How the (proposed) new Texas Water Fund works

Texas is on the verge of expanding its financial strategy for addressing the state’s long-term water infrastructure challenges for the first time in 10 years.

Earlier this year, the Legislature approved a legislative package aimed at both delivering new water supplies and fixing aging, deteriorating water systems. The legislation that makes up this package, Senate Joint Resolution 75, Senate Bill 28, and SB 30, work in concert to create a new fund, the Texas Water Fund, and capitalize that fund with a $1 billion down payment.

The Legislature indeed did some heavy lifting this year in passing this comprehensive water infrastructure legislative package. The final decision to establish the Texas Water Fund, though, rests with the voters who must approve the fund as an amendment to the Texas Constitution this November.

Given the promise and opportunity within the proposed Texas Water Fund, it’s worth exploring both what types of water projects would be eligible for funding and how the fund would work. These details are outlined within SB 28, the enabling legislation for the Texas Water Fund.

Here’s two key points you need to know.

First, lots of different, needed water projects could be funded by the Texas Water Fund.

Texas’ long-term water infrastructure challenges include:

  • the need for an expanded, diversified water supply portfolio for a drought-prone and growing state, and
  • the escalating priority of fixing aging, deteriorating, and leaking water systems.

SB 28 structures the water fund to address these twin challenges. The graphic below lists the different types of projects that can receive financial assistance through the Texas Water Fund.

Types of projects eligible for Texas Water Fund financing

In addition to the focus on fixing infrastructure and developing new supplies, the Texas Water Fund can help with water conservation and water loss mitigation projects. These projects are essential to smart water management in our drought-prone state.

As described within the 2022 Texas Water Plan, water conservation strategies are essential to the state’s survival when the next Big Drought hits.

The same could be said for the elimination of water loss. According to a 2022 report by the Texas Living Water Project, Texas’ water systems leak an average of 572,000 acre-feet of water per year — enough water to fill a major storage reservoir.

The Texas Water Fund will help finance projects that address both of these needs.

Second, the Texas Water Fund comes with smart financial flexibility.

SB 28 assigns the operation of the Texas Water Fund to the Texas Water Development Board (TWDB), the state agency responsible for water infrastructure financing. TWDB already administers several program funds and accounts tailored for providing financial assistance to different types of entities for different types of water projects.

Rather than reinvent the wheel, and as highlighted in the graphic below, SB 28 gives TWDB the flexibility to transfer money from the Texas Water Fund to these other program funds in order to provide financial assistance for water infrastructure projects.

Water Funds Eligible to Receive Texas Water Fund FinancingThis is a smart design that allows TWDB to leverage the financial assistance and policy frameworks of existing program funds towards the best use of Texas Water Fund dollars.

What’s next?

Texas voters on Nov. 7 will make the decision on whether to move forward with this new financial strategy for addressing Texas’ water infrastructure challenges.

If voters give the Texas Water Fund the green light, then the Legislature has approved a $1 billion down payment toward this new fund. This will be the first step of many needed to make sure we have water for our growing, and thirsty, state.

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Pol. Adv. Texas 2036