Introduction: The Central Tension

There are two major forms of government. There is the Federal Government, and State Government. Everything else is a subdivision of the state. This post was written with the help of AI while guided and edited by Lewis McLain.

In Texas, the tension between state power and local self-governance has deep roots and wide-reaching implications. From its early independence days through Reconstruction and into the 21st century, Texas has oscillated between fierce localism and assertive state control. Today, that struggle plays out in the form of state-imposed limits on local autonomy—through legislation, finance, judicial decisions, and bureaucratic mechanisms. Understanding this dynamic requires a detailed look at the history, structure, legal frameworks, fiscal policies, and political motivations that shape the relationship between the State of Texas and its local governments.

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I. The Historical Backdrop: From Colonies to Constitution

1. Mexican Rule and Texian Rebellion

As early as 1832–1833, Texian settlers resisted central control from the Mexican government. Their political conventions were declared illegal by Mexican authorities, which insisted that petitions flow through the ayuntamientos (local councils). This early conflict introduced the lasting theme: local populations versus centralized power.

2. The Constitution of 1876

After Reconstruction, the 1876 Texas Constitution sought to sharply limit centralized authority. It fragmented the executive branch, constrained legislative power, and emphasized local control. Yet paradoxically, it also embedded structural dependence: counties and special districts have only the powers the state explicitly grants them, while only cities of 5,000+ population can adopt home-rule charters. Even home-rule cities are bound by laws of general application.

This setup hardwired state supremacy over counties and most special-purpose governments while allowing limited autonomy for larger municipalities.

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II. The Architecture of Local Governance in Texas

1. Sheer Volume and Fragmentation

Texas has the most counties of any U.S. state—254 in total. In addition:

• Over 1,200 municipalities, divided into general-law and home-rule cities
• More than 1,100 independent school districts (ISDs)
• Over 3,250 special-purpose districts (utility, water, MUDs, etc.)
• An estimated 5,300 distinct local governments across the state

This staggering fragmentation leads to overlapping authority, duplication of services, and vastly differing levels of governance capacity.

2. Counties and Their Limits

Counties are administrative arms of the state: they manage jails, elections, public health, and roads—but cannot enact zoning laws or ordinances. Their governance is handled by a commissioners court, not a traditional executive council. They hold no inherent regulatory powers and rely entirely on statutory authorization for fees, facilities, or services.

3. Regional Councils of Governments (COGs)

In 1965, the Texas Legislature passed the Regional Planning Act, creating voluntary Councils of Governments (COGs). Today, there are 24 COGs serving as regional coordinating bodies. Two of the most significant are:

North Central Texas Council of Governments (NCTCOG)

• Formed in 1966, NCTCOG is the largest, covering 16 counties, 169 cities, 19 school districts, and 24 special districts over 12,800 square miles.
• Based in Arlington, NCTCOG facilitates transportation planning, environmental coordination, GIS mapping, emergency preparedness, and more—but has no taxing or regulatory power.
• In 2025, NCTCOG allocated $3.5 million to rescue the Amtrak Heartland Flyer—stepping in where the Legislature had declined support.

Houston–Galveston Area Council (H-GAC)

• Established in September 1966, H-GAC serves 13 counties over roughly 12,500 square miles, with a population exceeding 6 million.
• Headquartered in Houston, H-GAC enables local governments to coordinate on transportation, air quality, economic and workforce development, emergency preparedness, and environmental planning.
• It also functions as the Metropolitan Planning Organization (MPO) for eight core counties, overseeing federally funded transportation projects and regional emissions planning.
• Its Board of Directors, composed of local elected officials, sets the organization’s policy direction through a General Assembly structure.

Both NCTCOG and H-GAC demonstrate the potential for regional cooperation—but also underscore the limits of voluntary, underfunded bodies without enforcement authority.

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III. State Preemption: The Legal and Legislative Mechanics

1. Home-Rule vs Dillon’s Rule

While Texas allows home-rule cities greater self-governance, state law—and state courts—have held that state legislation overrides local ordinances unless local authority is explicitly protected. Courts traditionally require “unmistakable clarity” in legislative intent to uphold preemption, but recent laws have blurred those lines.

Texas operates under both a home-rule framework and the legal philosophy of Dillon’s Rule, which holds that local governments have only those powers: (1) expressly granted by the state, (2) necessarily or fairly implied from those express powers, or (3) essential to the purposes of the government. If there’s any doubt, the presumption is that the power does not exist.

