ODEM, Texas — The Odem City Council has adopted a no-new-revenue property tax rate. The vote ends a proposal to raise the city's tax rate by about 20% for the coming fiscal year.
Mayor David Maldonado told KRIS 6 News on Wednesday that the council approved the rate at a special meeting Tuesday night. He said the council was made to understand it could not move forward with a tax increase. The reason: the Texas Attorney General's Office had notified Odem in August that the city had not complied with a new state law.
The no-new-revenue rate is the tax rate that would bring in the same amount of property tax revenue as the year before, KRIS 6 has reported. Any increase above that rate requires cities to meet the audit and transparency standards in state law.
What the council had proposed
The special meeting notice, posted Sept. 16, called for a tax rate of $0.618399 per $100 of property value. The city described that rate as an effective increase of 20.04%. The proposed 2026-27 budget would have raised $178,912 more in property tax revenue than last year's budget, a 20.53% increase. For maintenance and operations, the notice estimated a $90.44 increase on a $100,000 home.
In May, Attorney General Ken Paxton sent letters to more than 130 Texas cities barring them from raising property taxes above the no-new-revenue rate. KRIS 6 reported that the cities had failed to meet state transparency and audit requirements. The law behind the letters, Senate Bill 1851, passed in 2025.
On Aug. 17, Aransas Pass, Mathis, Odem and Woodsboro were added to the list in a second round of letters. That brought the number of affected local cities to nine. Bishop, Gregory, Ingleside on the Bay, Taft and Three Rivers were named in May.
More than 240 cities across Texas are now barred from raising taxes. The investigation began in April, when Paxton's office demanded documents from more than 1,000 cities. Cities on the list cannot raise taxes above the no-new-revenue rate until they comply with the audit requirements.
A city rebuilding its finances
The tax dispute comes as Odem works its way out of a financial crisis that KRIS 6 News first reported in 2023.
In August 2023, documents obtained by 6 Investigates showed the city was spending $400,000 a month on expenses but bringing in only $200,000. Maldonado wrote at the time that the city had about two weeks of cash left.
For years before that, the council had approved deficit budgets and used reserves to cover the gap, 6 Investigates reported. Violations cited by the Texas Commission on Environmental Quality cost the city hundreds of thousands of dollars in wastewater plant repairs.
The city made deep cuts to recover:
- The 2023 budget eliminated every police position except the chief. It also set a goal of saving at least 5% of the operating budget each year for five years.
- In February 2024, the council voted to dissolve the police department.
- By September 2024, officials said the proposed budget was the first since 2016 in which the city would spend less than it took in, and that the city was nearly debt-free.
In July, Maldonado said the city could not yet afford to bring back a police department. He said he, the city's financial advisor, and the city administrator had reviewed the numbers and found the city did not have the revenue.
Odem stays under the tax limit until it meets the state's audit requirements. The city has not said which requirement it missed or when it expects to comply.
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