13 East Texas Cities Were Flagged Under Texas’ Audit Law. Tax-Rate Season Puts the Receipts Due Now

For residents of 13 East Texas cities, this week’s property-tax notices carry an extra accountability question: Did the city finish and file the annual audit that state officials said was missing or late, and is the proposed 2026 tax rate lawful under that status?

The timing is not abstract. Under the Texas Comptroller’s 2026 property-tax calendar, Aug. 7 was the date most cities and other taxing units had to publicize their no-new-revenue and voter-approval tax rates, fund balances, debt schedules and related information, or do so as soon as practical afterward. Local appraisal-district databases are also being updated during August and September as governments propose and adopt tax rates.

That makes the next several weeks the first practical test of a state enforcement action announced May 14. Attorney General Ken Paxton’s office said it sent violation-determination letters to more than 130 cities after reviewing audit and financial-statement records from more than 1,000 municipalities. KLTV identified 13 on the initial list as East Texas communities: Livingston, Rusk, Huntington, Corrigan, Mount Enterprise, Eustace, Elkhart, Yantis, Chireno, Tool, Berryville, Centerville and Clarksville.

The May list is a starting point, not a current verdict on every city. Senate Bill 1851 allows a restriction to end after a city completes the required audit and financial statement or files the statement and auditor’s opinion with its municipal clerk, depending on the violation. Some cities said in May that they had already acted or were close to doing so. RepWatchr therefore is not asserting that all 13 remain restricted today. The public record to demand now is each city’s dated proof of cure and the tax-rate worksheet that follows from it.

The law is specific. Texas Local Government Code Sections 103.001 and 103.003 require a municipality to have its records and accounts audited annually, prepare an annual financial statement based on that audit and file the statement, including the auditor’s opinion, with the city secretary or clerk within 180 days after the fiscal year ends. SB 1851 added Section 103.005, which authorizes complaints to the attorney general and creates a property-tax consequence after the attorney general determines a violation.

A city subject to that determination may not adopt a property-tax rate above its no-new-revenue rate for the tax year beginning on or after the determination. The restriction also applies to a later tax year that begins before the city completes or files the required records. The bill took effect Sept. 1, 2025, and applies to tax rates adopted for tax years beginning on or after that date.

The no-new-revenue rate is not simply last year’s rate. The Comptroller describes it as a calculation intended to show the rate that would collect about the same amount of property-tax revenue from the same properties taxed in both years, after adjustments required by law. New construction and individual changes in taxable value can still affect collections and household bills. Residents should compare the calculated no-new-revenue rate, the city’s proposed rate and their own estimated bill rather than rely on a slogan about whether a rate went up or down.

The May responses showed why present-tense verification matters. Livingston told KLTV that it had not imposed an ad valorem property tax since the 1980s. Berryville likewise said it had no city property tax, so the rate restriction did not have a practical tax effect there, while still describing the cost and difficulty of obtaining a timely audit. Those cities still have an obligation to meet the financial-reporting law; the immediate household tax consequence is simply different.

Rusk acknowledged the attorney general’s determination and said it had recently completed its 2024 audit and was working toward full compliance. It also said it could not adopt a rate above the no-new-revenue rate until compliance was achieved. The important 2026 follow-up is whether the audit and auditor’s opinion were filed with the clerk by a documented date and whether the attorney general received whatever proof the city relied on.

Huntington said its records had been with its auditor since February, but the audit was not completed by a March 30 deadline. City officials said they understood the restriction on the 2026 tax rate and intended to follow it. They also said the fiscal year 2024 audit and current budget were online and that the fiscal year 2025 audit would be posted when received. Residents should look for that newer audit, the filing date and the 2026 rate calculation.

Corrigan disputed the state’s list. Its mayor said the city had been in compliance with Chapter 103 since April 21. That is exactly the kind of disagreement a transparent record can resolve: publish the completed audit, the auditor’s opinion, the clerk’s file stamp, any correspondence with the attorney general and the city’s tax-rate worksheet in one place. A public filing should not depend on residents choosing between competing press statements.

Tool said in May that it was completing its 2024 audit and had contacted a third-party auditor about the 2025 fiscal year. That statement acknowledged unfinished work at the time. The relevant status today depends on what has been completed and filed since then.

For Mount Enterprise, Eustace, Elkhart, Yantis, Chireno, Centerville and Clarksville, the same documentary test applies even if no detailed May response received broad coverage. A city should not be treated as permanently noncompliant because its name appeared in an initial enforcement announcement. Nor should residents be asked to accept an undocumented assurance that the matter is fixed.

Every city on the list can make the answer easy to find. Its website should display the latest annual financial statement and auditor’s opinion, the date they were filed with the city secretary or clerk, the attorney general’s determination letter, any cure correspondence, the 2026 no-new-revenue and voter-approval rate calculations, the proposed rate, the hearing notice and the date of the council vote. If the city has no property tax, it should say so prominently while still posting the required audit records.

The Comptroller’s rules provide additional checkpoints. Tax-rate notices belong prominently on city websites. Local property-tax databases at Texas.gov/PropertyTaxes are meant to give owners individualized estimates as proposals change. If a city proposes a rate above the no-new-revenue rate, state law generally requires specified public notice and a record vote; under SB 1851, a city still subject to an attorney-general determination lacks that option until it cures the audit problem. Most taxing units must adopt a rate before Sept. 30 or 60 days after receiving the certified appraisal roll, whichever is later, subject to other statutory deadlines.

Residents can use a short document checklist before speaking at a council meeting. First, find the city’s latest audit and confirm the fiscal year it covers. Second, look for the independent auditor’s opinion and a clerk filing date. Third, compare the proposed rate with the no-new-revenue rate on the official worksheet. Fourth, check whether the May determination was withdrawn, satisfied or remains in force. Fifth, compare the proposed rate with the estimated bill for the resident’s own property.

The attorney general’s office also provides a process for reporting suspected noncompliance. A complaint should identify records and dates, not merely accuse officials of misconduct. City leaders, likewise, should distinguish an audit delay from theft or fraud; the May enforcement action concerned compliance with audit and filing requirements, not a finding that every listed city had misused money or already adopted an illegal rate.

Small cities have a legitimate capacity problem. Berryville said an annual audit can cost roughly $20,000 and described difficulty finding a qualified auditor able to meet the 180-day deadline. That concern deserves a policy response from lawmakers and professional associations. It does not erase the law, and it does not reduce the public’s need for audited books. If Texas requires a strict timeline, state leaders should also examine whether rural communities have access to enough independent auditors to meet it.

The fairest outcome is not a permanent label on 13 communities. It is a visible chain of compliance: audit completed, opinion issued, statement filed, state status clarified and tax rate calculated under the correct rule. August’s tax-rate season is when that chain matters to household budgets.

RepWatchr will treat each city’s status as a document question. A city that has cured the violation should publish the proof and receive credit for doing so. A city that has not should stay at or below the no-new-revenue limit and tell residents when the audit will be complete. The standard is the same for every official and every town: show the records before asking taxpayers for more.