AUSTIN, Texas — A lawsuit to stop the city of Austin from collecting millions of dollars in property taxes for Project Connect has been dismissed.
Project Connect is the voter-approved, taxpayer-funded effort to revamp public transit across Austin. It has faced opposition from groups that say it was a “bait-and-switch scheme” as the scale of the project has shrunk and costs have gone up.
Plaintiffs said city leaders need to stop the tax, rethink the project in a feasible way and go back to people to vote for it in a bond election.
Bill Aleshire, the attorney for the group opposing the project, said the decision will “very likely” be appealed.
Aleshire said the class-action lawsuit was based on a “relatively new and untested provision” in Texas Tax Code 16.05. He said it strengthens taxpayer protections and can stop the city from collecting its property tax if the tax rate is miscalculated.
“By losing this case, so far, the court is saying that the law doesn’t provide that taxpayer protection,” Aleshire said on Saturday. “That court decision will entice the Legislature to fix this once and for all.”
Aleshire said the 2024 tax rate the Austin City Council approved on Aug. 14 is miscalculated and must be removed. He said what started as a $7 billion plan that included 30 miles of rail and a route to the airport and downtown now has a more than an $11 billion price tag and half the routes.
Meanwhile, Texas Attorney General Ken Paxton has filed an appeal with the Texas Supreme Court in a legal battle over Project Connect’s funding structure. It comes after the 15th Court of Appeals dismissed a previous plea from Paxton that froze a trial over the transit project’s funding.
While the appeal is pending, bonds can’t be issued for Project Connect and it is unlikely a contractor would agree to a construction contract with no guaranteed source of payment, according to Aleshire.
“Once again, I think the Texas Legislature will be interested in stopping Project Connect from becoming a model for bypassing bond elections (where the tax expires automatically when the bonds are paid off) and, instead, mis-using tax-rate increases to the General Fund that put a tax in place in perpetuity regardless of what changes the city makes to what voters approved in exchange for the tax increase,” said Aleshire.
The Austin Transit Partnership, which oversees Project Connect, called the lawsuit “baseless,” saying the money saved up now will be used in upcoming years for future construction.