The justices ruled Friday that a Travis County judge erred by moving forward with the case without first ruling on a challenge to his court’s jurisdiction.
“The record indicates this approach was a deliberate effort to frustrate the State’s appellate rights,” Chief Justice Jimmy Blacklock wrote in the court’s opinion. “Nothing about this scenario is as it should be.”
The 8-0 ruling sends the case back to the trial court, where the judge must now rule on the jurisdiction challenge, likely setting up another lengthy appeals process. A potentially protracted legal fight could delay key funding decisions as courts weigh whether the Austin Transit Partnership, the government entity building the rail system, can legally issue bond debt under state law.
The Supreme Court heard arguments from lawyers representing the city of Austin and the Austin Transit Partnership, as well as Attorney General Ken Paxton’s office, in February.
The underlying dispute centers on the funding mechanism for the more than $7 billion project, which Paxton and other plaintiffs argue is unconstitutional.
The case stems from two lawsuits filed in 2023 that were later consolidated. The first was brought by a group of residents that included business owners, current and former elected officials and social justice advocates who argued that the light-rail project has been scaled back so significantly that it no longer reflects what Austin voters approved more than five years ago.
Bill Aleshire, an Austin attorney and former Travis County judge who brought the suit, told the American-Statesman the high court’s opinion is good news for opponents of the light rail project — the largest part of the voter-backed Project Connect transit expansion.
“It’s good news, and it’s a good opinion,” Aleshire said. “I am delighted that we are back in court.”
Neither ATP nor the city of Austin immediately responded Friday to requests for comment.
The second lawsuit, filed by ATP and known as a bond validation suit, seeks a court’s approval to issue the bonds. The combined case could determine whether the project can secure major portions of its funding, potentially determining whether the project can proceed.
Voters overwhelmingly endorsed the light-rail plan in November 2020 as part of Project Connect. Early proposals envisioned as many as 28 miles of track across the city. Local officials later reduced the plan to fewer than 10 miles, citing rising construction costs.
The 2020 ballot measure authorized a 20% increase in Austin’s property tax rate dedicated to transit improvements. Under the plan, the city would transfer that revenue to ATP, which would use the funds to repay bonds issued to finance the project’s construction.
Despite the legal uncertainty, ATP and the city of Austin have continued advancing the project. The Austin City Council on Thursday passed several Project Connect-related items, including authorizing a $36.8 million funding transfer to the light-rail agency to relocate water lines ahead of construction.
ATP signed a contract expected to exceed $3 billion with its primary design-build contractor in February and has maintained that it expects to break ground on the system in 2027. The project recently received federal environmental clearance, a key step toward securing a planned $4 billion federal grant, and if all goes to plan, the light-rail line could open by 2033.
Aleshire said the agency should wait to move forward until the legal questions are settled, and he will consider asking for an injunction to stop construction from proceeding.
“Even the best advocates for light rail in Austin should be willing at this point … to pause and think,” Aleshire said.