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Texas Legislature could derail Austin's transit expansion

A view of the Texas State Capitol dome around twilight. The United States and Texas flags are fluttering in the wind. The Goddess of Liberty statue on top of the dome is towering above everything else.
Gabriel C. Pérez
Companion bills filed in the Texas House and Senate would force the Austin Transit Partnership to get voter approval before issuing bonds to finance construction of the city's light-rail system.

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Austin’s slowly shrinking vision for a fast-moving urban rail system by the end of the decade is about to face a new challenge, one that could upend the voter-approved transit expansion: property tax warriors in the Texas Legislature.

New bills challenging the Austin Transit Partnership's (ATP) powers to borrow money come as the organization is about to unveil a set of scaled-back light-rail options that fit within the original $7.1 billion Project Connect budget.

Rail opponents are seizing on the moment, accusing Austin leaders of having oversold their plan to get it passed by voters in 2020 and calling on the Republican-dominated state Legislature to throw a wrench in the gears.

"This town got bamboozled," said Gerald Daugherty, a former Travis County commissioner who has spent decades fighting Austin's light-rail initiatives, including the most recent one that increased city property taxes by 20%. "The lege has to step up and do the right thing."

Gerald Daugherty, former Travis County Commissioner and an organizer against Project Connect, is pictured during a film screening and rally to support Dirty Martin's on March 9, 2023, at Dirty Martin's Place off Guadalupe Street in Austin. Michael Minasi / KUT
Michael Minasi
Gerald Daugherty, former Travis County commissioner, has spent decades fighting Austin's light-rail ambitions.

The proposals — House Bill 3899 and Senate Bill 1791 — would force the ATP to hold a citywide election before borrowing large amounts of money to pay for the expensive upfront costs of building the light-rail system. ATP estimates it would need to borrow up to $2.5 billion and plans to repay the money with its existing stream of tax revenue.

Supporters of the bills say if Texas cities and counties have to hold elections before borrowing money and paying the debt back with property taxes, then the Austin Transit Partnership should have to hold bond elections, too.

"The intention is simply to require that they follow all of the transparency requirements that are already in state law for any other taxing entity," said Republican state Rep. Ellen Troxclair, a former Austin City Council member who wrote the House bill. "They've kind of found a loophole and are exploiting it."

State Rep. Ellen Troxclair while speaking to a reporter about her legislation. She's sitting in front of a window at Dirty Martin's Place off Guadalupe Street.
Michael Minasi
State Rep. Ellen Troxclair says if cities and counties have to hold bond elections, then local government corporations like the Austin Transit Partnership should have to hold them, too.

Proponents of the transit expansion scoffed at the legislation, saying voters already authorized borrowing when they approved the Project Connect ballot proposition by a margin of 16.5% in an election with more than 420,000 votes.

"People knew there would be bond debt associated with financing and then delivering Project Connect," said Casey Burack, an executive vice president at ATP who oversees business and legal affairs. "That was all set forward in a very transparent manner leading up to the vote."

Using debt to finance construction costs was a core component of Project Connect. As explained in public documents and at open government meetings, creating a dedicated stream of property tax revenue not only would help ATP fund pay-as-you-go engineering and construction costs, but also cover payments on borrowed money.

Voters were asked on the ballot if they wanted to create an independent board that would be "providing funds for loans and grants to develop or expand transportation within the city."

Requiring an election to authorize ATP borrowing could raise questions among the bureaucrats at the Federal Transit Administration doling out billions in highly competitive grants. Project Connect is premised on the federal government paying for up to half the project.

"That's really the risk of this legislation and we are already getting questions from the federal government," Burack said. "What does this mean for ATP's ability to fund the construction years?"

If voters were to deny ATP the ability to borrow, Austin's light-rail ambitions could be entirely derailed — unless someone can come up with an inventive way to pay for more than $1 billion in annual construction costs for multiple years in a row.

A bar graph and line graph showing Project Connect expenditures versus revenues in millions of dollars. The green line indicating expenditures shows costs running over $1 billion in 2024, 2025, 2026 and 2027.
PFM Financial Advisors LLC
City of Austin
This graph, published in a city memo before the 2020 Project Connect vote, shows Project Connect's estimated annual expenditures soaring above $1 billion for four years in a row.

Austin Mayor Kirk Watson, a former Democratic state senator, said he believes there may be a deal to be cut with state Sen. Paul Bettencourt, the Republican lawmaker who's made lowering property taxes a focus of his legislative career. Bettencourt is carrying the ATP bill in the Texas Senate.

"If transparency and accountability and not killing the project are really the goals, I think we might be able to come up with ways that are good to make sure there's transparency and accountability," Watson said. "But we should not, we cannot work to deny the result of an election and overturn the voice of the people of Austin."

Austin Mayor Kirk Watson seated at the city council dais.
Michael Minasi
Austin Mayor Kirk Watson, a former Democratic state senator, believes his old colleagues could be open to a deal that would increase government transparency without restricting ATP's powers to issue bonds.

Meanwhile, the ATP is preparing to present a set of less expensive light-rail options during an open house Tuesday at the Austin Central Library from 4 p.m. to 7 p.m.

A briefing sheet reviewed by KUT provides a high-level overview of five light-rail alternatives covering less distance than the initial plan pitched to voters ahead of the 2020 vote. Each of five options is estimated to cost less than $5 billion, Burack said.

Only one of the five options appears to include the downtown transit subway promised to voters. But instead of a 4-mile tunnel going down Fourth Street, under Lady Bird Lake and up South Congress Avenue, this tunnel would run about a mile down Guadalupe Street from East Martin Luther King Jr. Boulevard to Eighth Street. Only one station would be underground.

An illustration showing a three-level system that includes a concourse allowing people to walk for blocks underground.
Austin Transit Partnership
In 2021, ATP said this was the plan: a three-level subway system that includes a concourse allowing people to walk for blocks underground in downtown Austin. The five new options being unveiled next week appear to include just one underground station.

Last year's plan to extend the subway tunnel was the single biggest cause of cost overruns. Increasing the length from 1.56 to 4.19 miles doubled the estimated price tag to more than $4 billion.

All light-rail options to be presented by the ATP raise the possibility of installing elevated sections through significant parts of the downtown area, a less expensive option than tunneling that still frees trains from having to stop at traffic lights.

ATP says the plans in the briefing document viewed by KUT could change before they're presented to the public next week.

But officials are quick to emphasize that these scaled-back plans are just a starter system. The ATP will eventually be able to build the map now estimated at over $10 billion, as long as the Project Connect financial model isn't upended.

"We'll build as much as we can," Burack said. "As soon as we've paid some of that debt off so we have a higher cash flow, we will start going and building the next phase."

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Nathan Bernier is the transportation reporter at KUT. He covers the big projects that are reshaping how we get around Austin, like the I-35 overhaul, the airport's rapid growth and the multibillion-dollar transit expansion Project Connect. He also focuses on the daily changes that affect how we walk, bike and drive around the city. Got a tip? Email him at Follow him on X @KUTnathan.
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