Texas Attorney General Warns Over 110 Municipalities of Statutory Limits on Property Tax Rate Increases

AUSTIN, TX — The Office of the Texas Attorney General issued formal legal compliance warning letters Wednesday evening to more than 110 municipal and county governments across Texas, demanding strict adherence to state statutory caps on local property tax revenue growth.

Statutory Framework and SB 2 Voter-Approval Caps

The advisory notices instruct city councils and county commissioners that under the Texas Property Tax Reform and Transparency Act (Senate Bill 2), any proposed property tax levy generating more than a 3.5 percent increase in maintenance and operations revenue must receive mandatory voter approval on the November general election ballot.

The Attorney General's office cautioned local jurisdictions against using creative debt exemptions or certificate of obligation reclassifications to bypass public referendum requirements, warning that non-compliant tax rates will face immediate state injunctions and nullification.

Municipal Budgets and Public Safety Services

City managers and municipal league representatives across Dallas, Fort Worth, San Antonio, and Austin countered that rapid population expansion and statutory inflation across emergency equipment make maintaining baseline public safety services difficult within the 3.5 percent cap.

Taxpayer advocacy groups, however, welcomed the state enforcement, asserting that soaring appraised property valuations have placed an unsustainable burden on residential homeowners and small commercial tenants.

Legal Timelines and Budget Adoption Deadlines

Municipalities must finalize and publish their 2026–2027 proposed tax rate calculations by August 28, 2026, with mandatory public hearings scheduled before final budget adoption in mid-September.