Supplemental budget bill: 11 spending items to consider
Texas 2036 Government Performance and Fiscal Policy Director Rahul Sreenivasan submitted comments on Wednesday to accompany his testimony to the Texas House Committee on Appropriations in favor of House Bill 500. He highlighted multiple spending items within the supplemental budget bill, which is scheduled for consideration on the House floor on Thursday.
Here are his submitted comments:
Thank you for the opportunity to provide updated written comments reflecting the updates made in the committee substitute to House Bill 500, the supplemental appropriations bill. Texas 2036 supports several of the proposed appropriations within the bill that represent strategic state investments aimed towards addressing Texas’ long-term needs in the areas of water infrastructure development, community college funding, university research funding, pension liabilities, space exploration and research, cybersecurity, wildfire response, heat mitigation in Texas Department of Criminal Justice (TDCJ) facilities, court data systems, and orphaned well plugging. These items, which are listed in the committee substitute of the bill, are as follows:
Increased State Water Infrastructure Funding
- Section 5.03 appropriates $2.5 billion to the Texas Water Fund for the purposes of developing water supply and infrastructure projects.
Over the next 50 years, the state will need to invest at least $154 billion towards expanding its water supply portfolio and fixing aging, deteriorating drinking water systems. The proposed $2.5 billion appropriation to the Texas Water Fund administered by the Texas Water Development Board (TWDB) represents another meaningful step — in addition to the $1 billion appropriated in 2023 — towards addressing the state’s long-term water infrastructure challenges.
Maximizing Federal Dollars for Water Infrastructure
The U.S. Infrastructure Investment and Jobs Act of 2021 increased federal appropriations for state clean and drinking water state revolving funds.
- Section 5.01 appropriates $54.8 million towards Texas’ Clean Water State Revolving Fund and $88.2 million to the state’s Drinking Water State Revolving Fund.
Both appropriations will work to maximize the state’s draw-down of federal funds, enhancing TWDB’s capacity to assist drinking water and wastewater systems towards achieving compliance with state and federal health, safety, and environmental protection requirements.
Enhanced Wildfire Response
Data from the Office of the State Climatologist at Texas A&M University indicates that the state’s wildfire season will become longer as greater portions of the state become susceptible to wildfire risks. The historic Panhandle wildfires of 2024, combined with the findings from the House Investigative Committee report on those fires, point to the need for expanded state and local wildfire response capacity.
There are three items in HB 500 that advance this goal:
- Section 3.04 appropriates $111 million to the Texas A&M Forest Service for wildfire suppression.
- Section 3.05 appropriates $100 for rural volunteer fire departments.
- And lastly, Section 3.06 appropriates $394 million towards expanding the state’s aircraft fleet for wildfire fighting purposes.
Orphaned Well Plugging
As of late February 2025, there were 6,567 abandoned oil and gas wells in Texas according to Railroad Commission (RRC) data.
- The $100 million appropriation towards RRC’s well-plugging program in Section 5.09 will extend the agency’s capacity to protect groundwater quality and public safety.
Reducing Long-Term Pension Liabilities
As budget writers grapple with how to pay for tax relief and other investments with recurring costs for future legislatures, one of the best ways to reduce that burden is by reducing our future liabilities. Thanks to the work of Chair Bonnen and Chair Huffman with Senate Bill 321 in 2021, the two $510 million legacy payments included in the House and Senate base budget will continue the fund’s path towards actuarial soundness and is now projected to eliminate its unfunded actuarial liability by 2046 ahead of its goal of 2054.
- The supplemental lump sum payment of $1 billion in Section 1.01 would save the state another $2.5 billion in interest payments and would eliminate the unfunded actuarial liability two years sooner.
Increasing Our Investment in the Space Economy
Last session, HB 3447 by Chair Bonnen established the Texas Space Commission (TSC) as well as the Texas Aerospace Research & Space Economy Consortium (TARSEC). A total $150 million appropriation was made by the Legislature to initially fund the Space Exploration & Aerospace Research Fund (SEARF) to fund a grant program to grow and advance the space industry in Texas.
Between September 2024 and January 2025, TSC received 281 applications from 140 unique entities that totaled $3.4 billion in funding requests for proposed projects, signaling a significant gulf between available grant funding.
- Section 1.04 of the committee substitute to HB500 appropriates $300 million to the SEARF to allow the TSC to award grants to more highly-qualified Texas-based companies.
Strengthening Cybersecurity Posture
Texas’ growing population and economy depends on a robust and efficient digital infrastructure to deliver services to Texans and protect and strengthen the state’s cybersecurity posture. With more and more entities using Department of Information Resources’ (DIR) services and the threat of cyber attacks on government agencies expanding:
- Sections 8.08, 8.09, and 8.10 of HB 500 allocate funding for DIR exceptional items (corresponding to exceptional item nos. 2, 3, and 5 from the agency’s LAR) to supply the agency with the necessary cybersecurity and IT management tools to carry out its role in protecting state data and promoting proper data governance.
Heat Mitigation at TDCJ Facilities
Extreme, deadly heat in Texas prisons is an ongoing challenge, not just for the tens of thousands of incarcerated Texans who live there, but also for the many thousands of public safety professionals who work there. It has also been a consistent source of legal liability, with a federal judge ruling just last week that a lack of adequate climate control is unconstitutional under the Eighth Amendment.
- A significant portion of the appropriations in Sections 4.04 and 4.05 of the bill will refurbish some of the old units and ensure that newly built units have climate control.
This is an important step towards the ultimate goal shared by all parties, including TDCJ, correctional workers, incarcerated Texans alike – the installation of permanent climate control systems in all of TDCJ’s inmate housing areas.
Improving Court Data Systems
This bill makes important strides in the data and IT infrastructure of our judiciary in two key areas – appellate courts and specialty courts. Our two highest courts and 15 courts of appeals have been working on a legacy, server-based case management system that is inefficient and vulnerable to cyberattacks.
- Section 8.24 appropriates $11.9 million to finally bring our higher courts into the 21st century with a more secure cloud-based solution.
On specialty courts, the proliferation of new case-type-specific dockets — over 200 currently — has also seen a variety of tracking and reporting methodologies, from spreadsheets to custom software.
- The $3.9 million appropriation in Section 8.25 will go towards the development of a cloud-based case management system that will improve service delivery and help measure program outcomes.
Sustaining Community College Finance Reform
HB 8, passed by the 88th Legislature, established a new outcomes-based funding model for Texas community colleges, rewarding institutions for measurable outcomes in dual credit completion, credential attainment, and transfer success.
- Section 3.09 of HB 500 appropriates $89.5 million to the Texas Higher Education Coordinating Board to support community colleges for outcomes already achieved during the current biennium.
This supplemental funding is essential to maintain the credibility of the new finance system, provide stability for institutions, and reinforce the state’s commitment to driving improved educational and workforce outcomes through performance-based investments.
Increased University Research Funding
- Section 3.13 of the committee substitute to HB 500 allocates up to $1.3 billion to the Texas University Fund (TUF) contingent on up to two additional higher education institutions qualifying for research funding from the TUF.
This additional funding will ensure the research fund approved by voters in 2023 is stable for when those institutions meet the thresholds necessary to receive distributions.
As with the filed version of HB 500, Texas 2036 supports the committee substitute to the bill. Thank you again for your leadership and careful stewardship of taxpayers’ dollars, and please let us know if your office has any additional questions or concerns.