The overview
Senate Bill 2519 by Sen. Paul Bettencourt, R-Houston, would prevent the repayment of bond debt with local governments' annual property tax revenue reserved for maintenance and operations.
In 2020, Austin voters agreed to a 20% tax hike to fund the light rail and rapid bus system. Their approval of Proposition A increased the city's maintenance and operations tax, with the new portion dedicated to the Austin Transit Partnership—a joint local government corporation created with Capital Metro to oversee Project Connect.
The added tax is meant to both pay off the billions of dollars in bonds ATP will issue for construction, and to keep the transit network maintained and running indefinitely.
“It’s not a system that we’re going to want to ever adopt anywhere else ever again," he said during a May Senate committee hearing.
The specifics
SB 2519 was amended before its 23-7 passage May 12 to remove several provisions more specific to the Austin transit initiative. Bettencourt said the updates made the legislation a strict "philosophical bill" focused on separating the distinct taxing streams going forward, without referencing or impacting Project Connect.
“I’m trying to take out any reference to specific projects and just make the bright line of what the right public policy is," he said.
SB 2519 as originally drafted would've also allowed residents to take legal action to block taxes on their property, and earn a refund for any past taxes paid, if a government "materially deviates" from the stated intent of a tax rate election through:
- A cost increase of 33% or more
- A "significant change" in financing or purpose
- A "significant reduction" in scope
Before the May 12 revision, Bettencourt had said his bill would defend taxpayer interests by placing reasonable limits on governments that adjust a tax increase's purpose after the fact. Following questions from Project Connect supporter Sen. Sarah Eckhardt, D-Austin, Bettencourt confirmed the bill has no retroactive effect and is meant to avoid misinterpretation of longstanding tax practices in the future.
Companion legislation, House Bill 3879 from Rep. Ellen Troxclair, R-Lakeway, moved out of committee this month following review in April. The committee substitute for HB 3879 is now centered only on the resident relief provisions for tax election deviation that were struck from HB 2519.
What they're saying
Arguments for and against SB 2519 in a May committee hearing were similar to those raised over HB 3879. Bill supporters said it's critical to reel in taxes and keep local governments from mixing separate revenue streams, while opponents said ATP is working within current law to create a much-needed transit program that already won public support.
Austinites approved Proposition A after the 2019 passage of Bettencourt's SB 2, which set a new 3.5% cap on year-to-year growth in governments' property tax revenue—unless voters agree to a higher increase, up to 8%. Carl Walker, senior property tax analyst with the Texas Taxpayers and Research Association, warned senators that permanent maintenance and operations tax increases could become much more burdensome without the proposed limitations.
"If you explode your amount and fund [interest and sinking] through [maintenance and operations], then you’ve got 3.5% on a larger number which grows exponentially over time, and continues to grow," he said May 5.
On the other hand, Eckhardt has referenced infrastructure projects in Fort Worth and Kerr and Fort Bend counties with similar funding plans as Project Connect. And ATP Chief Financial Officer Bryan Rivera contended that financing the transit project through a city tax hike to back another entity's debt is allowed under existing state law.
Bettencourt pushed back, pointing to a 2023 opinion on the topic from Attorney General Ken Paxton that prompted some changes to ATP policies and the corporation's filing of a bond validation lawsuit to cement its current financing plan.
“The intent of the author is to never have [maintenance and operation] swapped for [interest and sinking] for any reason, period," Bettencourt said. "I don’t know what’s going to happen with the suit, that’s another court, another day and we’ll find out. But that’s why this bill exists here, because this is not a mechanism that we want to use—at least as the author of SB 2, that I ever want to see again."
Travis Krogman, vice president of state and federal relations with the Austin Chamber of Commerce, said derailing the local transit program would bring harmful unintended consequences for the local economy as well as hundreds of Texas businesses and workers that'd be involved in project development.
“With [the Texas Department of Transportation] projecting that the population of Austin will grow by 100% in the next 25 years, it’s imperative that our community is able to deliver this voter-approved project without interference and delay," he said.
