Texas Attorney General Ken Paxton has ordered four Texas cities—La Marque, Odessa, Tom Bean, and Whitesboro—to immediately halt property tax increases that may have been adopted in violation of state law. In letters sent to local officials this week, Paxton warned that the proposed tax hikes could be unlawful under Senate Bill 1851, a measure passed during the last legislative session that restricts municipalities that fail to meet state auditing requirements.
“I have grave concerns that municipalities across Texas have blatantly violated the law in an attempt to crank up people’s property taxes,” Paxton said. “My message to these cities is this: don’t mess with Texas taxpayers. Local governments must abide by the law, and I will take every step to defend the people of Texas and their hard-earned dollars.”
At the heart of the dispute is SB 1851, legislation designed to enforce financial accountability among local governments. Under the new law, municipalities that fail to file their annual financial reports and audits on time are barred from raising taxes beyond the "no-new-revenue" rate. That rate is the amount needed to generate the same revenue as the prior year, preventing sudden or steep tax increases unless the city is fully compliant with state reporting requirements.
According to Paxton’s office, several municipalities failed to meet those reporting obligations, either submitting their financial audits late or neglecting to file them entirely. Despite those lapses, the cities in question sought significant tax increases—some reportedly as high as 51% above the prior year’s levels.
Taxpayers in those jurisdictions could have faced sudden spikes in their property bills, an outcome the state law was designed to prevent. With Texas already experiencing some of the fastest-rising property valuations in the country, the potential increases drew immediate scrutiny from state officials.
The Attorney General’s directive requires the cities to pause their plans and reassess their compliance with SB 1851 before proceeding with any tax changes. While the letters do not carry the force of a court order, they signal a strong warning that the state will not tolerate municipalities disregarding fiscal oversight requirements.
Paxton’s intervention highlights the growing tension between state oversight and local control in Texas. Supporters of SB 1851 argue that financial accountability measures are necessary to ensure cities operate transparently and within the law, especially when taxpayers are asked to contribute more. Opponents, however, may view the state’s enforcement as overreach, particularly in communities facing budgetary shortfalls and increased costs for essential services.
For residents of La Marque, Odessa, Tom Bean, and Whitesboro, the issue may remain unsettled until the cities either comply with auditing rules or adjust their proposed tax rates. Paxton’s office has indicated it will take “every step” necessary to enforce the law, including legal action if municipalities refuse to comply.
The broader implications extend beyond the four named cities. Paxton’s warning suggests that other municipalities across Texas could face similar scrutiny if they attempt to raise taxes without first meeting their reporting obligations.
For now, the Attorney General’s move ensures that taxpayers in the affected cities will not immediately face steep increases, at least until compliance questions are resolved. The outcome of this dispute could shape how other local governments approach their budgeting process under the new state law.
