“I have grave concerns that municipalities across Texas have blatantly violated the law in an attempt to crank up people’s property taxes,” Attorney General Ken 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.”
During the regular legislative session this year, the legislature passed bills to impose additional restrictions on localities levying property taxes. Among them was SB 1851, which Gov. Greg Abbott signed into law. It went into effect Sept. 1.
It authorizes the attorney general to determine if a city government complied with municipal auditing requirements. Texas Local Government Code stipulates that municipalities must have their records and accounts audited every year and prepare their financial statements based on the audit. All related documents must be filed in the office of the municipal secretary or clerk within 180 days after the last day of the municipality’s fiscal year.
If this isn’t done, citizens have the right to file a complaint with the OAG to investigate. If the OAG investigates and determines a municipality is in violation of the law, the OAG may then prohibit it from adopting an ad valorem tax rate that exceeds the no-new revenue tax rate, according to the law.
Cities that don’t meet the state’s auditing requirements are then restricted to only increase taxes enough to maintain the previous year’s amount of revenue, according to the law.
The municipalities being investigated either submitted their reports late or not at all, according to the complaints filed. They also increased property taxes by up to 51%, well above the legally allowed no-new-revenue rate stipulated by state law.
After the leaders of the governments of La Marque, Odessa, Tom Bean and Whitesboro passed property tax increases that appeared to violate the law, taxpayers complained to the OAG, which launched investigations.
Paxton sent a letter to the mayors and city council members of each city stating, “I am formally launching an investigation into the [respective city] to determine whether the new tax rate is illegal. Furthermore, I am demanding that the new tax rate not be implemented until I complete my investigation.”
His letter to La Marque’s mayor and city council states they didn’t comply with filing requirements, filing documents six months after the deadline. His letter to Whitesboro’s mayor and city council makes a similar claim, stating they filed the required documents three months after the deadline.
Paxton’s letter to Odessa’s mayor and city council states his office hasn’t been able to find an audit report or financial statement for the previous fiscal year. It states the city’s last publicly published audit was from fiscal 2023.
His letter to Tom Bean’s mayor and city council makes a similar claim, stating the city’s last published audit was from fiscal 2020, which was uploaded online in 2022.
The letters order the officials of each city to not implement the tax hikes and requests a range of financial information and documents be submitted to his office.
“Texans deserve government at all levels that understands the impact of taxes on economic prosperity and keeps dollars in their pockets,” Paxton said. “Burdensome tax increases are antithetical to the spirit that drives Texas and require the utmost scrutiny both by the citizenry and by the State.”
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