Austin’s Project Connect Is Failing to Deliver

When, in a 2020 referendum, Austin voters approved Project Connect, many urbanists hailed it as an ambitious plan to modernize the city’s public transit system. Five years and numerous delays later, proponents insist that they’re delivering what was promised. But frustration with Project Connect is mounting.

The original proposal was anchored by the Austin City Council’s “Contract with Voters,” a nonbinding resolution promising investments in affordable housing, sidewalk and road upgrades, fixed-rail improvements, and bus rapid transit. After a full-fledged campaign, Austinites overwhelmingly approved Proposition A, enabling the provision of tax dollars to launch Project Connect. But while many of Proposition A’s projects have moved forward, the city has dramatically scaled back the most ambitious component—light rail—amid soaring costs. Scrutiny has intensified over the project’s unique funding mechanism: a permanent, substantial tax increase. Though the light-rail project has diminished in scope, the tax hike remains in place.

As Texas’s 89th legislative session kicked off in January, reform efforts to clarify Project Connect’s mandate and define its responsibility to consult voters and taxpayers gave hope to its opponents—and for good reason. The previous session’s attempt at reining in Project Connect had enjoyed widespread support, with only a technical point of order impeding its path to becoming law. Even better, that bill’s coauthor, then-State Rep. Dustin Burrows, was now Speaker of the Texas House. If reformers failed, however, Project Connect would proceed in its current form—not the one that voters had originally approved. The initiative would risk becoming a case study in poor urban governance: city leaders winning tax hikes by promising transformative infrastructure, and then delivering something far less impressive.

Project Connect proponents argue that they have created a novel public transportation financing model, paving the way for other local jurisdictions to use similar tools to pursue mobility projects; organizations like the Texas Municipal League and National League of Cities, which awarded Austin a $900,000 grant related to Project Connect, serve as conduits for these programs, often encouraging replication in other cities. By contrast, critics of the project see it as a cautionary tale about the lengths to which local officials and jurisdictions will go, the legislative and regulatory loopholes they will find, and the legal fights they will wage to achieve what they define as success.

Understanding what makes Project Connect so unusual requires a look at Austin’s complicated history with transit advocacy. For decades, boosters have repeatedly failed to persuade voters to support light-rail expansion.

The story begins in 1973, when the Texas legislature authorized the creation of rapid-transit authorities. State Senator Jim Wallace, a Houston Democrat, sponsored a bill allowing cities with more than 600,000 residents to form joint entities overseeing regional transit projects through interlocal or joint-powers agreements. Austin didn’t meet the population threshold back then; but in 1981, the city successfully lobbied the legislature to lower the benchmark to 325,000. Two years later, the Austin Area Rapid Transportation System was born.

The Capital Metropolitan Transportation Authority (CapMetro), as Austinites know it today, followed in 1985, after voters approved its creation and a one-cent sales tax to fund it. In 1986, CapMetro collected $40 million in tax revenue; today, that figure amounts to about $400 million. While the budget soared, public ridership did not. In 1990, total boardings reached 31.2 million. Thirty years later, commuter rides for buses and trains had declined to 30.5 million. Over that period, the agency spent roughly $4 billion in sales-tax revenue.

CapMetro began exploring light rail in the 1990s. But public opposition and political pressure led the Texas legislature in 1997 to dissolve its all-citizen board and replace it with one composed of elected officials from member jurisdictions, appointed by local entities such as the Austin City Council and Travis County Commissioners Court and smaller entities. Lawmakers also granted CapMetro the authority—seen by some as a mandate—to hold a public vote on light rail by November 2000. The agency proceeded with a referendum proposing a $2 billion bond to fund a 52-mile system, scheduled for completion by 2018.  

The plan faced stiff opposition. Gerald Daugherty, a Travis County commissioner, was among those who campaigned against the 2000 referendum. A report that year by analysts Thomas A. Rubin and Wendell Cox raised concerns: overly optimistic ridership projections; rail speeds comparable with those of buses and slower than peak-hour traffic; and “exceedingly optimistic” cost estimates. (Many of these concerns persist today.) The proposal narrowly failed, receiving 49.6 percent support.

Austin’s next big public transit push came 14 years later. In 2014, a new referendum proposed a $1 billion bond—$600 million for light rail and $400 million for road improvements. Daugherty, still a vocal opponent, recalls regularly standing on the interstate at 6:30 p.m. with a sign reading, “No rail, costs too much, does too little.” This proposal also failed, receiving just 43 percent of the vote.

