Full Breakdown
Texas Attorney General Bars Over 130 Cities from Raising Property Taxes Over Audit Non-Compliance
5/15/2026, 7:49:52 AM
Statewide Tax-Rate Ban for Non-Compliant Municipalities
On May 14, 2026, Attorney General Ken Paxton mailed violation-determination letters to more than 130 Texas cities. The letters bar any ad valorem property-tax increase above the ‘no-new-revenue’ rate until the municipality meets audit and transparency requirements of Senate Bill 1851, and impose penalties for non-compliance.
Legal Framework and Scope of Enforcement
SB 1851, passed in the 2025 legislative session, links a city’s authority to raise property taxes to compliance with financial reporting. The law requires an audit within 180 days of fiscal-year close and transparency standards. After reviewing documents from over 1,000 municipalities, the AG’s office listed 130-plus cities—including Alpine, Balch Springs, Horizon City, San Elizario and Wimberley—that missed the 2025 audit deadline. Larger metros such as Houston and Dallas were not included.
Official Statements & Responses
Paxton said the measure protects ‘hardworking Texans’ from unlawful tax hikes and enforces state law uniformly. The AG’s office noted the probe continues and more letters may follow. Wimberley and Jonestown officials reported completing the required audits and consider themselves compliant; Horizon City and San Elizario have not responded.
Opposition from Small Municipalities
Small-city leaders argue the 180-day audit deadline and tax-cap strain staff and could force cuts to services. The Texas Tribune reported that municipalities say the law disproportionately impacts towns lacking dedicated finance personnel. Odessa’s mayor warned the retroactive application was premature.
Conflicting Reports & Gaps
Sources differ on the number of barred municipalities. The AG’s release cites “more than 130” cities, the Texas Tribune mentions “about 135,” while some reports list 132 or 130. The Bond Buyer notes 93 cities filed audits late but does not specify how many received letters. Several listed cities, including Horizon City and San Elizario, have not responded publicly.
What’s Next
The AG’s office says the audit review will continue through the fiscal year, and additional letters may be issued as more municipalities are found non-compliant. Cities that remain out of compliance risk ongoing prohibition on tax increases and penalties under SB 1851. Legal challenges have not yet emerged.
Verbatim Quotes
> “I will not allow cities to unlawfully raise taxes on hardworking Texans. That is why I took aggressive action against over 130 Texas cities to hold them accountable and ensure they comply with state law,” — Ken Paxton, Texas Attorney General
> “Cities cannot fail to abide by state audit requirements without consequences.” — Ken Paxton, Texas Attorney General
> “ The city of Wimberley issued the following statement in response to Paxton's letter: "The City of Wimberley was recently notified by Ken Paxton that it was out of compliance with the completion of its FY 2025 audit.” — City of Wimberley spokesperson
> “The finalized audited financial statements for the City were provided by our auditors on March 23, 2026, and presented to our City Council on March 24, 2026.” — Jonestown City officials
