Paxton Bars 130 Texas Cities From 2026 Tax Hikes Over Audit Failures

15 articles · Updated · KLTV · May 14

More than 130 Texas cities — including over 10 in East Texas — were told they cannot set ad valorem tax rates above the no-new-revenue level for 2026.
Senate Bill 1851, passed in 2025, triggers that penalty when cities miss state audit and transparency requirements; Paxton’s office said it reviewed more than 1,000 cities after opening the probe in April.
Rusk and Huntington said they are working to finish overdue audits, with Huntington saying its 2025 tax rate was adopted before the law took effect on Sept. 1, 2025.
Corrigan disputed its inclusion, saying it has been compliant since April 21, while Livingston and Berryville said the restriction has little practical effect because they do not levy city property taxes.
Berryville said the mandate highlights a broader strain on small cities: annual audits can cost about $20,000 and are hard to complete within the state’s 180-day deadline.

Why are over 130 small Texas towns blocked from tax hikes while major cities like Houston and Dallas are not on the list?

Is a costly state-mandated audit a fair measure of fiscal health or an impossible hurdle for Texas's smallest towns?

Could a state mandate to control taxes inadvertently threaten essential services like police and fire protection in over 130 Texas communities?