Texas Attorney General Ken Paxton has ordered four cities to immediately halt their recently approved property tax increases, launching investigations into whether they violated a new state law requiring timely financial audits. The enforcement action targets four cities specifically because they both implemented a 51% property tax increase and failed to meet state auditing requirements in Odessa, La Marque, Tom Bean, and Whitesboro.
New Law Creates Financial Accountability Hurdle
The law signed by Governor Greg Abbott as Senate Bill 1851 became effective on September 1, 2025, to stop cities from increasing property taxes above their “no-new-revenue” rate unless they submit annual audits and financial statements within 180 days of their fiscal year-end. The no-new-revenue rate preserves the current year’s revenue level,s which prevents any increase in property tax bills.
“I have grave concerns that municipalities across Texas have blatantly violated the law in an attempt to crank up people’s property taxes,” Paxton stated in a news release. “The message I want to send to these cities is to leave Texas taxpayers alone.
Cities Push Back Against “Premature” Enforcement
The tax increases serve as vital financial resources, enabling cities to fund their deteriorating infrastructure and rising public safety costs. La Marque, home to 18,000 residents near Galveston, has already frozen salaries and hiring while deferring infrastructure projects. The city raised property taxes by two cents for every $100 of taxable property value to address its financial problems.
The 4,000-resident town of Whitesboro, situated north of Dallas, plans to use its tax money for hiring four additional firefighters, constructing a million-gallon water tower, and road repairs, which will cost $200,000. The industrial city of Odessa serves more than 114,000 residents and requires homeowners to pay $39 more in property taxes each month.
Broader Context of Texas Property Tax Wars
The enforcement action marks the most recent development in Texas Republicans’ ongoing effort to limit property tax rates at the local level. The 2019 state legislation imposed a 3.5% annual growth restriction on property tax revenue, which requires voter approval for any additional revenue collection by cities and counties. The financial situation of cities and counties is becoming increasingly challenging because they must cover rising costs for police services, firefighters, and infrastructure maintenance. Yet, their sales tax income continues to decline.
The legislation, created by State Senator Robert Nichols (R-Jacksonville), establishes financial penalties for cities that fail to fulfill their minimum transparency obligations. The law allows any person to report suspected noncompliance to the Attorney General’s office, which grants Paxton’s office broad investigative authority.