What can taxpayers do when local governments waste their money?

What can taxpayers do when local government leaders either waste or misappropriate their money? It depends, experts told The Center Square.Recent and ongoing local issues are raising questions about what recourse taxpayers have, including in rural and urban areas in Texas.
In Point, Texas, city officials didn’t pay payroll taxes for years leading to a budget shortage. The city owed obligated retirement, health insurance, life and other insurance costs and could barely cover utilities this month, raising questions about operational costs next month. The town’s entire police force was laid off as a result.
In Corpus Christi, residents are facing a water shortage, even though $1 billion has been directed to proposed solutions. Conflict among officials continues, The Center Square reported.
“In some ways, the answer to this question differs on whether the city in question is general law or home-rule. In the latter instance, taxpayers could potentially organize and initiate near-permanent reforms through a successful charter amendment election. Such charter changes might include imposing tax-and-spending limits, creating efficiency audit requirements, or instituting a wide variety of budget transparency measures. Unfortunately, this avenue is not available to residents of a general law city, like those in Point,” James Quintero, policy director for the Texas Public Policy Foundation’s Taxpayer Protection Project, told The Center Square.
“Another option is to run for local office. Very often political scandals involving widespread corruption, incompetence, or institutional failure spur on the next generation of passionate reformers. In Point’s case, there is an obvious need for good people to step up and make changes,” he said.
When asked what can be done when taxpayer money is misappropriated and basic services can’t be provided, Quintero said, “Currently, there is no clear-cut solution to protect taxpayers. In some instances, affected parties may be able to seek relief through either litigation or legislation; but each of those avenues requires a long time and a lot of money. And even then, someone may not be successful.”
When asked what a county government or state legislature could do, Quintero recommended that the state legislature next year could “establish a clear framework for the State to temporarily assume control over failing local institutions, other than school districts, for the purpose of restoring security, stability, and self-governance. If local governments are creatures of the State, then robust state legislative action should be part of any solution.”
Julie Willard with Truth in Accounting told The Center Square ongoing fiscal troubles in local governments “reinforce a persistent and troubling reality. Many governments including those in Texas claim balanced budgets while continuing to push significant costs onto future taxpayers.”
The five largest cities in the U.S., all led by Democrats, didn’t have enough money to pay their bills in 2024, including Houston, according to a TIA report published earlier this year. “Because of varying state laws, cities operate under complex and varied governmental structures, making comparisons difficult and reducing transparency,” TIA said, The Center Square reported.
“At Truth in Accounting, we evaluate government finances using a comprehensive approach that includes all bills coming due not just what officials choose to include in their annual budgets. When you account for long term obligations like pensions and retiree health care, the picture changes dramatically,” Willard said, adding that “much of the debt burden in Texas cities is driven by unfunded retirement promises that have been building for years.”
“These obligations are not theoretical. They represent real commitments that will require taxpayer funding. When governments fail to fully fund them they are effectively borrowing from the future. This practice obscures the true cost of government and undermines transparency and accountability.”
“Taxpayers deserve clear, honest information about their government’s finances,” she added. “Without it, elected officials can continue making decisions that defer costs and increase the burden on future generations.”
TIA recommends that policymakers “adopt more transparent accounting practices, fully fund pension promises and ensure that budgets reflect the true cost of services provided today. Until that happens, reports like this will continue to reveal a gap between what governments say and what they actually owe.”

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