Regular Session
Government Affairs & Regulatory Compliance Analysis
SB1851 fundamentally alters the credit risk profile of Texas municipalities by prohibiting cities from exceeding the "no-new-revenue tax rate" if they fail to file annual audits within 180 days of their fiscal year-end. This creates a statutory "budget freeze" risk for government contractors, developers, and bondholders, significantly increasing the probability of non-appropriation contract terminations starting in late 2025.
Sen. Robert Nichols·Senate Bill·Regular Session
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Key implementation requirements and action items for compliance with this legislation
Existing "Non-Appropriation of Funds" clauses in your government contracts are now high-risk liabilities.
JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.
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This bill's path through the Texas Legislature
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Common questions about SB1851
SB1851 fundamentally alters the credit risk profile of Texas municipalities by prohibiting cities from exceeding the "no-new-revenue tax rate" if they fail to file annual audits within 180 days of their fiscal year-end. This creates a statutory "budget freeze" risk for government contractors, developers, and bondholders, significantly increasing the probability of non-appropriation contract terminations starting in late 2025.
SB1851 was authored by Texas Senator Robert Nichols during the Regular Session.
SB1851 was signed into law by Governor Greg Abbott on May 24, 2025.
SB1851 is enforced by Office of the Attorney General.
The regulatory priority for SB1851 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.
The cost impact of SB1851 is estimated as "high". This may vary based on industry and implementation requirements.
SB1851 addresses topics including city government, city government--finance, city government--general and audits & auditors.
Key dates for SB1851: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.
SB1851 establishes the following penalties: administrative/fiscal restriction penalty of Cap on tax rate: Municipality prohibited from adopting a rate exceeding the 'no-new-revenue tax rate' for Attorney General determination that municipality failed to audit records/prepare financial statement OR failed to file statement/auditor opinion with municipal clerk within 180 days of fiscal year-end.. Consult with legal counsel for specific applicability to your situation.
JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.
