied directly to a municipality’s ability to levy higher taxes, aligning well with principles of limited government and fiscal responsibility.

The purpose of SB 1851 is to ensure that taxpayers know how their dollars are being spent and to reinforce basic transparency in municipal governance. These goals reflect a strong alignment with the liberty principles of personal responsibility, limited government, and protection of private property (through tax restraint). Furthermore, the absence of a fiscal note or state funding mechanism suggests the bill is designed to be implemented with minimal state expenditure.

In conclusion, SB 1851 upholds taxpayer protections and reinforces statutory financial safeguards without creating overreach or expanding government power. It ensures transparency through a simple, enforceable incentive structure, and it strengthens public trust in local governance.

• Individual Liberty: The bill includes a public complaint mechanism, empowering individuals to hold their local government accountable. This participatory feature supports the idea that government should be responsive to and monitored by the people. It gives ordinary citizens a clear path to engage in democratic oversight, reinforcing the concept that liberty includes the right to demand accountability from governing bodies.
• Personal Responsibility: The bill incentivizes municipal officials to uphold their financial reporting duties. Tying the ability to increase tax rates to compliance with audit requirements ensures that cities that fail to act responsibly face natural consequences. This reinforces the expectation that local governments must be transparent and accountable stewards of public funds, echoing the core value that people (and institutions) should bear the consequences of their choices.
• Free Enterprise: While the bill doesn’t directly address market regulation, commerce, or enterprise, it may have indirect positive effects by encouraging a more predictable and transparent fiscal environment at the local level. Stable, accountable municipal finances can bolster business confidence and investor trust. However, the bill’s core mechanisms don’t specifically regulate or impact commercial freedom.
• Private Property Rights: By prohibiting noncompliant municipalities from adopting tax rates above the no-new-revenue threshold, the bill directly protects property owners from unjustified tax increases. It ensures that any rise in property taxes is contingent on the city proving it is managing taxpayer funds responsibly. This defends citizens from opaque or potentially irresponsible fiscal practices that could otherwise lead to higher taxation without clear justification or oversight.
• Limited Government: The bill exemplifies the principle of limited government by using existing legal mechanisms—not new regulatory bodies or expanded authority—to enforce compliance with basic fiscal transparency laws. Rather than creating a new enforcement agency or mandate, the bill empowers the Attorney General to act only upon citizen complaints. It imposes consequences not through fines or criminal penalties but by capping tax authority, which is a restrained, non-intrusive tool. The state does not assume new responsibilities; it simply holds municipalities to their existing duties.

• HB 4097 (Same As)