Texas Supreme Court Weighs Austin Light-Rail Funding Case

Justices will decide on the legality of an early appeal by AG Ken Paxton in a case whose outcome could impact Austin's light-rail ambitions.

Published on Feb. 10, 2026

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The Texas Supreme Court heard oral arguments in a case that could determine whether Austin's long-delayed light-rail project can move forward. The underlying dispute centers on the funding mechanism for the more than $7 billion project, which Texas Attorney General Ken Paxton and other plaintiffs argue is unconstitutional. The court is weighing a procedural question of whether the attorney general's office was allowed to file an early appeal that halted the case before it could be tried locally.

Why it matters

The outcome of this case could have significant implications for Austin's light-rail ambitions, which have faced legal challenges and scaling back from initial proposals. The court's decision on the procedural issue will determine whether the case returns to the local trial court or continues in the appeals process, potentially further delaying the project.

The details

The case stems from two lawsuits filed in 2023 that were later consolidated. The first was brought by a group of residents who argued the light-rail project has been scaled back significantly from what Austin voters approved in 2020. The second lawsuit was filed by Austin Transit Partnership, the governmental entity overseeing the project, seeking court approval to issue bonds to finance construction. Lawyers for the city and Austin Transit Partnership argued against attorneys from Paxton's office, who are seeking to halt the project on constitutional grounds.

  • The Texas Supreme Court heard oral arguments in the case on Tuesday, February 10, 2026.
  • If the court sides with the city and Austin Transit Partnership, the case would likely return to Travis County for trial.
  • A ruling in favor of the attorney general could send the case back into the appellate process.

The players

Ken Paxton

The Texas Attorney General who is leading the legal challenge against the funding mechanism for Austin's light-rail project.

Austin Transit Partnership

The governmental entity overseeing the light-rail project, which filed a lawsuit seeking court approval to issue bonds to finance construction.

Greg Canally

The CEO of Austin Transit Partnership, who has expressed confidence in the outcome of the case and said the agency is continuing to advance the project.

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What they’re saying

“We have complete confidence in the court system to hear that case in expedited fashion. But none of that has stopped us from progressing the work.”

— Greg Canally, CEO, Austin Transit Partnership (American-Statesman)

What’s next

The Texas Supreme Court did not issue a ruling on Tuesday, and decisions typically come weeks or months after oral arguments. If the court sides with the city and Austin Transit Partnership, the case would likely return to Travis County for trial. A ruling in favor of the attorney general could send the case back into the appellate process.

The takeaway

This case highlights the ongoing legal challenges facing Austin's ambitious light-rail project, which has already faced significant scaling back from initial proposals. The outcome of this procedural dispute could determine whether the project can move forward in the near future or face further delays in the appeals process.