The setup
The Project Connect light rail and bus system is funded through an ongoing civic tax increase authorized by Austin voters' approval of Proposition A in November 2020. Project Connect is overseen by the Austin Transit Partnership, a local government entity created for the program, but its local funding comes from the city tax.
Property tax rates are split into two portions: maintenance and operations to cover day-to-day expenses, and debt service to pay off long-term obligations like bonds. Austin's Project Connect tax was added to the city maintenance and operations rate, and the revenue is regularly transferred to ATP to pay off its own bonds issued for project development, and for the future operations of bus and train lines.
City and ATP leaders have defended the financing plan as a good fit for an ongoing transit program that already won local electoral support. Some critics argue the indefinite taxing structure is illegal, and that funds should come through more specific bond propositions put to voters.
What happened
Several bills considered by the Texas Legislature this session were aimed at local governments' use of tax revenue, and allowing property owners to sue against taxation if a voter-approved project significantly changes from its outline on the ballot. However, none received final approval before the House and Senate formally adjourned in early June.
House Bill 3879 from Rep. Ellen Troxclair, R-Lakeway, was drafted to halt the tax transfer process and prevent entities like ATP from repaying debt with city funding. Troxclair, a former Austin City Council member, promoted the bill as a taxpayer protection measure this spring. It wasn't considered by the full House after committee review.
Sen. Paul Bettencourt, R-Houston, brought companion legislation that passed the Senate in a revised form, with Bettencourt's assurance that it wouldn't retroactively impact Project Connect. That bill was also never brought to a final vote in the House.
Bettencourt also filed SB 3067 and SB 3071 in May, which included elements of the original bills. However, they never made it to the full Senate for approval.
The bills stalled this year out after a similar outcome in 2023, when Troxclair's taxing and bond bill moved through the House and Senate but failed to pass before the legislative session closed. Bettencourt's Senate companion also didn't advance.
Bettencourt was unavailable to comment on this year's legislation and the targeted taxing process as of press time June 12. Troxclair's office didn't respond to a request for comment.
What they're saying
Casey Burack, ATP's executive vice president of business and legal affairs, said the transit program remains on track with a legal funding source.
"ATP and the city of Austin have followed the law at every step in moving Austin light rail forward. Attempts to stop the project, whether through the Legislature or the courts, have not delayed our progress," Burack said in a statement. "In fact, last week ATP officially released its solicitation for a multibillion dollar final design and construction contract—meeting yet another major milestone for the project. We're excited to be one step closer to construction and to give so many Texans and Texas businesses the opportunity to help build Austin light rail."
Despite persistent tension and disagreement between city and state officials, Mayor Kirk Watson framed the 2025 legislative session as generally positive one for Austin given the death of several bills including those related to Project Connect.
"We’ve spent a considerable amount of time and resources over the past two legislative sessions defending this voter-approved investment in light rail primarily because a legislator who used to serve on the Austin City Council (but no longer lives in Austin) pushes it. Twice now, it’s failed," he said in June. "Austin light rail just might be the little engine that could. We keep chugging up the hill, overcoming seemingly insurmountable obstacles with absolute determination to fulfill the will of Austin voters and build light rail. There are still obstacles, but we’ll do all we can to be ready for those, too. I do, really, think we can—and should—get this transformative mobility project done for the people of Austin."
What else?
While Project Connect doesn't face a roadblock at the Capitol for now, challenges in court remain.
The transit program has faced multiple lawsuits aimed at its financing plan and the reduced scope of the light rail network's first phase. Last year, ATP launched legal proceedings—a bond validation lawsuit under Texas' Expedited Declaratory Judgments Act—to secure its taxing and debt repayment strategy. The case drew scrutiny from Attorney General Ken Paxton and was initially held up in trial court; following appeals from Paxton, the case is now before the Texas Supreme Court.
Additionally, some local property owners and former elected officials have taken legal action against the plan. One suit was wrapped into the bond validation case, and another remains in progress in appellate court.
Those residents and their attorneys maintain transit officials "abandoned" the original rail plan promoted in 2020, removing key elements and instead building a "minuscule route." In a statement, they said they appreciated lawmakers' attempts to pass legislation aimed at Project Connect this year.
"Nobody voted for this plan—nor against it, for that matter, as nothing resembling it was ever on the ballot. That is, unless you look at the nearly identical and similarly inadequate 2014 plan that voters soundly rejected by a 57-43 margin. And no court has validated the promised funding scheme," the group said. "Every day that passes, a new Austinite learns of this historic bait-and-switch and joins our opposition. In time, Austin leaders will be forced to do the right thing: act transparently, put an honest and cost-effective transportation proposal back on the ballot, fund it legally, and allow democracy to work."
For now, Project Connect's two rapid bus lines serving East Austin launched earlier this year while its rail lines remain in development.
