S.B. No. 1851 introduces new regulations regarding the penalties for municipalities that fail to comply with certain audit requirements. The bill amends Chapter 103 of the Local Government Code by adding Section 103.005, which outlines the definitions of "no-new-revenue tax rate" and "tax year." It allows individuals to submit complaints to the attorney general regarding suspected violations of audit requirements. If the attorney general finds that a municipality has not conducted the required audits or filed the necessary financial statements within the specified timeframe, the municipality will be restricted from adopting an ad valorem tax rate that exceeds its no-new-revenue tax rate for the current and subsequent tax years until compliance is achieved.

The provisions of this bill will only apply to the adoption of ad valorem tax rates for tax years beginning on or after the effective date of the Act, which is set for September 1, 2025. This legislation aims to ensure that municipalities adhere to financial accountability standards by imposing penalties for noncompliance, thereby promoting transparency and responsible fiscal management.

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