Monitoring the Session

SB 1851

Nichols’s bill on cities that skip audits

Became law, effective Sep 1, 2025

Verdict: No flags

No flagsInitial review
Sen. Robert NicholsRSenate 3

Initial review · graded Oct 20, 2026 · Headline, summary and grade are analysis of the bill text, not a finding about any person · How we grade

Caption

relating to the penalty for noncompliance with certain audit requirements by a municipality.

Caption from analyzed text · version I.

Summary

Anyone can complain to the attorney general. 180 days to file.

The bill lets anyone complain to the attorney general that a city skipped its required annual audit or failed to file its financial statement within 180 days after its fiscal year ends. If the attorney general finds a city out of compliance, that city cannot adopt a property tax rate above its no-new-revenue rate for the next tax year and any later year until it gets the audit done and filed. Cities that skip audits lose the ability to raise property tax revenue, and residents gain a complaint route to force the issue.

Receipt

The receipt

89R-SB1851 · 2025-03-04

SOLD BY

Sen. Robert NicholsRSenate 3

ITEM

relating to the penalty for noncompliance with certain audit requirements by a municipality.

WHAT IT DOES

Anyone can complain to the attorney general. 180 days to file.

The bill lets anyone complain to the attorney general that a city skipped its required annual audit or failed to file its financial statement within 180 days after its fiscal year ends. If the attorney general finds a city out of compliance, that city cannot adopt a property tax rate above its no-new-revenue rate for the next tax year and any later year until it gets the audit done and filed. Cities that skip audits lose the ability to raise property tax revenue, and residents gain a complaint route to force the issue.

CHARGES

[ ] NONE FOUND

TOTAL

No significant fiscal implication to the State is anticipated.

LBB estimate · fiscal note version I · source

Sources

Fiscal note · version I · March 30, 2025

No first-year general revenue figure available here.

LBB published estimates · flow over the stated periods.

Source snapshot 2026-10-19, Central time.

HISTORY

  1. Received by the Secretary of the Senate
  2. Filed
  3. Read first time
  4. Referred to Local Government
  5. Scheduled for public hearing on . . .
  6. Considered in public hearing
  7. Testimony taken in committee
  8. Left pending in committee
  9. Considered in public hearing
  10. Vote taken in committee
  11. Reported favorably w/o amendments
  12. Recommended for local & uncontested calendar
  13. Committee report printed and distributed
  14. Placed on intent calendar
  15. Not again placed on intent calendar
  16. Placed on local & uncontested calendar
  17. Placed on intent calendar
  18. Laid before the Senate
  19. Read 2nd time & passed to engrossment
  20. Vote recorded in Journal
  21. Three day rule suspended
  22. Record vote
  23. Read 3rd time
  24. Passed
  25. Record vote
  26. Reported engrossed
  27. Received from the Senate
  28. Read first time
  29. Referred to Intergovernmental Affairs
  30. Considered in formal meeting
  31. Reported favorably w/o amendment(s)
  32. Comte report filed with Committee Coordinator
  33. Committee report distributed
  34. Laid out in lieu of companion HB 4097
  35. Read 2nd time
  36. Passed to 3rd reading
  37. Record vote RV#1942
  38. Statement(s) of vote recorded in Journal
  39. Committee report sent to Calendars
  40. Read 3rd time
  41. Passed
  42. Record vote RV#2070
  43. Statement(s) of vote recorded in Journal
  44. House passage reported
  45. Reported enrolled
  46. Signed in the Senate
  47. Signed in the House
  48. Sent to the Governor
  49. Signed by the Governor
  50. Effective on 9/1/25
FILED UNDER

No verified beat found.

SIGNED FOR BY

House · 89 yea · 31 nay

Senate · 31 yea · 0 nay

Sources

House: Final passage · May 10, 2025. Journal. Published stock for this vote. Snapshot 2026-10-19, Central time.

Senate: Final passage · Apr 16, 2025. Journal. Published stock for this vote. Snapshot 2026-10-19, Central time.

All floor motions and other positions below.

No flags

THANK YOU FOR CHECKING THE RECEIPT

CAMPAIGN PAID FOR BY

CAMPAIGN PAID FOR BY

Robert Nichols

Donors

James I Perkins$25,000Advanced Drainage Systems Inc. PAC$10KTexas REALTORS Political Action Committee$10K

Not tied to this bill.

Sources

The author's campaign account only. Own money and internal transfers are separate on the member page.

