There is a new Texas law that can stop your city from raising your property taxes — not because voters said no, and not because the city spent too much, but because the city was late with its bookkeeping.

It is Senate Bill 1851, passed by the 89th Legislature in 2025. In May 2026 the Texas Attorney General used it to notify more than 130 cities that they may not adopt a tax rate above their no-new-revenue rate. On August 17, 2026 he added more than 110 more, pushing the total past 240 — and the office says the investigation is still open. Some of those cities say the state is reading the law wrong. Here is what the statute actually says, who it has hit, and how to check whether your own city is on the list.

The timing is not incidental. Under Texas Tax Code § 26.05(a), a city must adopt its tax rate before the later of September 30 or the 60th day after it receives its certified appraisal roll. The August letters landed in the middle of the weeks when 2026 rates are actually being set.

What SB 1851 actually does

SB 1851 did not create a new audit requirement. Texas cities have long been required by Chapter 103 of the Local Government Code to have their records and accounts audited annually (§ 103.001) and to file the resulting financial statement and the auditor’s opinion with the municipal secretary or clerk within 180 days after the end of the fiscal year (§ 103.003).

What was missing was a penalty. SB 1851 supplied one. It adds a new § 103.005, which lets any person file a complaint with the Attorney General about a suspected violation of § 103.001 or § 103.003, and then provides that if the Attorney General determines a city has not had the audit done, or has not filed the statement and opinion before the 180th day after its fiscal year ends, the city:

“may not adopt an ad valorem tax rate that exceeds the municipality’s no-new-revenue tax rate” — for the tax year beginning on or after the date of the Attorney General’s determination, and for any later tax year that begins before the city completes and files the missing audit.

That is the whole mechanism, and it is worth appreciating how blunt it is. There is no fine, no lawsuit, and no hearing built into the statute. Missing the paperwork deadline caps the city’s levy at roughly what it collected last year, and the cap stays on until the paperwork is fixed.

The bill was authored by Sen. Robert Nichols. It passed the Senate 31–0 on April 16, 2025 and the House 89–31 on May 10, 2025, was signed by the governor on May 24, 2025, and took effect September 1, 2025. By its own terms (SECTION 2 of the enrolled bill) it “applies only to the adoption of an ad valorem tax rate for a tax year that begins on or after the effective date.” That single sentence is the center of the fight described below.

Why the no-new-revenue rate is the lever

The no-new-revenue rate — defined in § 103.005 by reference to Chapter 26 of the Tax Code — is the rate that would raise about the same amount of property tax revenue from the same properties as the year before. When appraisals rise, the no-new-revenue rate falls to compensate. Holding a city to it does not cut anyone’s taxes; it freezes the city’s total take from existing property at last year’s level. For a fuller walk-through of how that rate sits alongside the voter-approval rate in the summer rate-setting season, see our explainer on the summer votes that set your bill.

The enforcement: four cities, then 1,000, then 240-plus

Enforcement arrived in four waves.

October 2025. Barely a month after the law took effect, the Attorney General’s office sent letters to four cities — Odessa (Ector County), La Marque (Galveston County), and Tom Bean and Whitesboro (both in Grayson County) — telling them to halt tax increases the office viewed as adopted in violation of the new law. As The Texas Tribune reported on October 3, 2025, the office said La Marque filed its documents six months after the deadline, Whitesboro filed three months late, and it could not locate an audit report or financial statement for Odessa for the prior fiscal year. The Tribune put Whitesboro’s adopted rate increase at 38 cents to 58 cents per $100 of value, La Marque’s at 2 cents, and Odessa’s at roughly $39 a month for an average homeowner.

April 2026. The office escalated from complaints to a sweep, demanding audit and financial documents from more than 1,000 Texas municipalities — including the largest ones, among them Houston (Harris County), Dallas (Dallas County), San Antonio (Bexar County), Fort Worth (Tarrant County), and Lubbock.

May 14, 2026. The office announced it had sent letters to more than 130 cities notifying them that they are prohibited from adopting a rate above no-new-revenue. Notably, the big cities swept up in the April document demand were not on the enforcement list — the cities that failed the test are overwhelmingly small and mid-sized.

A published account of the list (Texas Scorecard, May 2026) names cities in every region of the state: Balch Springs in Dallas County, Wimberley in Hays County, Alpine in Brewster County, Texas City and Kemah in Galveston County, Weslaco in Hidalgo County, Snyder in Scurry County, Wolfe City in Hunt County, and Victoria in Victoria County, among many others.

We have reproduced that list here only as reported. If your city’s status matters to you, confirm it directly — see “How to check your own city” below.

August 17, 2026. The office sent a second batch of violation-determination letters to more than 110 additional cities — and this time published the names itself. The release states that the April sweep covered more than 1,000 municipalities, that it produced the original group of over 130, and that “the investigation remains ongoing.”

