Showdown: Paxton vs. Odessa Over 'Illegal' Tax Hike

AUSTIN, TX — On Thursday, October 2, 2025, Paxton dropped the bombshell: He's investigating Odessa for allegedly violating Senate Bill 1851, a new law enacted about a month ago aimed at keeping local governments accountable. Signed by Gov. Greg Abbott and effective Sept. 1 2025, the bill mandates that cities publish a financial audit within 180 days of the fiscal year's end before hiking taxes above the "no-new-revenue" rate—that magic number that keeps revenue steady from existing properties.

Paxton's letter to the Odessa City Council pulls no punches. He claims a complaint tipped him off, and a quick check revealed no audit for fiscal year 2024 (ending September 30, 2024). Even worse, the 2023 audit only surfaced on September 24, 2025—way past due according to the new law and suspiciously close to the council's tax vote on September 23. He's demanding documents and ordering a freeze on the new rate until the probe wraps up.

But Odessa isn't backing down. In a fiery response via press release, city officials blasted Paxton for jumping to conclusions without reviewing their side.

"The City was never notified of the complaint and was never given the opportunity to respond," they stated. They argue the law doesn't kick in until the 2026 tax year, citing the bill's language and past opinions from Paxton himself and former AG Abbott that laws aren't retroactive unless specified.

The hike in question? A modest jump from $0.466375 to $0.470700 per $100 of assessed value for fiscal year 2026, starting October 1, 2025. For the average $193,000 home, that's just $0.71 more per month—pocket change, but enough to spark this statewide spat.

Not Just Odessa: A Wave of Investigations

Paxton's not stopping at one city. He's also eyeing La Marque, Tom Bean, and Whitesboro for similar slip-ups. This could signal a crackdown on local tax practices across Texas, especially as property values soar and budgets strain.

Here's a quick look at the targeted towns:

Social Media Buzz: Texans Weigh In

The news hit X like a West Texas dust storm. Journalist Matt Stringer tweeted: "New: the @CityofOdessa fires back at @KenPaxtonTX saying the AG never looked at any documents before making a determination the city illegally raised taxes, adding they expect better conduct from the attorney general."

Local outlet NewsWest9 shared: "The city stated in a press release that it was never notified of the complaint and was never given an opportunity to respond." And the official City of Odessa account posted: "The City of Odessa received a letter today from Ken Paxton... Details: [link]"

Even Texas Scorecard chimed in with a video headline: "Illegal Tax Hikes?" discussing the broader implications.

What's Next in This Tax Tussle?

If the investigation unfolds, eyes are on whether Odessa's tax increase sticks or gets rolled back. This could set precedents for how new laws apply retroactively and how strictly audits are enforced. For more on the budget, check the City of Odessa's site.

The good news (or bad news if you wanted a tax break in San Angelo) is that the City of San Angelo published its audit of FY 2024 before raising your taxes.