Governor Abbott's HB 21 Empowers Texas Cities to Reclaim Their Tax Power From Centralized Control

Governor Greg Abbott’s signature on House Bill 21 marks a turning point for Texas municipalities. This law grants cities and towns greater authority over their tax policies, breaking the grip of centralized control. Communities now have the tools to shape their financial destinies, free from the meddling of distant lawmakers. HB 21, signed in May 2025, is a clear victory for local self-governance.

Local leaders understand their residents’ needs far better than state or federal officials. They navigate the same streets, attend the same town meetings, and hear the same concerns. When tax decisions stay close to home, accountability thrives. HB 21 reinforces this by tightening oversight of Housing Finance Corporations, ensuring tax exemptions prioritize public benefits like affordable housing over private profits.

This approach aligns with a core conservative belief: power belongs closest to the people. Dating back to the 1970s tax revolts, such as California’s Proposition 13, conservatives have fought for local autonomy. Reagan’s decentralization policies in the 1980s cemented this vision, emphasizing efficiency through competition among jurisdictions. Texas is now carrying that torch, proving communities can thrive without overbearing state or federal rules.

Why does this resonate? Because Texans value trust in their neighbors over faith in bureaucrats. HB 21’s requirements, like annual audits and open records for tax exemptions, ensure transparency. It’s not about deregulation; it’s about empowering communities to make decisions that reflect their values and needs.

For residents tired of seeing their tax dollars mismanaged, this law offers hope. It signals a return to governance that listens, responds, and delivers results tailored to the people who live there. Texas is setting a standard for what local freedom can achieve.

Decentralization delivers results. Research from Georgia’s 2020-2025 reforms shows that giving local governments more revenue control increases public trust and sharpens service delivery. Economist Charles Tiebout’s 1950s theory still holds: when residents can choose where to live based on local policies, competition drives better governance. HB 21 puts this into practice, letting Texas cities craft tax policies suited to their unique circumstances.

Indiana’s recent tax reforms offer a clear parallel. By requiring local officials to reauthorize tax rates annually and ending countywide revenue sharing, the state ensured budgets reflect voter priorities. Texas’s HB 21 mirrors this, mandating compliance audits and tying tax breaks to affordability goals. These measures hold local leaders accountable while preserving their ability to innovate.

Some argue local control risks uneven outcomes, pointing to federal programs like Community Development Block Grants that often favor wealthier areas. Yet this critique ignores a key truth: centralized systems haven’t solved inequality either. Federal and state mandates frequently miss the mark, imposing rigid rules that stifle local solutions. Communities answerable to their residents can address inequities more effectively, tailoring policies to their specific needs.

Advocates for centralized funding claim HB 21 could harm low-income families, citing studies that show local taxes often burden the poor disproportionately. Their solution—more state or federal oversight—relies on a flawed assumption. Decades of centralized programs, from 1970s school finance reforms to modern equity grants, have failed to deliver consistent fairness. Distant agencies lack the insight to address local challenges effectively.

Texas takes a smarter path. HB 21 links tax exemptions to measurable affordability outcomes, reserving housing units for low- and middle-income renters. It restores local appraisal control and sets geographic limits on tax breaks, ensuring communities, not developers, call the shots. Fears of fiscal chaos or elite capture don’t hold up—local voters have the power to keep officials in check.

Contrast this with the alternative: surrendering more authority to state or federal bureaucracies with spotty track records. The 2017 Tax Cuts and Jobs Act, a conservative triumph, showed that curbing federal overreach—like capping the SALT deduction—sparks local innovation. HB 21 builds on that foundation, proving Texas trusts its people to govern wisely.

Texas isn’t alone in rethinking tax policy. States like Michigan and Indiana are diversifying revenue sources and stabilizing local budgets, countering restrictive caps like Massachusetts’s Proposition 2½. Yet Texas stands out for its clarity of purpose. HB 21 redefines who controls tax decisions, phasing in requirements through 2027 to balance flexibility with accountability.

This model puts local officials directly in the hot seat, answering to their neighbors, not state or federal agendas. It rejects the growing trend of state preemption—like Texas’s own “Death Star” laws—that strips municipal authority. Instead, HB 21 restores confidence in local democracy, letting communities set their own course.

As President Trump’s second term unfolds, ending in 2029, conservatives across the nation should look to Texas. HB 21 proves that local control isn’t just feasible—it’s the future. Communities deserve the freedom to decide how their tax dollars are spent. Texas is showing the way, and the rest of America would be wise to follow.