“I am continuing to fight to stop cities from unlawfully raising taxes on hardworking Texans. 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.” — Attorney General Ken Paxton, August 17, 2026

The August group reaches noticeably larger cities than the May one. It includes Pasadena in Harris County — a Houston-area city of 151,401 at the 2020 census, larger than any city reported on the May list — along with Mission in Hidalgo County (85,856), Greenville in Hunt County, Hereford in Deaf Smith County, Santa Fe in Galveston County, Robinson in McLennan County, Port Isabel in Cameron County, Tulia in Swisher County, the city of Brazoria, and Presidio on the border — alongside roughly a hundred small towns.

Hunt County now appears in both rounds: Wolfe City in May, and the county seat of Greenville in August.

This list is also firmer than the May one. The Attorney General published the August names directly, rather than our relying on a press account. Counting the names printed in that release gives 116; the office describes it as “over 110.”

The unresolved question: does it reach audits that were already late?

This is the part that has not been settled, and any honest account has to say so.

The cities named in October 2025 did not argue that their audits were on time. They argued that SB 1851 does not reach backward. Their reading: the law took effect September 1, 2025 and is not retroactive, so it governs audit periods going forward — not a fiscal year that closed, and a deadline that passed, before the statute existed. A Whitesboro administrator told the Tribune the city had consulted four advisers, all of whom supported that position. Odessa and La Marque likewise said they were following the law.

The state’s reading is that SECTION 2 limits the law to tax rate adoptions occurring on or after September 1, 2025 — which the fall 2025 rate adoptions were — and says nothing that would excuse an audit that was already overdue on that date.

Both readings are available on the face of the text. As of this writing we are not aware of a Texas appellate decision resolving it. Until a court does, a city that receives one of these letters faces a genuinely hard choice: adopt at no-new-revenue and absorb the budget hit, or adopt above it and risk litigation.

Why this matters to a homeowner

Two reasons, and they point in opposite directions.

First, it is a real, enforceable transparency rule with teeth — something Texas property-tax law has often lacked. A city that will not show taxpayers audited books cannot ask those taxpayers for more money. That is a defensible principle, and it passed the Senate unanimously.

Second, the burden falls hardest on small towns. The cities on the enforcement list are mostly places with a part-time finance staff, a single clerk, or a contract auditor who ran late. The penalty is not scaled to the size of the failure: a statement filed three months late produces the same levy cap as no audit at all. And the cap is on the city’s revenue, which in a year of rising costs generally means service cuts rather than a refund to you.

It is also worth being clear about the size of the effect on your bill. The city is only one line on a Texas property tax bill, and usually not the largest — school district M&O and I&S rates typically dominate. Freezing the city at no-new-revenue does not freeze your total bill, and it does not lower your appraisal.

The calendar matters this year. A § 103.005 determination applies to the tax year beginning on or after the date of the determination, so an August 17 letter reaches the 2026 rate cities are adopting right now. If your city is on either list, the rate it can lawfully adopt this fall is capped at no-new-revenue — worth knowing before the public hearing, not after. The cap also lifts on its own terms once the city completes and files the missing audit.

How to check your own city

Ask the city secretary or clerk for the annual financial statement and the auditor’s opinion. Under § 103.003 — as described in the text of SB 1851 itself — those documents are supposed to be on file there within 180 days of fiscal year end. If the clerk cannot produce them, that is your answer.
Check the date. Most Texas cities run an October 1 – September 30 fiscal year, which puts the 180-day filing deadline at roughly the end of March.
Read the truth-in-taxation notice. When your city proposes its rate this summer, the notice must show the no-new-revenue rate alongside the proposed rate. If a city under a § 103.005 determination proposes something higher, ask about it at the public hearing.
File a complaint if the audit is missing. Section 103.005(b) expressly lets any person submit a complaint to the Attorney General about a suspected § 103.001 or § 103.003 violation.
Check both enforcement lists. The Attorney General published the August 17, 2026 list in full; the May 2026 announcement covers the earlier group. Neither is final — the office says more determinations are coming.
Look up your county’s rates on the county page for Harris, Travis, Bexar, or any of the other 254 Texas counties covered on this site, and verify anything specific to your property with your county appraisal district.

What we could not verify

In keeping with this site’s policy, here is what is not nailed down:

The exact totals. Both announcements give “over” figures rather than counts — “over 130” in May, “over 110” in August. Our own count of the names printed in the August release is 116. Treat any precise combined total as approximate.
The May city list. Those names are as reported by Texas Scorecard; we have not confirmed each one against the Attorney General’s letters. The August names come from the Attorney General’s own release.
Whether any city on either list has since filed its missing audit and been released from the cap. The statute lifts the cap once the audit is completed and filed, but we are not aware of a published list of cities that have cured.
Whether any of the four cities named in October 2025 ultimately rolled back its adopted rate, and whether any litigation has been filed over the retroactivity question.
Any claim that a specific city raised its rate a specific percentage “above no-new-revenue.” The Tribune’s figures above are rate changes, which are not the same thing as the gap between the adopted rate and the no-new-revenue rate. We are not repeating the larger percentage figures circulating in some coverage.

Sources

How to Protest Your Taxes → Find Your County

The Texas Audit Law That Can Freeze Your City’s Tax Rate