Undeterred, Austin’s transit advocates came back with the new Project Connect in 2020. This time, they had a plan to defeat the persistent opposition to public transit expansion.

As originally proposed, Project Connect was a $7.1 billion initiative, with $4.8 billion allocated to a 27-mile, multiline rail system. It aimed to serve 81,700 riders per day, linking Austin–Bergstrom International Airport to downtown. Aware of the long history of failed transit proposals in Austin, advocates crafted the Contract with Voters pledging no street-level turnarounds, no impediments to vehicular traffic, a subway line beneath Lady Bird Lake, and connections to major corridors from historically underserved neighborhoods.

Compared with its predecessors, Project Connect was a massive undertaking. Public attention focused on light rail, its most ambitious component. But Bill McCamley, then–executive director of Transit Forward—a group formed to back the measure—argues that the project’s value extends well beyond that. “There were light rail–only proposals in Austin in both 2000 and 2014 that failed at the ballot box,” he says. “So the folks who designed Project Connect said, ‘Let’s go back to the drawing board. Why do these keep failing?’ ” Austin’s long-standing reluctance toward transit loomed large. City leaders believed that it was essential, McCamley says, to establish a team for “education, engagement, and, frankly, some accountability . . . to make sure people had the right information.”

What they found, he continues, is that voters wanted a more “holistic” approach. So they devised Project Connect to include not only light rail but also upgrades to the city’s commuter line; a new station near the soccer stadium; rapid bus lines; pickup services in mobility zones; and a 20-year, $300 million commitment to an “anti-displacement fund” for the creation and preservation of affordable housing units for those living in areas affected by Project Connect’s development.

Still, the core selling point—and main source of controversy—was light rail. And the original proposal is far from what Austinites are now getting. Cost overruns and inflation drove the price tag sharply upward. As estimates neared $11 billion—twice the original amount—the Austin Transit Partnership (ATP), the new local government corporation created by Proposition A, introduced five alternative routes to stay within the budget voters had approved. “The days of overpromising are over,” said ATP executive director Greg Canally.

The result, rolled out in 2023, was a significantly scaled-down plan: a rail-only budget of $5.1 billion; a reduction from multiple lines to just one; 9.8 miles of track instead of the original 27; 52,000 fewer projected daily riders; 15 light-rail stations rather than 26; and the elimination of the planned subway system.

McCamley and Transit Forward believe that they are honoring voters’ wishes. “People voted for this thing because they are concerned about affordability,” McCamley says. “They voted for this thing because they’re concerned about climate change and the impact climate change is having in Texas . . . and this helps with that.”

But others, understandably, see things differently. Cathy Cocco, who once supported the initiative, is now a named plaintiff in a class-action lawsuit seeking to block it. She believes that Austin taxpayers were subjected to a bait and switch, left with a plan that resembles the very proposal that they rejected in 2014. “Seven billion for the same skinny piece of rail,” she told me, amounts to “fraud.”

Opponents of the project have more than one reason to feel misled. Voter approval of Proposition A entrenched a new agency with a funding mechanism that may now be hard to dismantle. Whether they realized it or not, voters authorized a permanent 20 percent increase in the operations and maintenance portion of the property tax—and the creation of the Austin Transit Partnership.

Project Connect involves three local government entities: the City of Austin, which proposed the ballot language and collects the taxes; ATP, which receives the revenue annually to design and build the project; and CapMetro, slated to operate the system after it’s complete. At the center of the controversy is ATP’s status as a local government corporation, a structure authorized under Texas law, which allows jurisdictions to create such entities to enable public-private transportation partnerships.

These corporations can provide efficiencies, but they operate in a legal gray area that, in practice, seems to enable them to play by two sets of rules. Quasi-public in nature, they are subject to the Texas Open Meetings and Public Information Acts but also enjoy powers granted to nonprofit corporations under the Texas Business Organizations Code. Though created by local governments through joint agreements, they wield powers more typical of public agencies. Their boards are appointed by local officials—but unlike standard government bodies, they are exempt from many public-sector rules. Competitive bidding laws don’t apply to them; they face no restrictions on property transactions; and they remain legally distinct from the jurisdictions that created them.

For Project Connect, the most consequential feature of the local government corporation model is ATP’s ability to issue debt without voter approval—so long as it’s backed by local tax revenue. In Austin’s case, ATP can issue revenue bonds secured by property-tax receipts from the 2020 tax hike approved under Proposition A. In the year following the vote, ATP received $156 million in transfers. By March 2025, it will have collected over $400 million—yet the city still lacks the high-profile light-rail system that advocates promised.             

