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More than 130 Texas cities just got blocked from raising property taxes. Attorney General Ken Paxton sent letters on May 14, 2026, citing violations of financial transparency laws. These mostly small municipalities failed audits, triggering a stunning enforcement action.
🔥 Quick Facts
- Cities blocked: More than 130 Texas municipalities prohibited from raising taxes above no-new-revenue rate
- Law enforced: SB 1851, passed in 2025 legislative session, requires financial audits for tax increases
- Investigation scope: Paxton reviewed over 1,000 municipalities across Texas for compliance
- Financial requirement: Cities must conduct annual audits and demonstrate financial transparency with taxpayers
How Senate Bill 1851 Changed Texas Tax Rules
Senate Bill 1851 fundamentally shifted how Texas cities can raise property taxes. The law bars municipalities from adopting tax rates above the “no-new-revenue” level without meeting strict requirements. Attorney General Paxton launched this enforcement after reviewing documentation from more than 1,000 cities statewide. The statute represents Texas’s most aggressive push yet for municipal financial accountability.
Cities previously had more flexibility raising revenue without proving financial oversight. SB 1851 changed this by requiring annual audits and public financial statements. Most of the blocked cities are small, according to reports, meaning rural areas face the toughest compliance challenges ahead.
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Which Texas Cities Are Currently Affected
The 130+ blocked cities include municipalities across East Texas, West Texas, the Rio Grande Valley, and Central Texas. Named examples include Dalhart, Lamesa, Paducah, Snyder, Spur, and Turkey, along with larger cities like Victoria and Wimberley. Horizon City and San Elizario in El Paso County also received enforcement letters from the attorney general’s office.
According to Paxton’s investigation, these cities failed to provide required audit documentation. The attorney general’s office says they violated transparency requirements designed to protect taxpayers. One report noted only three cities in Texas met all compliance standards under the new law.
What the No-New-Revenue Rate Means for Cities
| Term | Definition |
| No-New-Revenue Rate | Tax level that generates same revenue as prior year without rate increase |
| Compliance Status | 130+ cities deemed non-compliant with audit and transparency mandates |
| Current Restriction | Blocked cities cannot exceed no-new-revenue rate until compliance achieved |
| Recovery Path | Cities can regain flexibility by providing required financial audits and transparency |
The no-new-revenue rate is essentially a property tax cap for noncompliant cities. Blocked municipalities cannot increase tax rates beyond what they collected in the previous year. This restriction applies until they submit required audit documentation.
“Cities must meet Texas’s financial statement audit and transparency requirements to raise property taxes above the no-new-revenue rate.”
— Attorney General Ken Paxton’s Press Release, May 14, 2026
Why Paxton’s Enforcement Action Matters for Texas Budgets
Local government budgets face real pressure from this enforcement wave. Blocked cities cannot raise revenue for increased costs like infrastructure upgrades, emergency services, or administrative expenses. Budget constraints now force difficult choices between cutting services or waiting for compliance approval from the attorney general’s office.
Small towns struggle most under these restrictions. Many lack resources for sophisticated audit systems or compliance staff. Rural Texas cities report confusion about how to meet state standards. The attorney general’s enforcement action sends a clear signal that financial transparency now carries legal teeth.
What Happens Next for These 130+ Cities
Cities can appeal the attorney general’s findings and regain tax flexibility by proving compliance. Those that submit required audits and financial statements may be cleared for higher tax rates. Paxton’s office will review submissions as part of an ongoing statewide audit compliance program.
Will Texas cities meet audit standards quickly, or will budget crises force the issue? Municipal leaders face pressure to invest in financial systems while frozen at no-new-revenue rates. The real test comes in how fast communities can demonstrate compliance and whether taxpayers accept temporary revenue limits for better transparency.
Sources
- The Texas Tribune – Comprehensive coverage of Texas Attorney General Ken Paxton’s enforcement of SB 1851 property tax audit requirements
- USA Today – National reporting on why 130+ Texas cities face property tax increase restrictions from noncompliance
- Texas Attorney General’s Office – Official press release detailing enforcement letters and SB 1851 compliance investigation
