A category-action lawsuit filed Monday by Austin, Texas, property taxpayers against town seeks the elimination of $187 million in property tax revenue allocated within the 2024 tax 12 months for a light-rail project.
The litigation is the newest salvo in a legal battle over the power of the Austin Transit Partnership, a nonprofit corporation created by town and the regional Capital Metro Transportation Authority, to make use of a rise in operation and maintenance property taxes voters approved in November 2020 to back bonds for Project Connect.
A rendering shows a train within the planned light-rail system for Austin, Texas. A bunch of city property taxpayers filed a class-action lawsuit looking for to chop off $187 million in tax revenue allocated to the downsized mass transit project.
Austin Transit Partnership
The lawsuit filed in Travis County District Court cites “a comparatively recent and untested provision” in Texas law allowing taxpayers to sue to enjoin tax collections in cases where the tax rate is miscalculated. It contends the tax revenue is not going to be used this 12 months for the light-rail plan presented to voters in 2020 and that $456 million in tax revenue collected over the past 4 years has been stockpiled, not spent.
“Plainly speaking, the taxpayers of Austin are getting nothing, absolutely nothing, … this 12 months from this ‘annual appropriation’ of the Project Connect tax,” Bill Aleshire, the plaintiffs’ attorney, said in an announcement.
Project Connect has been downsized from 2020’s 27-mile, 31-station plan to a 9.8-mile, 15-station project estimated to cost as much as $4.8 billion in 2022 dollars.
The plaintiffs, a few of whom filed a challenge to the bond financing last 12 months, are specifically asking the court to require the Austin City Council to lower its 2024 tax rate by 7.93 cents per $100 of assessed valuation, to scale back the tax levy by $187 million. The motion was triggered by town council’s adoption on Aug. 14 of a $1.1 billion 2024 total property tax levy, in line with the lawsuit.
“The town council imposed the tax for 2024 as a substitute of voluntarily stopping the tax, rethinking Project Connect, and developing a feasible mass transit system for Austin with an honest price tag and going back to voters with a lawful bond proposition,” the lawsuit said.
An Austin spokesperson said town is aware of the lawsuit and can reply to it “through the suitable court channels.”
ATP Executive Director Greg Canally said “one other baseless lawsuit” shouldn’t be going to stop the light-rail project from advancing.
“ATP has made key investments in our community over the previous few years — including a recent train station at Q2 stadium and two recent metro rapid bus lines — while at the identical time advancing Austin Light Rail through the federal grant process that can bring billions of federal dollars to Texas,” he said in an announcement. “Savings we now have responsibly put aside in accordance with the general public financial statement can be spent in upcoming years to fund construction.”
Meanwhile, court validation sought by town and ATP for an initial $150 million of revenue bonds the corporation would issue stays up within the air.
An ultimate win in court for Austin and ATP would allow the bonds to bypass approval of the debt from Texas Attorney General Ken Paxton’s office, which issued a May 2023 opinion that state law doesn’t authorize a municipality to “earmark” a voter-approved increase in maintenance and operations property taxes for debt service, which is paid with interest and sinking fund property taxes. The attorney general can be arguing before a state appellate court that ATP shouldn’t be eligible under state law to hunt court validation for bonds.