Ken Paxton's Statewide Crackdown Could Block Hundreds of Texas Cities From Raising Taxes

Attorney General Ken Paxton (R-TX) has launched one of the broadest municipal oversight efforts in recent state history, demanding financial records from more than 1,000 cities across Texas to crack down on what his office describes as widespread noncompliance with state audit laws.

At the center of the effort is SB 1851, a state law passed during the most recent legislative session that ties financial transparency to a city's ability to raise property taxes.

Under the measure, municipalities are required to complete and publicly post annual financial audits by a set deadline. Any city that falls short of those requirements is legally barred from collecting property tax revenue above the prior year's level, a restriction commonly referred to as the no-new-revenue rate.

AG Paxton says his office began noticing a pattern of noncompliance after sending earlier enforcement letters to the cities of La Marque, Odessa, Tom Bean, and Whitesboro.

Targeted Investigations

Those targeted investigations, he said, revealed that audit failures were not isolated incidents but a statewide issue. That finding prompted his office to go further, shifting from a complaint-driven approach to a proactive, statewide document review.

The scope of the inquiry is sweeping.

Among the cities now required to produce financial records are some of Texas's largest and most prominent municipalities, including Houston, Dallas, San Antonio, Fort Worth, El Paso, Corpus Christi, Laredo, Lubbock, Amarillo, Beaumont, Waco, Brownsville, McAllen, and Wichita Falls, along with dozens of smaller communities.

"I will not allow any Texas city to unlawfully increase taxes," Paxton said, adding that while many municipalities have already met the requirements, his office intends to ensure universal compliance across the state.

Paxton made clear the effort is far from over, stating that the number of cities under review will continue to grow as his office works to hold every municipality in Texas accountable to the same standard.