Texas Attorney General Ken Paxton on Thursday issued formal warning letters to more than 130 Texas cities, telling them they cannot raise property taxes while they remain out of compliance with state reporting rules. The cities also received formal violation determination letters, putting them under enforcement provisions and penalties in a new state law.
The move follows an investigation launched last month by the Attorney General’s Office, which demanded records from over 1,000 municipalities to check whether they were meeting transparency and financial audit requirements. Paxton said 130 cities identified so far failed to provide the necessary audits or meet statutory transparency benchmarks for the new fiscal year.
“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,” Paxton said. He added that cities cannot ignore state audit rules without consequences and said his office would continue to aggressively enforce Texas law to protect taxpayers across the state.
The action is tied to SB 1851, passed during the 2025 legislative session, which bars cities from adopting property tax rates above the no-new-revenue level if they are still out of compliance with state-mandated financial reporting. The law gives the state a direct enforcement tool over municipal tax decisions by linking higher rates to transparency and audit compliance.
The cities named in Thursday’s warning are not necessarily the last ones to face action. The Office of the Attorney General said the review is ongoing and that more cities could be added to the non-compliant list as municipal records are reviewed. For now, the message from the texas attorney general is simple: comply with the audit rules, or lose the right to raise property taxes.