Named after Iowa Supreme Court Justice John F. Dillon (1868), this rule is a bedrock principle in Texas constitutional law—especially for counties and general-law cities. Even home-rule cities, which have broad authority under Article XI of the Texas Constitution, are subordinate to state law in areas of general application.

Thus, while home-rule cities may regulate broadly in the absence of conflicting state laws, any new state law—such as HB 2127—can override them unless clearly unconstitutional. Counties, meanwhile, are strictly creatures of statute and can act only when authorized by state law.

2. The Death Star Bill – HB 2127 (2023)

HB 2127, known as the Texas Regulatory Consistency Act, severely restricts local governments from regulating labor, agriculture, natural resources, property, or finance unless state law expressly permits it.

• It invalidated numerous local ordinances (e.g., paid sick leave, wage theft protections, tenant protections).
• Lawsuits argue it violates the Texas Constitution’s home-rule provisions; though a lower court struck it down, it remains in effect pending appeal.

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IV. Fiscal Shackles: How the State Controls Local Budgets

1. Revenue Caps & Rollback Elections

The Truth-in-Taxation framework restricts local tax hikes:

• 3.5% above the previous year’s revenue is allowed without voter approval; 1% under proposed legislation.
• Local governments face procedural burdens to raise revenue effectively.

2. Central Appraisal Districts (CADs) & Appraisal Caps

• Property values are set uniformly by CADs—state-regulated but locally governed, limiting flexibility.
• A 10% homestead appraisal cap restricts rapid valuation increases, compressing revenue potential.

3. Tax Abatement Loopholes and Reforms

• Housing Finance Corporations (HFCs) and Public Facility Corporations (PFCs) had exploited loopholes to extend tax breaks across jurisdictions.
• HB 21 (2025) closed the loophole, restricting housing finance agency activity to their constituents.

4. Robin Hood Plan – School Finance Recapture

• Property-rich districts must transfer surplus tax revenue to the state for redistribution—more than $1.8 billion annually.

5. Chapter 313 Tax Agreements

• Firms receive tax breaks in exchange for jobs; these abatements have cost local schools $10.8 billion (2006–2020).

6. Sales Tax Rebate Abuses and Reform

• In recent years, some cities created sales tax rebate agreements allowing businesses to collect sales tax on transactions across the state, then receive a large percentage back—sometimes for decades.
• These deals have allowed small cities to capture tax revenue from remote or online sales with no real economic connection to the transaction location.
• While cities like Round Rock, which built costly infrastructure for Dell, argue for retaining those revenues, abuse by other jurisdictions led to public backlash.
• In response, the state passed Senate Bill 878 (2025) to reform these incentives by:
  • Capping rebate agreements at 25 years
  • Requiring public hearings before approval
  • Mandating online transparency and reporting
  • Including performance metrics and clawback provisions

These reforms signal a new phase in the state’s effort to prevent local deals that distort statewide equity in tax policy.

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V. State Actions Triggered by Local Abuses

• The Tenaha asset forfeiture scandal involved law enforcement seizing money and property from drivers without charges—used locally without oversight—prompting state restrictions on civil forfeiture.
• The Houston ISD takeover followed governance failures, prompting state intervention amid accusations of ethics violations.
• Floodplain development and disasters exposed gaps in county zoning authority—fueling arguments for stronger centralized land-use regulation.

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VI. Motivation: Why the State Seeks to Control Localities

• Partisan Dynamics – Urban centers often pursue progressive policies that contrast sharply with conservative state leadership.
• Business Interests & Uniformity – Corporations and developers favor consistent regulations across jurisdictions.
• Legislative Efficiency – Texas’s biennial sessions incentivize centralized governance in place of a patchwork of local rule.
• Corrective Oversight – High-profile local abuses have increased public tolerance for state intervention and financial limits.

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Conclusion: Democracy in the Balance

Texas’s governance framework blends one of the most fragmented local government landscapes in the nation with robust state oversight and restriction. From NCTCOG and H-GAC to counties, school districts, and beyond, local governments face legal curbs and financial constraints even as citizen demands increase. At times, these constraints are reactions to real abuses—but often, they undermine local democracy, responsiveness, and innovation.

In a state that prides itself on independence, the real question becomes: Whose independence counts? The state’s? Or the people’s, acting through their cities, counties, and school boards?