Texas Supreme Court rules on case involving Austin's Project Connect
Project Connect is the voter-approved, taxpayer-funded effort to revamp public transit across Austin.
Author: Daniel Perreault
Published: 6:12 PM CDT May 22, 2026
Updated: 6:12 PM CDT May 22, 2026
https://www.kvue.com/article/news/politi...269-fc24326d-b67d-4da8-9b35-1a29f14242bf
AUSTIN, Texas — The Texas Supreme Court ruled on a case involving the Austin Transit Partnership (ATP) and Project Connect on Friday.
It is part of the legal fight over whether the city's plan to fund the transit system is legal. The high court did not express an opinion on the merits of the case but did weigh in on procedural issues in the legal proceedings.
At issue is a motion filed by the state, which should have triggered an interlocutory appeal, but the court declined to rule on the state’s plea and then proceeded “toward resolution of the merits without resolving the State’s challenge to its power to do so.”
Basically, the Texas Attorney General’s Office challenged whether ATP, the government corporation created to plan and design the light rail system, could skip asking the AG’s office to approve bond issuance and instead ask a court to approve the bonds.
The AG’s office filed a motion challenging ATP’s authority to file a lawsuit, and, as a result, the judge lacked jurisdiction over the case. But at the urging of the City's and ATP's lawyers, the judge did not rule on the AG’s challenge to his jurisdiction. In the opinion for the court, Chief Justice Jimmy Blacklock wrote that “this approach was a deliberate effort to frustrate the State’s appellate rights.”
“Nothing about this scenario is as it should be. A court may not decline to rule on challenges to its jurisdiction, which should always be addressed before proceeding to the merits,” Blacklock said. “A court may not withhold a ruling on the government’s properly presented plea to the jurisdiction in order to prevent the government from appealing. And the government may not appeal from an interlocutory order that does not exist.”
The Texas Supreme Court said the lower court must address the jurisdictional issue and rule on the AG’s motion.
“The bottom line is that when a judge is presented with a motion challenging the jurisdiction of that court to hear that case, the judge must rule on it and actually sign an order,” Bill Aleshire, a lawyer representing a different group that has sued over the project, said. “They can't pocket veto it like what occurred in this case. So today, the Supreme Court ordered Judge Sheppard to sign an order one way or the other on the attorney general's motion.”
In a statement, Austin Transit Partnership said the pending litigation has not slowed the progress in advancing Austin Light Rail.
“Austin Transit Partnership and the City of Austin filed the bond validation lawsuit so that we could have an impartial judge confirm that our bond financing program complies with all state laws,” the statement said. “Today’s procedural ruling in that lawsuit means that the case can now move forward. We are confident in our case and look forward to our day in court.”
A group of taxpayers filed a lawsuit to stop the city of Austin from collecting millions of dollars in property taxes for Project Connect, arguing that its funding structure is unconstitutional.
“We're in a mess with Project Connect in Austin now because they are proceeding on with a risk that they won't get federal funding, they won't be able to issue bonds, and sooner or later, we're going to get a decision on the case I filed challenging the legality of the property tax the City of Austin is funding Project Connect with,” Aleshire said. “What if we prevent that? They are going to have created a catastrophic mess.”
Aleshire said the ruling re-energizes the legal fight over what he said was a "bait-and-switch scheme."
“We've been frozen out of being able to do anything with the trial court. I couldn't even ask for an injunction to stop ATP from going out and spending tens of millions of dollars for rail cars, for example,” Aleshire said. “Now we're back in trial. We'll have a chance to get some immediate relief, even if it's later, there's another appeal, and I'm afraid that's what's going to happen. We’ve got to go back to court. The Court's going to rule, and then it'll be appealed again. This time, I hope it's an expedited appeal through the appellate courts in the Supreme Court.”
It is the latest setback for Project Connect, which has faced widespread criticism since voters approved it in 2020, when the light rail plan changed and became more expensive.
“This project has been off the rails, so to speak, since the very beginning,” Aleshire said.
The plan was drastically scaled back in 2023 after inflation and rising costs pushed its price tag past $11 billion. It has faced opposition from groups that say it was a “bait-and-switch scheme,” as the project's scale has shrunk and costs have risen.
“Voters were misled in 2020, and now they're in the tax trap forever. I don't think most voters realize that when they pay their city property taxes that 20%, of the taxes they pay that go to the general fund are dedicated to Project Connect,” Aleshire said. “I think that when voters looked at what they were told they would get in 2020, they'll realize that this is a breach of that contract with the voters and had a bait and switch.”
Not a single foot of light-rail track has been laid. The total cost of the project is $8.2 billion, up from the initial $5.8 billion. It is less than half the original proposed length, the number of stops on this transit system has been scaled back, and it is no longer expected to reach Austin-Bergstrom International Airport in the first phase. It has become the costliest public transit project per mile in Texas history and the seventh-most-expensive light rail project per mile in the U.S.
Under its current plan, the project, worth several billion dollars, will add almost 10 new miles of light rail and 15 light rail stations across the city. The route for the first phase of the light rail runs from the University of Texas, then goes on Guadalupe Street from 38th Street to downtown, and from downtown to the east along East Riverside, and south on South Congress to Oltorf.
“What we have now is Project Connect is an illegal, inefficient, unaffordable, catastrophic mistake,” Aleshire said.
To pay for the new transit system, Austin leaders put forward a 20% permanent property tax hike in the city.
