December 9, 2025 - Press Release - Texas Attorney General

Attorney General Ken Paxton Launches Statewide Investigation of Nearly 1,000 Texas Cities to Ensure Municipal Transparency and Stop Illegal Tax Increases

Attorney General Ken Paxton has launched a major initiative to ensure the hardworking people of Texas receive municipal budget transparency and that municipalities do not engage in unlawful tax increases. As part of the review, Attorney General Paxton has requested financial documents and information from nearly 1,000 Texas cities to date, and that number will continue to grow.

SB 1851 is a recently enacted state law that bars cities who do not strictly follow Texas’s financial statement audit and transparency requirements from raising taxes above the no-new-revenue rate. To enforce that law, Attorney General Paxton previously sent letters to La Marque, Odessa, Tom Bean, and Whitesboro to stop their unlawful tax raises. During those investigations, it became apparent that cities across the state routinely fail to comply with these long-standing requirements. Under his new authority, Attorney General Paxton has launched this initiative to not only act in response to citizen complaints, but also actively request documents and audit information from Texas cities to ensure they are in compliance with the law. Any cities not in compliance put themselves at significant legal risk, and any city who has received an email information request from the Office of the Attorney General should promptly respond.

“Local officials will not be allowed to ignore the law, cover up their finances, and burden Texans with never-ending tax increases,” said Attorney General Paxton. “Our cities and municipalities must prioritize transparency and minimizing the tax burden of every citizen across the state. While many cities have already complied with these requirements, I’m launching this review to ensure that the law is universally followed, taxpayers are respected, and local government is accountable to all Texans.” 

Attorney General Paxton’s review includes some of the largest cities in the state, including Houston, Galveston, San Antonio, Dallas, Fort Worth, Lubbock, Wichita Falls, McAllen, Beaumont, Amarillo, El Paso, Corpus Christi, Laredo, Texarkana, Brownsville, Waco, and Tyler. Additionally, the Office of the Attorney General has created a complaint form that Texans can fill out if they believe local officials are violating SB 1851’s audit requirements. The complaint form can be found here:

https://www.texasattorneygeneral.gov/sb1851-complaint-form

Munic­i­pal­i­ty Non­com­pli­ance with Audit Require­ment (SB 1851)

Municipalities should be aware of the following: 

1. Section 103.001 of the Local Government Code requires a municipality to have its records and accounts audited annually and to have an annual financial statement prepared based on the audit.
2. Section 103.003 of the Local Government Code requires that the annual financial statement, including the auditor's opinion on the statement, be filed in the office of the municipal secretary or clerk within 180 days after the last day of the municipality's fiscal year.
3. A municipality is in violation of this law may not adopt an ad valorem tax rate that exceeds the municipality's no-new-revenue tax rate:
    
   (1) for the tax year that begins on or after the date of the attorney general's determination; or
   (2) for a subsequent tax year that begins before the date the municipality has had an annual audit completed and financial statement prepared or filed the financial statement and auditor's opinion on the financial statement with the municipal clerk, as applicable.

If you believe a municipality is in violation of Section 103.001 or 103.003 of the Local Government Code you may file a complaint below.

https://www.texasattorneygeneral.gov/sb1851-complaint-form

Direct Link to Press Release:

https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-launches-statewide-investigation-nearly-1000-texas-cities-ensure