Paxton Launches Statewide Review of Nearly 1,000 Texas Cities Over Audit Compliance

Texas Attorney General Ken Paxton has initiated a comprehensive review of the financial reporting practices across nearly 1,000 municipalities, including major cities such as Houston, Dallas, and San Antonio. This effort aims to assess whether local governments comply with state auditing and transparency regulations. Paxton's office has confirmed it expects the number of cities under examination to increase as the initiative expands.

The analysis examines Senate Bill 1851, a new law that prohibits cities from raising taxes above the no-new-revenue rate unless they comply with state audit and financial reporting requirements. Paxton has taken action in the towns of La Marque, Odessa, Tom Bean, and Whitesboro, directing them to stop what his office has labeled as illegal tax hikes.

The emergence of those cases prompted a more thorough investigation. The attorney general’s office reports that numerous Texas cities consistently fail to adhere to required audit practices. This revelation has prompted Paxton to adopt a proactive statewide strategy rather than relying on individual complaints or irregularities to surface.

“Local officials must adhere to the law, maintain transparency in their finances, and refrain from imposing continuous tax hikes on Texans,” Paxton stated. He stated that the review aims to guarantee “the law is universally adhered to, taxpayers are honored, and local government remains accountable to all Texans.”

The initiative encompasses numerous prominent, rapidly expanding communities across the state. Paxton’s office has identified several cities, including Houston, Galveston, San Antonio, Dallas, Fort Worth, Lubbock, Wichita Falls, McAllen, Beaumont, Amarillo, El Paso, Corpus Christi, Laredo, Texarkana, Brownsville, Waco, and Tyler. Auditors may include additional municipalities as they continue processing filings and requesting documentation.

Paxton’s office cautioned that cities failing to comply with audit regulations, or those that disregard requests for financial data, may encounter “significant legal risk.” The guidance indicates that enforcement measures may intensify should municipalities fail to respond swiftly or address the shortcomings highlighted by the state.

The Office of the Attorney General has introduced a public complaint portal, allowing Texans to report any suspected violations of SB 1851. The tool enables residents to report instances in which they suspect local officials are increasing taxes without complying with financial reporting requirements mandated by law.

The attorney general's review comes amid intense discussions about municipal autonomy, state oversight, and the escalating expenses of local government in Texas. State officials have yet to outline a timeline for completing the audit sweep, but they have confirmed that enforcement actions will continue as cases evolve.

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