Paxton opinion notes likely missteps, possible way forward for Project Connect

Many questions remain about the path forward for Austin’s Project Connect transit plan following an advisory opinion from Texas Attorney General Ken Paxton that noted some likely legal hurdles related to the funding model created to pay for the system.

Paxton issued his opinion on Saturday at the request of state Sen. Paul Bettencourt, R-Houston, who chairs the Senate’s Local Government Committee. One of the main discussion points in Paxton’s opinion concerns whether state law allows tax revenue collected by the city for the broad use of “maintenance and operations” to be used to pay for bond debt issued by Austin Transit Partnership, the local government corporation created to manage the $7 billion Project Connect plan.

Transit insiders and those who have studied the opinion closely feel the specific wording Paxton used and the footnotes included in the document offer a legal and bureaucratic path for the transit plan to continue forward. The wording also indicates that ATP has the authority to issue debt, and that the 2020 bond election strongly approved by voters was legal and valid, though there is the potential for court proceedings related to ATP’s debt issuance.

Another issue highlighted in the opinion is the need to make the tax revenue transfer to ATP a specific step taken yearly by City Council as a budget action, rather than allowing the transfers to take place automatically in perpetuity.

Paxton’s opinion came ahead of a busy week for the transit plan on many fronts. State lawmakers will decide this week on the fate of bills that would require another affirmative vote from the public before ATP could issue an estimated $1.75 billion in bonds.

While the initial bill from Rep. Ellen Troxclair that sought to create a 15-year debt repayment window was made less restrictive and palatable for the transit plan, Bettencourt’s partner bill is still awaiting passage and he has signaled he may amend it to restore some of the measures removed from Troxclair’s initial draft.

The Legislature is scheduled to close May 29.

Also this week, ATP is scheduled to reveal its favored initial light rail route from the five options that were presented to the public in March. If that route is approved by the ATP board and other partner entities, including City Council, it would be eligible to go through environmental study, among other steps.

If state lawmakers mandate that voters give a second approval for Project Connect to move forward, proponents plan to put the issue on the November ballot because they see off-year elections as more favorable to their chances.

In a prepared statement, Mayor Kirk Watson said he and other transit backers received some needed clarity from Paxton’s opinion.

“The advisory opinion issued by the Attorney General today upholds the will of Austin voters and reinforces that the City of Austin’s tax ratification election in 2020 was conducted in full compliance with state law,” Watson said. “I appreciate Chairman Bettencourt seeking this expedited opinion, which includes some additional guidance on the path forward for Austin Light Rail. This coming week, the board of the Austin Transit Partnership will take the next step to move ahead with a new light rail alignment and realizing the vision of Austin voters.”

Casey Burack, ATP’s executive vice president of business and legal affairs, said ATP “will take this opinion into consideration that lays out additional steps that make it clear that the contract revenue that we receive from the city is subject to the city’s annual appropriation.”

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