Texas Attorney General Ken Paxton has notified more than 110 cities that they cannot adopt property tax rates above their no-new-revenue tax rates after his office determined the municipalities failed to comply with state financial audit and transparency requirements.
Paxton announced the latest round of enforcement Monday as part of an investigation involving more than 1,000 Texas municipalities. His office previously sent similar notices to more than 130 cities in May, and the statewide review remains ongoing.
The restrictions stem from Senate Bill 1851, a law passed by the Texas Legislature in 2025 that ties municipalities' ability to raise property tax revenue to compliance with annual financial reporting requirements.
Cities Found Out of Compliance With SB 1851
SB 1851 took effect Sept. 1, 2025, and amended the Texas Local Government Code to require municipalities to conduct annual audits of their records and accounts.
Cities must prepare a financial statement based on the audit and file both the statement and the auditor's opinion with the municipal secretary or clerk within 180 days after the end of the city's fiscal year.
The law also gives the attorney general an enforcement mechanism with potentially significant consequences for city budgets.
If the attorney general determines that a municipality has failed to meet the requirements, the city cannot adopt an ad valorem tax rate exceeding its no-new-revenue tax rate for the tax year beginning on or after the determination. The restriction remains in place in subsequent tax years until the municipality completes the required audit and filing.
Paxton's office requested documents from more than 1,000 municipalities while reviewing compliance with the law. The latest letters went to cities the office determined had not satisfied the statutory requirements. Municipalities not included in the latest round either met the requirements or had not yet received a determination as part of the continuing investigation.
“I am continuing to fight to stop cities from unlawfully raising taxes on hardworking Texans,” Paxton said in a statement. “My office has been investigating cities across Texas. Now, over 110 new cities have been notified that they must not raise property taxes in violation of state law. I will continue to make sure that taxpayers are protected from unlawful tax increases.”
More Than 110 Texas Cities Receive Violation Letters
According to the Texas Attorney General's Office, the municipalities receiving the latest violation determination letters are:
Adrian, Annona, Aransas Pass, Avery, Blackwell, Blossom, Bogata, Bonney, Brazoria, Brownsboro, Charlotte, China, Clifton, Clint, Cottonwood Shores, Cotulla, Cranfills Gap, Cresson, Cumby, Darrouzett, Detroit, Dickens, Dish, Edgecliff Village, Electra, Florence, Friona, Gallatin, Godley, Goldthwaite, Goodlow, Goodrich, Gorman, Grand Saline, Granger, Greenville, Gruver, Hallsburg, Hallsville, Hawk Cove, Hawkins, Hawley, Hereford, Hilshire Village, Hudson, Indian Lake, Ingram, Itasca, Ivanhoe, Jones Creek, Kempner, Kendleton, Kennard, Kingsbury, Kress, La Villa, Ladonia, Linden, Log Cabin, Lone Star, Lyford, Mason, Mathis, Mission, Moody, Morgan, Munday, New London, Newton, Nordheim, Oakwood, Odem, Oglesby, Overton, Palacios, Pasadena, Pattison, Peaster, Penitas, Pine Forest, Point Comfort, Port Isabel, Presidio, Rancho Viejo, Rice, Robinson, Roman Forest, Round Mountain, Round Top, San Leanna, Sanford, Santa Fe, Seadrift, Simonton, Spearman, Springlake, Stockdale, Stockton Bend, Stratford, Strawn, Sunset Valley, Taylor Landing, Throckmorton, Toyah, Trinidad, Tulia, Uhland, Vega, Vinton, Weimar, Winfield, Winnsboro, Woodcreek, Woodsboro, Wortham and Yorktown.
What the Property Tax Restriction Means
The no-new-revenue tax rate is designed to produce roughly the same amount of property tax revenue from properties taxed in both the current and previous years, with adjustments for factors such as new and lost property.
That does not necessarily mean an individual property owner's tax bill will remain unchanged. Instead, the calculation focuses on the taxing unit's overall revenue from the applicable tax base.
For the cities covered by Paxton's determination, the practical effect is that officials cannot adopt a property tax rate above the no-new-revenue rate until their municipality satisfies the audit and filing requirements imposed by SB 1851.
The restriction adds another layer to Texas' existing limits on local property tax increases.
Texas does not impose a state property tax. Instead, property taxes are levied by local governments, including cities, counties, school districts and special-purpose districts.
Most Texas cities and counties are already subject to a voter-approval tax rate framework. Generally, that system permits up to 3.5% growth in maintenance and operations property tax revenue above the no-new-revenue amount, along with debt service and any applicable unused increment, before voter approval is required.
For municipalities found in violation of SB 1851, however, the new enforcement provision prevents them from using that additional taxing capacity while they remain out of compliance.
Texas Property Tax Levies Have Grown Sharply
The enforcement action comes as property tax collections across Texas have risen substantially over the past decade.
Statewide property tax levies increased from approximately $51.2 billion in 2015 to $89.4 billion in 2025, according to Texas Comptroller data compiled by Texas Policy Research.
City property tax levies grew at an even faster pace over the same period, rising from about $8 billion in 2015 to $16.7 billion in 2025.
The Legislature's passage of SB 1851 effectively connects a city's ability to increase property tax revenue with its compliance with financial auditing and public filing requirements.
