Texas Attorney General Ken Paxton says more than 130 Texas cities are prohibited from adopting property tax rates above the “no-new-revenue” level after allegedly failing to meet state audit and financial transparency requirements.
The enforcement effort centers on Senate Bill 1851, a law passed during the 2025 legislative session that ties a city’s ability to raise property tax revenue to compliance with annual audit and financial reporting rules. Under the law, cities that fail to complete or properly file required financial audits cannot adopt a tax rate above the no-new-revenue rate until they come into compliance.
Paxton’s office said it reviewed records from more than 1,000 Texas municipalities before identifying an initial group of cities that may be out of compliance. The attorney general’s office says the investigation remains ongoing and additional cities could face enforcement actions later.
Some North Texas and Texoma communities have already appeared in earlier enforcement actions connected to the law. In October, Paxton’s office ordered the cities of Tom Bean and Whitesboro to halt what the attorney general described as potentially illegal tax increases tied to audit compliance issues.
More recently, regional television stations reported that additional East Texas and Texoma cities were included among the latest round of notices sent by the attorney general’s office. KXII reported that Howe, Southmayd and Tom Bean were among the cities receiving notices connected to the law.
Paxton said the law is intended to ensure taxpayers have access to complete financial information before cities seek additional tax revenue.
“I will not allow cities to unlawfully raise taxes on hardworking Texans,” Paxton said in a statement released Thursday.
