Opponents of the fence refused federal workers access to their land last month in South Texas. About the same time, the government offered to pay some property owners $3,000 in exchange for permission to conduct surveys for the project.
After many of them balked at the money on principle, the government abandoned the plan.
"I think it's blood money, bribery," said Brownsville Mayor Patricio M. Ahumada Jr.
The proposal to build 370 miles of steel fence is widely opposed in the Rio Grande Valley, the most heavily populated part of the Texas-Mexico border and a region with an economy and culture dependent on cross-border traffic.
The payments were being offered in a region where the median family income is about $30,000. But instead of welcoming the windfall, many residents were outraged when federal officials described the payment plan.
Ahumada, whose border city has already denied fence-planners access to city property, said the payments were insulting and disingenuous.
"The federal government is doing all it can to get access," Ahumada said. "They are thinning the herd (of opposition), so to speak, one by one. These tactics are not unusual when they want to get something done like this."
Johnny Hart, owner of the Riverside Club in Mission, said he sees the money as "nothing more than a bribe." But he wouldn't turn it down.
"Give me $3,000 and you can survey all you want, but it doesn't mean I am not going to fight you" on building the fence, Hart said.
Congress has authorized $1.2 billion to build 700 miles of fencing along the U.S.-Mexico border. The project includes about 330 miles of so-called virtual fence - a network of cameras, high-tech sensors, radar and other technology. The remaining sections, primarily in urban areas are expected to have an actual fence. About 70 miles of actual fence is planned in South Texas.
Noel Benavides, a city councilman and business owner in Roma, said the payments would cloud the issue.
"If this was really something that was going to be beneficial to the whole community and the whole nation, I would be the first person to say, 'My friend, you can go in there and do what you need to do,"' Benavides said. "It's going to be a waste of time. It's not going to stop illegal immigrants."
Benavides, a lifelong resident of Roma, said residents and local governments may eventually lose their battle against the fence, but they plan to keep fighting. State officials, including Republican Gov. Rick Perry, also oppose plans to build the fence.
On Tuesday, Rep. Henry Cuellar, a Democrat from Laredo who is opposed to the fence, said Homeland Security authorities told him the payment plan was off. He did not elaborate.
It was not clear what prompted the change of heart. Customs and Border Protection spokesman Brad Benson did not return several phone calls from The Associated Press.
Ahumada said the issue was also a matter of historical and patriotic pride.
"You are talking about land that Texans and Americans shed blood for to keep," he said. "And now they are trying to move the border further north than established by treaty."