Texas Property Tax Crackdown Hits Over 130 Cities

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Texas Attorney General Ken Paxton (R) has sent enforcement letters to more than 130 Texas cities, warning them that they are prohibited from increasing property taxes above the “no new revenue” rate after allegedly failing to comply with new state financial transparency requirements.

The action stems from Senate Bill 1851 (SB 1851), legislation approved during the 89th Texas Legislative Session (2025) that tied local property tax authority to financial disclosure compliance. The law requires municipalities to complete audits and submit required financial documentation before adopting property tax rates above the no new revenue threshold.

According to the Attorney General’s Office, more than 1,000 Texas cities were reviewed as part of an ongoing statewide investigation into compliance with the law. Over 130 municipalities were ultimately identified as failing to meet the statutory requirements for the current fiscal year. The Attorney General’s Office says those cities are now subject to enforcement provisions that prevent them from adopting higher property tax rates until compliance is achieved. In late 2025, we previously detailed the Attorney General’s expanding investigation into local government transparency and property tax compliance.

According to the Attorney General’s office, the the following list of cities have been sent violation determination letters: Alpine, Aspermont, Baird, Balch Springs, Balmorhea, Bedias, Berryville, Big Spring, Bishop, Blooming Grove, Blue Mound, Briarcliff, Brookside Village, Buffalo Gap, Calvert, Cameron, Campbell, Centerville, Chico, Chireno, Clarksville, Clear Lake Shores, Combine, Corrigan, Crane, Cross Timber, Crowell, Crystal City, Cuero, Dalhart, Danbury, De Leon, Eagle Lake, Elkhart, Eureka, Eustace, Fairfield, Farwell, Flatonia, Franklin, Fritch, Fulton, Gordon, Grandfalls, Gregory, Groesbeck, Groom, Hale Center, Hamilton, Hearne, Hempstead, Higgins, Hillcrest Village, Horizon City, Howardwick, Howe, Huntington, Industry, Ingleside On the Bay, Jewett, Jonestown, Keene, Kemah, Kenedy, Kerens, Kermit, Lamesa, Livingston, Lott, Lumberton, Manvel, Marquez, McCamey, Megargel, Menard, Mertzon, Mexia, Miami, Midway, Miles, Mount Enterprise, Natalia, New Home, New Waverly, Newcastle, Oyster Creek, Paducah, Panorama Village, Pelican Bay, Pleak Village, Plum Grove, Port Lavaca, Quanah, Red Lick, Redwater, Rockdale, Rocksprings, Roma, Rusk, San Elizario, San Felipe, San Perlita, Seabrook, Shepherd, Smiley, Snyder, Somerville, Southmayd, Spring Branch, Spur, Sterling City, Stinnett, Sunray, Surfside Beach, Taft, Tehuacana, Texas City, Texline, Three Rivers, Tiki Island, Tom Bean, Tool, Turkey, Valley Mills, Valley View, Victoria, Weslaco, Weston Lakes, Wharton, Wickett, Wimberley, Wolfe City, Woodloch, Yantis, and Yoakum. 

Those cities have now been formally notified that they may not adopt property tax rates above the no new revenue threshold unless they come into compliance with state law. The announcement represents one of the most aggressive state-level enforcement actions tied to local property tax authority in recent Texas history.

SB 1851 Limits Property Tax Increases

Senate Bill 1851 established a direct connection between local government transparency and municipal taxing authority.

Under the law, cities that fail to complete required financial audits or submit required reporting documents cannot raise property taxes above the no-new-revenue rate. That rate is designed to generate roughly the same amount of property tax revenue from existing properties as the previous year, excluding revenue generated from new construction. The legislation effectively created a financial penalty for municipalities that fail to comply with transparency requirements.

Texas Policy Research (TPR) supported SB 1851 as it was being considered by lawmakers in the 89th session. The current enforcement action appears to be the first large-scale implementation of those provisions.

Property Tax Debate Shifts to Local Governments

The Attorney General’s action reflects a broader shift in Texas politics surrounding property taxes and local government spending.

For years, Texas lawmakers have approved state-level property tax relief packages while many local governments continued increasing overall tax collections through appraisal growth, bond debt, and higher local spending levels. That tension has increasingly pushed attention toward municipal budgeting practices, debt issuance, financial transparency, and taxpayer accountability at the local level.

Paxton framed the enforcement effort as a taxpayer protection measure, arguing that cities should not be allowed to impose larger tax burdens without first complying with basic transparency standards required under state law.

The move is also likely to intensify ongoing debates over the balance between state oversight and local control.

Supporters of the enforcement action will likely argue that taxpayers deserve full financial transparency before local governments seek additional revenue. Critics may argue that smaller municipalities with limited staffing or administrative resources could struggle to meet increasingly complex reporting requirements.

Still, politically, the issue places local governments in a difficult position. Rising property tax burdens remain one of the most consistently unpopular issues among Texas voters.

Statewide Investigation Reveals Compliance Issues

One of the most notable aspects of the enforcement action is the sheer size of the statewide review.

The Attorney General’s Office examined compliance across more than 1,000 municipalities before identifying over 130 cities as allegedly violating the law’s requirements. The list spans multiple regions of Texas and includes municipalities ranging from small rural communities to larger suburban cities. The breadth of the review suggests the issue extends beyond isolated administrative mistakes.

At the same time, the situation raises practical questions about how municipalities manage financial reporting obligations and whether some local governments lack the infrastructure necessary to consistently meet state deadlines and audit requirements.

The Attorney General’s Office has indicated that the investigation remains ongoing and that additional cities could potentially face enforcement actions if further violations are identified.

Property Tax Debate Expands Beyond Transparency

The controversy surrounding SB 1851 also intersects with broader debates over local government spending, debt accumulation, and long-term property tax reform.

Texas Policy Research’s Texas Liberty Compact specifically calls for stronger limits on local spending and debt, arguing that local governments often face fewer meaningful fiscal restraints despite being primarily responsible for rising property tax burdens. The Texas Liberty Compact also advocates for the eventual elimination of property taxes through structural spending reforms and stronger fiscal discipline at both the state and local levels.

Supporters of those reforms often argue that property tax relief cannot succeed long-term if local governments continue expanding spending obligations and debt faster than population growth and inflation. This latest enforcement action is likely to add additional momentum to those broader conversations heading into future legislative sessions.

Texas Links Transparency to Government Authority

The broader significance of the Attorney General’s action may ultimately be philosophical as much as procedural.

Texas is increasingly moving toward a model in which transparency requirements are tied directly to governmental authority and fiscal powers. In this case, a municipality’s ability to raise property taxes became contingent upon compliance with state-mandated financial disclosure standards.

That represents a meaningful evolution in the state’s broader approach to property tax reform and local government accountability. Whether Texans ultimately view the enforcement effort as necessary taxpayer protection or excessive state intervention will likely depend on how consistently the law is enforced and how municipalities respond in the coming months.

What is clear is that the debate over Texas property taxes is no longer solely about tax rates and appraisals. Increasingly, it is also becoming a debate about financial transparency, taxpayer trust, local government spending, and the accountability of public officials exercising taxing authority.

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