A trial over the legitimacy of the Project Connect system's funding has been put on hold, after state attorneys appealed a decision in the legal effort by Austin transit officials to validate the financial plan.

The overview

Austin voters in 2020 approved a long-term tax increase to support the development of Project Connect, a new light rail and rapid bus network running though the city.

Over the following years, rising costs eventually led the Austin Transit Partnership—the government entity created to build and oversee Project Connect—to reduce the proposed rail system. ATP's revised plan, covering about half the distance of the original and with features like a downtown subway and airport connection removed, was approved last year.

The scaling back of the system led several Austinites, including incumbent and former local officials, to sue ATP over what their attorney Bill Aleshire has called a "bait-and-switch" on city voters.

Additionally, Project Connect's financing plan—in which Austin's indefinite tax increase would cover the several billions of dollars of debt to be issued by ATP—has been opposed by state leaders, including Attorney General Ken Paxton.

To decide those issues, ATP moved in early 2024 to formally validate Project Connect's funding strategy and address the resident lawsuit through new legal action.

Since then, Paxton has continued to push back on the ATP while local planning for the development of Project Connect continues.

What happened

A trial to determine the legality of the ATP financing began in Travis County court June 17. However, lawyers with Paxton's office immediately moved to halt the proceedings through an appeal.

Paxton had argued this spring that the county court couldn't take up ATP's bond validation petition due to alleged problems with the overall financing plan under state code. He called to dismiss the case in April through a plea to the jurisdiction, and on June 17 his attorneys moved to address that issue on appeal as the trial got underway.

With that action, the proceedings are on hold until a higher court determines whether or not ATP can continue its bond validation case.

What they're saying

ATP Executive Director Greg Canally called the appeal "baseless," and a move by state lawyers to push off a final confirmation that Project Connect is legal and can proceed.

“We were looking for an impartial judge to confirm and validate what we’ve known all along: That through all the steps of creating and implementing and carrying out Project Connect and Austin light rail, we have followed state law," Canally said after court proceedings wrapped up June 17. "The judge was ready for this trial, ... and the vocal opponents were not ready today. And the reason they’re not is because they know that this is a delay tactic, and that the law is not on their side on their position.”

Canally added that work to develop the transit system is continuing ahead of an appellate court decision.

“We’re working day in, day out with the community and our great partners at Austin Transit Partnership and the city and CapMetro," he said. "We feel really great. Trains will be coming to Austin.”

Aleshire said the delay was a result of the ATP choice to pursue bond validation proceedings this year, therefore involving Paxton's office, rather than adjusting course to a different financing structure or transit plan.

“We were ready to put up for trial today, and frankly our taxpayer clients were looking forward to having the court decide whether or not the Texas Tax Code protects taxpayers from the bait and switch that is Project Connect," he said.

While Paxton's move now sends the issue to the Third Court of Appeals on an accelerated track, Aleshire said it's likely to eventually be decided by the state supreme court. He also called on Austin officials to re-evaluate the light rail plan, which he said will be "doomed" either in court or in the state Legislature.

"It is time for leaders to rethink Project Connect and to consider putting a bond election on the November ballot, where it is legal and logical and honest," he said.