S.B. No. 1851 amends the Local Government Code by adding Section 103.005, which establishes penalties for municipalities that fail to comply with certain audit requirements. Specifically, if the attorney general determines that a municipality has not conducted the required audit of its records and accounts or has not filed the necessary financial statement and auditor's opinion within 180 days after the end of its fiscal year, the municipality will be restricted from adopting an ad valorem tax rate that exceeds its no-new-revenue tax rate. This restriction applies to the tax year that begins after the attorney general's determination and for any subsequent tax year until the municipality fulfills its audit and filing obligations.

The bill clarifies definitions related to the no-new-revenue tax rate and tax year, and it emphasizes the importance of timely financial accountability for municipalities. The provisions of this act will take effect on September 1, 2025, and will only apply to the adoption of ad valorem tax rates for tax years beginning on or after that date.

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