A trial to determine the validity of Austin’s “Project Connect” light rail plan has been indefinitely postponed due to an appeal by the Texas Office of the Attorney General over a separate aspect of the plan’s validity.
Tuesday’s trial was supposed to litigate officials’ attempt to scale back the plan from the ambitious one presented to voters in 2020. According to Community Impact, community members had sued, declaring the original 2020 proposal a “bait and switch.”
However, before the trial over the reduced route could proceed the Texas Office of the Attorney General notified litigants that it intended to appeal a separate action related to the structure of the project’s financing.
As Texas Scorecard has previously reported, at issue is the convoluted structure of the measure presented to voters in 2020. Designed to evade state limits on debt and borrowing (which seemed like a money laundering arrangement), the measure created a “governmental corporation” called the Austin Transit Partnership. According to the 2020 proposal, the Austin Transit Partnership was supposed to be funded by a one-time increase to the city’s maintenance and operations property tax.
However, proponents of the project lowballed the cost estimate. Combined with Biden’s inflation, this has led to a situation where the Austin Transit Partnership now needs to borrow substantial sums.
Unfortunately for proponents, state law prohibits using maintenance and operations property tax dollars to pay debt for “governmental corporations.” While a second component of the property tax—interest and sinking—could be used to pay debt, that’s not what was approved in 2020.
Tuesday’s delay means Project Connect will likely face indefinite legal hurdles on multiple fronts.
Meanwhile, Councilmember Mackenzie Kelly has called for the city to cut property taxes by 21 percent (the initial increase from the plan) as this issue winds its way through the courts.
Council Member Kelly Issues Statement on Project Connect Lawsuit
Kelly to propose a 21% reduction in city property taxes until Project Connect financing is approved by the courts pic.twitter.com/dmTY52J6H6— Council Member Mackenzie Kelly (@MK6ATX) June 17, 2024
Legal challenges to Project Connect are unlikely to be resolved anytime soon. The Texas legislature may also override the project during its 2025 session.
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