“The way this was funded in Austin has never, ever been done this way before. This is not a bond issue,” Aleshire said. “This was a tax rate election that increased the general fund tax. It doesn't ever go away. There are all kinds of legal issues with that, especially when they try to take what's supposed to be operating money and use it to pay bonds.”
Blacklock said ATP’s counsel told the court that any ruling on the state plea would trigger an interlocutory appeal and automatic stay, delaying the expedited proceedings.
Under the interlocutory-appeal statute, a governmental unit may immediately appeal an “order” that “grants or denies a plea to the jurisdiction,” and such an appeal automatically stays all proceedings in the trial court.
“When you think about it, that's logical,” Aleshire said. “Why would you go all the way through a trial and all the expensive lawyer fees and time and judicial resources, and at the end of it say the court doesn't even have jurisdiction and can't issue a ruling. You would want to do that up front.”
The court ended the hearing without “making a ruling one way or another.” When the court called the case to trial, the State again pressed for a ruling, and the court said it had not “explicitly ruled for or against” the plea and dismissed the case. The groups opposing the project appealed, but the court of appeals dismissed the appeal for lack of appellate jurisdiction because there was no appealable interlocutory order. Blacklock said the court of appeals was not wrong to conclude that, because there was no order for the State to appeal.
By proceeding to trial without first resolving the State’s challenge to the court’s authority, Blacklock said the court abused its discretion.
“The City and ATP contend that the State’s argument about who qualifies as an “issuer” is in truth a merits argument, not a jurisdictional one, so no interlocutory appeal should be available,” Blacklock said. “This is incorrect—not because the State is right that its argument is a jurisdictional one (we express no view on that question), but because the State’s position is that its argument is a jurisdictional one. If the trial court disagrees with that, the Legislature has authorized the State to pause the case to ask an appellate court who is right.”
The City and ATP argued the automatic stay associated with the State’s interlocutory appeal “may frustrate the ostensible purpose of the Expedited Declaratory Judgment Act, which is to pass judgment on the legality of public debt speedily.
Blacklock said that it is “not an immaterial concern,” and government gamesmanship causing undue delay cannot be ignored, but the solution “is not to pocket-veto the government’s jurisdictional arguments.”
“Right or wrong, the State insists that the district court lacks jurisdiction under the EDJA because neither the City nor ATP is a genuine 'issuer,' Blacklock wrote. “And right or wrong, the Legislature has given the State the option of testing this argument on appeal before the case proceeds further.”
Blacklock said courts can act on motions to expedite an interlocutory appeal if the delay occasioned by the automatic stay threatens real harm or impose appropriate sanctions on any party, including the government, that wastes the resources of the courts “with frivolous or bad faith arguments”, but cannot just deny the government its statutory appellate rights. He described “bypassing those rights for the sake of judicial efficiency” as “more than a garden variety procedural error” because it is “a right that, once bypassed, no post-judgment appeal can restore.”
“We recognize that this framework is not immune to strategic exploitation. A governmental unit intent on delay may file a plea to the jurisdiction for just that purpose, secure in the knowledge that even a denial will trigger an automatic stay pending interlocutory appeal,” Blacklock wrote. “The potential for abuse is real, and appellate courts confronted with such appeals should resolve them with the dispatch the circumstances demand, particularly in expedited proceedings where delay is most costly. But until the Legislature decides otherwise, swift resolution on appeal coupled with the possibility of sanctions in egregious instances—not a trial court’s strategic refusal to rule—are the procedurally proper safeguards against abuse.”
The project hopes to secure federal grant funding for about 50% of the capital costs, with the remaining 50% from local funding. ATP is working to secure that funding.
The federal government has not made a final decision on whether to provide funding to Austin, and U.S. Sen. John Cornyn recently said he opposes Austin receiving any federal funding for Project Connect.
“They've got no good reason to hope that that's going to happen with an administration in Washington that insists on a rigorous cost-benefit analysis before they fund a rail transit project,” Aleshire said. “It's costing over $100,000 per rider to build this, and it's only 9.8 miles. It doesn't even reach the airport, and it's putting a train on downtown streets. It's going to cause gridlock in downtown traffic. If they ever get away with building it, it will cost over $835 million per mile to build this. It’s crazy.”
ATP says the light rail system is needed because Austinites should have more options for getting around the Austin area, given how fast it is growing.
After hitting major milestones in the federal funding process, design, and pre-construction work this year, ATP said it will "continue moving forward and remain on schedule to begin construction in 2027."
It's not clear how much they could build if they don't get the federal funding they need. Whatever the case, this won't be operational until at least 2033.
“They're just going to build what they can, as they can, with the local property tax. But when you have a property tax that will last forever unless it's legally thrown out, there is no budget limit,” Aleshire said. “It'll just take longer to do, but they'll have it eventually. They'll have the money. But is that affordable? Is that logical?”
In January, the federal government approved ATP’s final environmental impact statement, clearing the path for roughly $4 billion in funding. About $7 billion is needed for the project.
In February, the ATP board selected Austin Rail Constructors to build the first phase of the project. The group was awarded a multibillion-dollar contract to finalize design and begin pre-construction activities, including shaping and building the design and construction of nearly every aspect of the system, including the transitway, tracks, systems, stations, bridges, traffic signals, utilities, drainage structures and streetscape improvements.
It's one of three key agreements the partnership expects to approve this year. The others will fund the operations and management facility near U.S. 183 and State Highway 71. Another will be used to purchase the train cars.
Prev
Linear Mode