Critics argue that the tax increase was misleadingly packaged. As Cocco puts it, voters believed that they were approving a bond measure—not a permanent 20 percent tax hike. The 2000 and 2014 rail proposals were framed explicitly as bond referenda; by contrast, the 2020 campaign promoted Project Connect more vaguely as a “$7.1 billion project,” but many assumed that it was another bond, or a one-time funding mechanism that would sunset after completion. “It was kind of marketed as a bond and a very pretty picture that had a lot of colored lines going all over the place,” Cocco says today. “Nobody said it was a ‘forever tax.’ That is a new phrase here.”

Voters weren’t the only ones under that impression. The Austin American-Statesman, the city’s leading newspaper, initially reported after the referendum that voters had approved a bond—only later issuing a correction, clarifying that the actual mechanism was a “tax rate increase.”

“The core policy issue,” says former Travis County judge Bill Aleshire, “is that if you tax or bond for something, how far can you go in changing it and still be allowed to do it?” Aleshire has filed two lawsuits to stop or delay collection of the tax funding the project. The drastic reduction in scope, he argues, means that the agencies involved effectively no longer have voter approval for what they’re pursuing. Alternatively, he contends that the funding mechanism itself violates state law. Legal merits aside, the political claim—that officials are breaking the promises made to the public—seems hard to refute. The reality is that by approving Proposition A, voters signed off on something far more complex than a simple bond or tax increase.

The fight over ATP is only intensifying, and the stakes extend well beyond a single light-rail project.

In the last legislative session, opponents of the funding mechanism brought their concerns to Republican State Senator Paul Bettencourt, who chairs the Texas Senate’s Local Government Committee. Seeking clarity on its legality, Bettencourt requested an opinion from State Attorney General Ken Paxton.

Bettencourt framed the issue this way: with voter approval, Austin enacted a tax increase equal to 20.7 percent of the city’s general-fund revenue for maintenance and operations—an amount that, by law, requires an annual tax-setting vote by the city council. The city’s plan was to transfer that same percentage, in perpetuity, to ATP, which would then issue debt to fund Project Connect. The question, as Bettencourt saw it, was whether Austin could legally bind future city councils to such an agreement. Paxton issued an opinion saying no, it could not. In response, Austin and ATP revised the agreement to address the concern. The transfer is now “subject to annual appropriations”—making the funding not automatic but contingent on a city council vote.

Was the modification substantial enough to require renewed voter approval? Ellen Troxclair, an Austin Republican in the state House, thought so. In 2023, she introduced a bill that would have required the city to present the scaled-down plan to voters and again seek their approval. In the Senate, Bettencourt amended the bill to prohibit the use of maintenance and operations funds to repay debt. But before the bill could reach Governor Greg Abbott’s desk, Austin Democrat John Bucy blocked its passage with a procedural technicality. Troxclair reintroduced the measure in 2025, and similar bills were filed in the Texas Senate, but as the legislative session drew to a close, it was clear that this time the bills did not have the blessing of Speaker Dustin Burrows. Despite best efforts, some bills were left pending in committee while others were left waiting to get a calendar date for a full vote of the Texas House—both of which meant the death of the legislation. 

Texas lawmakers certainly have a role to play in deciding what to do about Project Connect. But Austin’s expansive use of local government corporations also highlights the broader need to reform these entities. At a minimum, clearer parameters on their use are needed. As it stands, allowing the creation of these corporations for virtually any purpose—from zoos to convention and sports bureaus—grants excessive leeway to local governments, which have shown little hesitation in exploiting it.

Meantime, whether Project Connect will move forward in its modified form will apparently be decided by the ongoing legal battle. A representative from ATP appears undeterred. “We are involved in some legal action, but I would say we’re not letting that slow us down,” the representative says. “We want to make sure that we’re delivering the right system for the people of Austin, not the system that is going to be the best defense on a legal challenge.”

If it stands, the funding model could become a national template for bad governance. Unconstrained by the typical limits on property-tax revenue and bond usage, other cities might follow Austin’s example—deceptively imposing new taxes, funneling the proceeds into unaccountable local government corporations, and sidelining the voters who pay for it all.

Project Connect clearly demonstrates how some local jurisdictions can become so committed to favored projects that they are willing to jeopardize public trust. What the Texas legislature chooses to do in the coming session will have consequences well beyond Austin.

Top Photo by Brandon Bell/Getty Images