Proposition 4 Explained: Oversight and Accountability

This is the second in a three-part series exploring how Proposition 4 on November’s state constitutional amendment ballot changes Texas’ water infrastructure funding strategy, specifically addressing oversight and accountability. Read Part 1 here; read Part 3 here.

Proposition 4 on November’s constitutional amendment ballot dedicates $1 billion in state sales tax revenues to the Texas Water Fund. If approved by voters, this funding will be used to pay for water supply, infrastructure rehabilitation and flood protection projects.

Constitutionally dedicating state funding for water infrastructure represents a new — and significant — change in Texas’ financial strategy for addressing water infrastructure needs. Given the magnitude of this change, the Legislature approved two bills, House Joint Resolution 7 and Senate Bill 7, that enhance legislative oversight and public transparency regarding the use of this new revenue stream for water projects.

This article describes those significant changes.

1.) Stronger legislative oversight.

Proposition 4 dedicates state sales tax revenues to the Texas Water Fund, administered by the Texas Water Water Development Board (TWDB). The Legislature created two avenues that enhance its oversight over TWDB’s use of the Texas Water Fund.

The first is through the legislative appropriations process. HJR 7 requires that the Legislature appropriate the dedicated revenues to the Texas Water Fund. Here, state budget writers have the opportunity to approve — and potentially deny — the final allocation of dedicated revenue to the Texas Water Fund. This requirement leverages the appropriations process authorized by the Texas Constitution to enhance the Legislature’s oversight of TWDB’s administration of the Texas Water Fund.

In addition to this requirement, SB 7 created a permanent legislative committee, the Texas Water Fund Advisory Committee, that shall review the overall operation, function and structure of TWDB’s administration of the Texas Water Fund. This committee must meet to perform this review semiannually, and has the authority to provide comments and recommendations to TWDB on any matter.

2.) Performance measures tracking achievement.

SB 7 also requires that TWDB report on the state’s achievement toward addressing water infrastructure challenges. In particular, the bill requires that TWDB report on the state’s progress toward meeting future water supply needs, the net amount of water projected for development through projects that receive TWDB financial assistance, and, among other requirements, the agency’s progress toward providing financial assistance to utilities with water losses that exceed state thresholds.

These performance measures will provide the Legislature and the public better data on how the dedicated revenue stream is helping address the state’s long-term water infrastructure challenges. These data are essential for informing both the Legislature and taxpayers of their return on investment from dedicating state revenues toward water infrastructure needs.

3.) Infrastructure priorities.

One of the bigger questions surrounding Proposition 4 involves spending these funds and the types of projects contemplated by the revenue dedication. Here, HJR 7 requires that the Legislature designate the allocations of monies within the Texas Water Fund to other project funds for different types of water supply projects, such as water supply, infrastructure rehabilitation or flood protection projects.

SB 7 provides this required direction. In particular, the bill directs that no less than 50% of the revenues to the Texas Water Fund be channeled toward funds aimed toward expanding the state’s water supply portfolio. This means that at least 50%, and possibly more, of the dedicated revenues from Proposition 4 will be used for water conservation, reuse, desalination, aquifer storage, reservoirs for which all necessary land and permits have been acquired, and infrastructure capacity expansion projects, among others.

This designation will last until 2047. At that time the Legislature will have the opportunity to renew the funding dedication and redesignate the allocation of revenues to the Texas Water Fund.

Political advertising paid for by Texas 2036.