Derived itemized flow · Jul 2, 2024 to Mar 25, 2026. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

James I Perkins$25,000.00
Advanced Drainage Systems Inc. PAC$10,000.00

Advanced Drainage Systems Inc. PAC

$10,000.00

Cash
$10,000.00
Paid by others
$0.00
Total
$10,000.00

Also funds 2 other sitting lawmakers.

Derived recipient stock · Dec 5, 2024 to Oct 22, 2026. State data as of Nov 4, 2026.

Name match, not a verified identity: normalized filed name and state.

Sources

Derived itemized flow · on Dec 5, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100965387.

Texas REALTORS Political Action Committee$10,000.00

Texas REALTORS Political Action Committee

$10,000.00

Cash
$10,000.00
Paid by others
$0.00
Total
$10,000.00

Also funds 140 other sitting lawmakers.

Derived recipient stock · Jul 2, 2024 to Oct 24, 2026. State data as of Nov 4, 2026.

TEC account match.

Team
Sources

Derived itemized flow · on Dec 5, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100965387.

Money

Missing data does not establish zero giving. Display amounts are rounded.

×

Advanced Drainage Systems Inc. PAC

$10,000.00

Cash
$10,000.00
Paid by others
$0.00
Total
$10,000.00

Also funds 2 other sitting lawmakers.

Derived recipient stock · Dec 5, 2024 to Oct 22, 2026. State data as of Nov 4, 2026.

Name match, not a verified identity: normalized filed name and state.

Sources

Derived itemized flow · on Dec 5, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100965387.

×

Texas REALTORS Political Action Committee

$10,000.00

Cash
$10,000.00
Paid by others
$0.00
Total
$10,000.00

Also funds 140 other sitting lawmakers.

Derived recipient stock · Jul 2, 2024 to Oct 24, 2026. State data as of Nov 4, 2026.

TEC account match.

Team
Sources

Derived itemized flow · on Dec 5, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100965387.

Votes5

House May 10, 2025

Yea
89
Nay
31
Present, not voting
2
Absent
4
Excused
24
Names

Named positions matched to lawmakers. See the journal for unmatched names.

House journal

Sources

Record 2070

SB 1851 was passed by (Record 2070): 89 Yeas, 31 Nays, 2 Present, not voting.

Published stock of positions for this vote, except where marked derived.

  • Yea: 89 (published)
  • Nay: 31 (published)
  • Present, not voting: 2 (published)
  • Absent: 4 (derived from named list)
  • Excused: 24 (derived from named list)

House journal. Source snapshot 2026-10-19, Central time.

House May 9, 2025

Yea
96
Nay
43
Present, not voting
2
Absent
2
Excused
7
Names

Named positions matched to lawmakers. See the journal for unmatched names.

House journal

Sources

Record 1942

SB 1851 was passed to third reading by (Record 1942): 96 Yeas, 43 Nays, 2 Present, not voting.

Published stock of positions for this vote, except where marked derived.

  • Yea: 96 (published)
  • Nay: 43 (published)
  • Present, not voting: 2 (published)
  • Absent: 2 (derived from named list)
  • Excused: 7 (derived from named list)

House journal. Source snapshot 2026-10-19, Central time.

Senate Apr 16, 2025

Final passage

Yea
31
Nay
0
Present, not voting
Not printed
Absent
Not printed
Excused
Not printed
Names

Senate journal

Names were not printed. No individual positions are inferred.

The journal row lists three votes in order: passage to engrossment, suspension of the three-day rule, and final passage. This entry records final passage. Repeated tallies belong to separate votes.

Sources

SB 1851 (Nichols) Relating to the penalty for noncompliance with certain audit requirements by a municipality. (viva voce vote) (31-0) (31-0)

Published stock of positions for this vote, except where marked derived.

  • Yea: 31 (published)
  • Nay: 0 (published)
  • Present, not voting: Not printed
  • Absent: Not printed
  • Excused: Not printed

Senate journal. Source snapshot 2026-10-19, Central time.

Senate Apr 16, 2025

Suspension of the three-day rule

Yea
31
Nay
0
Present, not voting
Not printed
Absent
Not printed
Excused
Not printed
Names

Senate journal

Names were not printed. No individual positions are inferred.

The journal row lists three votes in order: passage to engrossment, suspension of the three-day rule, and final passage. This entry records suspension of the three-day rule. Repeated tallies belong to separate votes.

Sources

SB 1851 (Nichols) Relating to the penalty for noncompliance with certain audit requirements by a municipality. (viva voce vote) (31-0) (31-0)

Published stock of positions for this vote, except where marked derived.

