Testimony: Closing Texas’ water infrastructure funding gap
The following testimony by Director of Infrastructure and Natural Resources Policy Jeremy Mazur was given Sept. 24, 2024, to the House Natural Resources Committee on implementation of Senate Bill 28.
Chairman, members of the committee, for the record, my name is Jeremy Mazur, and I am the Director of Infrastructure and Natural Resources Policy for Texas 2036. Thank you for this opportunity to offer comments on this monitoring charge on Senate Bill 28.
To its credit, the Water Development Board has taken prudent steps towards implementing Senate Bill 28 and putting the $1 billion towards working water infrastructure funds.
While commendable, this $1 billion falls short of what Texas needs to invest in water infrastructure. These challenges here are twofold. First, Texas must invest in a broad, diversified water supply portfolio to improve our resilience to future severe droughts. Second, we need to fix our aging, deteriorating drinking water and wastewater systems that are fast becoming liabilities to the communities that they serve.
Texas 2036 projects that the state’s long-term price tag for addressing these issues equals nearly $154 billion.
If you look at the first chart on the one-pager I have provided, the inflation-adjusted cost estimate of what the state needs to spend on water supply projects in the recent water plan equals $59 billion.
Fixing our aging, deteriorating drinking water and wastewater systems will cost $73.7 billion and $21.1 billion, respectively. These estimates are based on inflation-adjusted EPA projections for the next 20 years, however.
When you add all of these estimates together, we see that the state will have to invest nearly $154 billion on water supply and infrastructure upgrade projects in the coming decades.
Both the $1 billion in the Texas Water Fund and the projected financial assistance effort from other state programs — including the SWIFT and the state revolving funds — will fall short of the $154 billion required to address our water infrastructure challenges.
The second chart on the handout illustrates Texas’ long-term water infrastructure funding gap. This chart depicts the growing differential between projected financial assistance needs and projected state funding efforts. By 2070, this funding gap will equal just over $110 billion.
Texas 2036 is working on finalizing a report that describes this funding gap in greater detail. We plan on releasing that report in mid-October.
Reliable water infrastructure, like a dependable electric grid, supports economic growth and development. Moreover, as more water-intensive industries expand in Texas, including semiconductor manufacturers, data centers, and dispatchable energy generation, we will need reliable water infrastructure in place to support their growth.
Simply put: water infrastructure investments equate with economic development.
Conversely, failing to develop critical water infrastructure invites severe economic consequences. We estimate that the economic costs attributable to aging, deteriorating water and wastewater systems will equal nearly $320 billion by 2039 — this is the size of the current state budget.
Moreover, another study that we are working on with Rice University concludes that not having enough water supplies for our electric grid invites the real possibility of diminished generation capacity, rolling blackouts, and potentially hundreds of millions in lost economic activity — per day. This study, which we plan to release in November, also points to substantial losses in the manufacturing and agricultural sectors, among others, if we don’t have enough water supplies for the next long, severe drought.
This brings me back to SB 28 and the $1 billion appropriated to the Texas Water Fund. Both the bill and the appropriation were a good step towards expanding Texas’ financial strategy towards addressing our water infrastructure challenges.
But this was a good first step.
The policy solutions we recommend for the next session, which build on the success of SB 28 and Proposition 6 from last year, include additional funding for the Texas Water Fund and, more critically, a dedicated, long-term revenue stream for that fund, much like HJR 169 that this committee approved in 2023.
Both the Legislature and state voters have approved dedicated revenue streams as a method of paying for our state parks and transportation infrastructure. The data indicates that this method of finance is working, especially for state highway projects.
A dedicated funding stream for water infrastructure — similar to that we use for highway projects — will set the state on the path towards closing the $110 billion-plus funding gap.
Thank you for your time, and I welcome any questions that you may have.