H.B. No. 4097 introduces a new section, 103.005, to the Local Government Code, which establishes penalties for municipalities that fail to comply with audit requirements. Specifically, if the attorney general finds that a municipality has not conducted the required audit and prepared an annual financial statement 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 for the current and subsequent tax years until compliance is achieved. The bill defines "no-new-revenue tax rate" and "tax year" to clarify the terms used in the context of the penalties.

The bill emphasizes the importance of timely audits and financial reporting by municipalities, aiming to enhance transparency and accountability in local government finances. It is set to take effect on September 1, 2025, and applies to tax years beginning on or after that date.

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