  • Yea: 31 (published)
  • Nay: 0 (published)
  • Present, not voting: Not printed
  • Absent: Not printed
  • Excused: Not printed

Senate journal. Source snapshot 2026-10-19, Central time.

Senate Apr 16, 2025

Passage to engrossment

Yea
Not printed
Nay
Not printed
Present, not voting
Not printed
Absent
Not printed
Excused
Not printed
Names

Senate journal

Names were not printed. No individual positions are inferred.

The journal row lists three votes in order: passage to engrossment, suspension of the three-day rule, and final passage. This entry records passage to engrossment. Repeated tallies belong to separate votes.

Voice vote. No numeric tally or individual yeas are inferred.

Sources

SB 1851 (Nichols) Relating to the penalty for noncompliance with certain audit requirements by a municipality. (viva voce vote) (31-0) (31-0)

Published stock of positions for this vote, except where marked derived.

  • Yea: Not printed
  • Nay: Not printed
  • Present, not voting: Not printed
  • Absent: Not printed
  • Excused: Not printed

Senate journal. Source snapshot 2026-10-19, Central time.

Witnesses3
For
3
Against
0
On
0
Names

For

  • Self; Mayor, Chandler Texas1 registration
  • Texas Association of Builders1 registration
  • Texas Public Policy Foundation1 registration
Sources

3 parsed registrations across the loaded witness lists.

Derived stock of witness registrations. Repeated appearances count separately. Organizations and self-representation appear as printed.

Senate witness list. Source snapshot 2026-10-20, Central time.

Fiscal

No significant fiscal implication to the State is anticipated.

LBB estimate · fiscal note version I · source

Sources

Fiscal note · version I · March 30, 2025

No first-year general revenue figure available here.

LBB published estimates · flow over the stated periods.

Source snapshot 2026-10-19, Central time.

How this was graded

Analysis of text version I by claude-opus-5-5, Oct 20, 2026, against the published rubric.

Sources

Texas Senate · Filed Mar 4, 2025

05/24/2025 E Effective on 9/1/25

Texas Legislature Online · Introduced · Senate Committee Report · Engrossed · House Committee Report · Enrolled

Data snapshot Oct 26, 2026 at 4:20 AM CDT. Grades, charges, quotes and corrections follow the published record.

Sponsors
Cody HarrisRHouse 8
Cosponsors
Carrie IsaacRHouse 73

House committee · Intergovernmental Affairs · Committee vote 10 aye, 0 nay, 1 absent · Out of committee

Senate committee · Local Government · Committee vote 6 aye, 0 nay, 1 absent · Out of committee

Companion

HB 4097 by Harris (identical)

Subjects

City Government--Finance

City Government--General

AUDITS & AUDITORS

Text

The text as introduced · 310 words

89R8353 DNC-D

By: Nichols
S.B. No. 1851

A BILL TO BE ENTITLED

AN ACT

relating to the penalty for noncompliance with certain audit

requirements by a municipality.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 103, Local Government Code, is amended

by adding Section 103.005 to read as follows:

Sec. 103.005. ANNUAL AUDIT AND FILING OF FINANCIAL

STATEMENT; PENALTY FOR NONCOMPLIANCE. (a) In this section:

(1) "No-new-revenue tax rate" means the

no-new-revenue tax rate calculated under Chapter 26, Tax Code.

(2) "Tax year" has the meaning assigned by Section

1.04, Tax Code.

(b) A person may submit a complaint to the attorney general

of a suspected violation of Section 103.001 or 103.003.

(c) Notwithstanding any other law, if the attorney general

determines that a municipality has not had its records and accounts

audited and an annual financial statement prepared based on the

audit as required by Section 103.001 or has not filed the financial

statement and the auditor's opinion on the statement in the office

of the municipal secretary or clerk before the 180th day after the

last day of the municipality's fiscal year as required by Section

103.003, the municipality may not adopt an ad valorem tax rate that

exceeds the municipality's no-new-revenue tax rate:

(1) for the tax year that begins on or after the date

of the attorney general's determination; or

(2) for a subsequent tax year that begins before the

date the municipality has had an annual audit completed and

financial statement prepared or filed the financial statement and

auditor's opinion on the financial statement with the municipal

clerk, as applicable.

SECTION 2. This Act applies only to the adoption of an ad

valorem tax rate for a tax year that begins on or after the

effective date of this Act.

SECTION 3. This Act takes effect September 1, 2025.