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The 89th Texas Legislature advanced several water infrastructure measures during the 2025 legislative session. Most importantly, Senate Bill 7 and House Joint Resolution 7 were passed to expand the tools available for statewide water planning, financing, and project coordination. Texas voters also approved Proposition 4 on Nov. 4, 2025, establishing a dedicated revenue stream for the Texas Water Fund. Together, these actions will create long-term support for water supply development, wastewater and flood infrastructure, and future planning needs across the state.
Texas Water Infrastructure and Supply Planning
Senate Bill 7 makes several updates to the Texas Water Code to strengthen statewide coordination for water supply planning and infrastructure development. The legislation establishes a Water Supply Conveyance Coordination framework, directing the Texas Water Development Board to facilitate joint planning among project sponsors, governmental entities, utilities, and other relevant participants.
The bill also directs the board to develop statewide guidance, standards, and best practices for project design, materials, and system interoperability. To support this work, the agency is authorized to procure professional and consulting services and convene advisory committees to assist in planning and implementation.
Senate Bill 7 expands the range of eligible projects financed through the Texas Water Fund to include desalination, water reuse, out-of-state water acquisition, and other initiatives to diversify the state's water sources. These projects expand the state's available water resources by developing alternative water supplies. The bill also broadens funding priorities to include water and wastewater infrastructure, permit-ready projects, water conservation strategies, water loss mitigation, statewide water awareness initiatives, and technical assistance for applicants.
Voter-Approved Dedication of Sales Tax Revenue to the Texas Water Fund
House Joint Resolution 7 proposed a constitutional amendment dedicating a portion of state sales and use tax revenue to the Texas Water Fund, which funds statewide water, wastewater, flood, and conservation infrastructure administered by the Texas Water Development Board. Texas voters overwhelmingly approved this amendment as Proposition 4 on Nov. 4, 2025.
Beginning Sept. 1, 2027, the resolution requires the comptroller of public accounts to deposit up to one billion dollars each fiscal year into the Texas Water Fund once state sales and use tax collections exceed $46.5 billion. The first $46.5 billion in revenue each year will continue to flow into general revenue, with the next one billion dollars dedicated to the Texas Water Fund and maintained in a separate account.
The legislature may, by concurrent resolution adopted by a record vote of a majority of the members in each chamber, direct the comptroller to allocate deposited funds to programs the Texas Water Development Board administers, including the State Water Implementation Fund for Texas, the New Water Supply for Texas Fund, and other authorized accounts. The amendment prohibits using the allocated funds to finance infrastructure transporting non-brackish groundwater, except in limited cases involving aquifer storage and recovery projects. Allocations cannot be modified during the first 10 fiscal years they apply. The legislature may also suspend these allocations during a declared state disaster, allowing temporary redirection of funds with the intent to restore them to the Texas Water Fund when practicable. These provisions will remain in effect until Aug. 31, 2047.
This legislation, culminating in the voter-approved constitutional amendment, creates a long-term funding stream to ensure Texans have the water needed for the continued population and business growth that Texas continues to see each year. This provides opportunities for an array of new water projects, which can serve as another component of the state's ongoing economic development.
*Special thanks to Government Law & Policy Legislative Assistant Harmony Charles for contributing to this GT Alert.
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