A lawsuit filed Monday seeks to stop the city of Austin from collecting tens of millions of dollars in the 2024 tax year for Project Connect, Austin's multibillion-dollar investment into local transit infrastructure, the centerpiece of which includes plans for miles of light rail.
The class action lawsuit filed in Travis County's 126th District Court cites a "relatively new and untested provision" of Texas tax code that allows a taxpayer to ask a court to halt the collection of property taxes if a tax rate is "miscalculated."
In this case, the lawsuit claims, the 2024 tax rate for Project Connect approved by the Austin City Council on Aug. 14 is miscalculated "because the 'purpose' of the 2020 Project Connect tax increase is no longer feasible, nor is the tax being used as promised." The lawsuit also claims the city won't spend the roughly $187 million it will levy for the transit investment this year.
Property tax bills this year will likely be sent out after the Nov. 5 general election as there are two tax-rate elections on the ballot for area voters.
Project Connect was approved by voters in 2020 with an increase to the city’s maintenance and operations property tax rate. It was set to include several transit projects and miles of light rail. Plans for the light rail have since been scaled down to under 10 miles, and construction is estimated to cost more, city and Austin Transit Partnership leaders have said. The Austin Transit Partnership is a local government corporation established by the city and Capital Metro to plan and build the light-rail system.
Construction of the light-rail system is estimated to begin in 2027. The Austin Transit Partnership expects significant increases in its expenses because of construction costs beginning fiscal year 2025-26, according to its proposed fiscal year 2024-25 budget document.
The lawsuit alleges that the money raised in taxes this year will go unspent as hundreds of millions in taxpayer dollars have been "stockpiled, unused" since the city began levying the tax in 2020. Because of this, the suit claims, the money levied in the 2024 tax year "will just be piled on top of that and won’t even be spent this fiscal year on Project Connect."
"Plainly, the taxpayers of Austin are getting nothing, absolutely nothing, this year from this 'annual appropriation' of the Project Connect tax," the lawsuit states.
The recent legal action is "another baseless lawsuit" that "is not going to stop ATP from advancing Austin Light Rail for all of Austin," Austin Transit Partnership Executive Director Greg Canally said in a written statement Tuesday afternoon.
"Savings we have responsibly set aside in accordance with the public financial plan will be spent in upcoming years to fund construction," Canally said. "Just like buying a home – it’s always better to have a bigger down payment."
A written statement provided by city of Austin spokesperson Memi Cárdenas said, “We are aware of the most recent lawsuit that once again challenges the City’s authority to set aside property taxes for the voter-approved Project Connect. We will respond to the lawsuit through the appropriate court channels.”
The lawsuit is another in a long line of challenges Project Connect has faced. Lawyers on the case are Bill Aleshire, a former Travis County judge, and attorney Rick Fine.
The plaintiffs in the lawsuit filed Monday include those in a 2023 lawsuit also filed by Aleshire and Fine that claimed the city misled voters about the investment and property tax increase and also sought to halt the collection of relevant property taxes and the issuance of municipal bonds for Project Connect without voter approval.
That lawsuit was combined with a bond validation lawsuit filed by the city of Austin in February, which seeks to determine whether the financing model for the light rail is legal under state law. The question of court jurisdiction is currently with the 3rd Court of Appeals following an June interlocutory appeal from Texas Attorney General Ken Paxton's office that halted the trial in a lower court.
In addition to the original plaintiffs in the 2023 lawsuit — restaurant Dirty Martin's Place; Gonzalo Barrientos, a former Democratic state senator; Ora Houston, a former City Council member; Margaret Gomez, current Democratic Travis County commissioner; and Susana Almanza, a founding director of social justice organization PODER — the lawsuit filed Monday has two new plaintiffs: Austin taxpayers Cathy Cocco and Barbara Epstein.
The lawsuit was also filed on behalf of "all property taxpayers of Austin."
"The light rail and Project Connect solution is an unaffordable, outdated yesterday idea," Cocco, who said she originally supported Project Connect in 2020, said at a Tuesday afternoon press conference at Dirty Martin's Place.
The most recent lawsuit has many of the same claims as the one filed in 2023, saying that the scope of Project Connect has changed drastically since voters approved it in 2020.
"The big difference is this lawsuit attacks the Project Connect tax itself directly for this year and says, 'You can't collect anymore Project Connect tax because you don't have permission ... from the voters anymore,'" Aleshire said at the press conference.
This article originally appeared on Austin American-Statesman: Lawsuit seeks stop Austin property tax collection for Project Connect
