EAST TEXAS (KETK) — Attorney General Ken Paxton has notified more than 130 Texas cities on Thursday that they are barred from raising property taxes above the no?new?revenue rate after his office determined they failed to meet state audit and transparency requirements under a new law.
According to the Attorney General’s Office, more than 1,000 Texas municipalities were asked to provide documents showing whether they complied with SB 1851, which requires every city to complete annual financial audits and meet state transparency standards. After reviewing those submissions, investigators identified more than 130 cities that allegedly failed to meet the required benchmarks for the upcoming fiscal year.
Thirteen East Texas cities appear on the AG’s list:
* Berryville
* Chireno
* Corrigan
* Elkhart
* Eustace
* Huntington
* Livingston
* Mount Enterprise
* Red Lick
* Redwater
* Rusk
* Tool
* Yantis
Letters sent by the state warn those municipalities that they may face enforcement actions and penalties under SB 1851 and cannot legally approve property tax increases beyond the no-new-revenue rate until compliance issues are resolved.
The Attorney General’s Office said the list of cities currently identified as non-compliant is preliminary and that additional municipalities could face similar restrictions as the investigation continues.
Paxton said the effort is intended to protect Texas taxpayers from unlawful tax increases and ensure local governments follow state law. State officials indicated that further enforcement actions may follow if additional cities are found to be out of compliance with the financial reporting requirements outlined in SB 1851.
“Cities cannot ignore state audit and transparency requirements without consequences,” Paxton said in a statement. “My office will continue enforcing the law to protect taxpayers across Texas.”
Statements from East Texas cities:
City of Tool
“We respect and understand the Attorney General’s determination regarding the City of Tool’s current audit status. To date, the City of Tool is completing its 2024 audit and have already corresponded with our third-party auditors in regards to our 2025 fiscal year audit, expected to be completed by the end of this fiscal year. We are committed to being fiscally responsible and strive to not only be in compliance with state law, but to continue to provide a level of transparency and commitment with taxpayers’ money.”
City of Huntington
We were notified by the Attorney General’s office yesterday afternoon that we were in violation of the provisions of SB 1851, which will effectively prevent the city from adopting a tax rate that exceeds the no-new-revenue rate for 2026.
As you are surely aware, the effective date on those provisions was September 1, 2025. The City’s 2026 fiscal year budget and 2025 tax rate had already been adopted by ordinance before that effective date, so the provisions did not apply for the setting of the 2025 tax rate.
Public hearings were published and held in accordance with the Public Meetings Act prior to those ordinances being adopted.
Our financial records have been in the hands of Mr. David Godwin and his capable staff since February 2026, but the audit was not completed by the required deadline of March 30, 2026. We are still awaiting the completed audit and expect that to be submitted for Council review in the near future. City officials are absolutely aware of the provisions that will restrict this year’s tax rate and plan to abide by the letter of the law.
As far as transparency is concerned, the City’s 2026 fiscal year budget and the audit for fiscal year 2024 are on the City’s website – http://www.cityofhuntington.org – under the Finance Department tab. As soon as the audit is completed and received by our office, it will be posted on the website posthaste.
City of Rusk
The City of Rusk has received notice from the Texas Office of the Attorney General regarding the City’s compliance with Local Government Code Chapter 103 and related requirements f fiscal year 2025.
The City understands that, based on the Office of the Attorney General’s determination, the City has been found not to have complied with the audit and financial statement requirements applicable under state law and is therefore subject to the enforcement provisions set out in Local Government Code 103.055(c).
The City has been diligently working to resolve the issue and recently completed its 2024 audit.
The City remains committed to transparency, fiscal responsibility and full compliance with Texas law.
Under the applicable statute, the City may not adopt an ad valorem tax rate that exceeds its no-new-revenue tax rate until compliance is achieved. The City intends to be in compliance as soon as possible.
The City will continue working diligently to address this matter.
KETK News has contacted additional East Texas cities for comment and is awaiting their responses.
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