Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	$0
2027	$0
2028	$0
2029	$0
2030	$0

Fiscal Year	Probable Revenue Gain/(Loss) from New General Revenue Dedicated Water Access Assessment Account	Probable Savings/(Cost) from New General Revenue Dedicated Water Access Assessment Account	Probable Savings/(Cost) from Texas Water Fund 484	Change in Number of State Employees from FY 2025
2026	$649,828	($649,828)	($1,440,734)	11.0
2027	$607,828	($607,828)	($14,601,300)	111.0
2028	$607,828	($607,828)	($13,761,300)	111.0
2029	$607,828	($607,828)	($13,761,300)	111.0
2030	$622,828	($622,828)	($13,794,300)	111.0

The bill would amend the Water Code related to water infrastructure development, legislative oversight, and performance and accountability at the Texas Water Development Board (TWDB).

The bill would amend eligible uses of the New Water Supply for Texas Fund (NWSTF). The bill would add reservoir projects meeting specific criteria, infrastructure projects to transport or integrate into a water supply system, and potable water reuse projects, as projects eligible to receive financial assistance from the NWSTF. The bill would permit transfers from the NWSTF to the State Participation Account (SPA) of the Texas Water Development Fund II (DFund II) and for eligible water supply projects creating new water sources for the state.

The bill would create a new General Revenue-Dedicated Water Access Assessment Account (GR-D WAAA) to support implementation and administration of the water access assessment program. The new account would consist of appropriations; transfers; gift, grants, and donations; interest; and proceeds from the sale of certain educational or public awareness materials.

The bill would amend the eligible uses, sources, and requirements of the Texas Water Fund (TWF). The bill would add the Flood Infrastructure Fund (FIF), the GR-D WAAA, the Agricultural Water Conservation Fund (AWCF), and the Economically Distressed Areas Program (EDAP) Account to the list of funds that TWF is eligible to transfer money to. The bill would amend TWF sources to add the dedication of revenues from the constitutional amendment proposed by the Eighty-ninth Legislature, Regular Session, 2025, (HJR 7, as introduced) as a source. The bill would also add wastewater projects, prioritized by risk as categorized and described by a water access assessment (WAA), in rural and small communities to the list of purposes that TWDB must ensure a portion of the money transferred from the TWF is used for.

The bill would amend eligible uses of the Water Bank to include purchasing, holding, and transferring of water rights that originate outside of the state for the purpose of providing water for the use or benefit of the state.

The bill would amend eligible uses of the SPA of DFund II to include NWSTF eligible projects. The bill repeals a requirement that at least 50.0 percent of money used from the SPA in a given fiscal year be used for interregional water projects. The bill would also repeal a previous restriction, which would allow the SPA to continue to be used for projects involving the development of desalination facilities and aquifer storage and recovery facilities through the acquisition of a facility or ownership interest in a facility.

The bill would rename and restructure the previous State Water Implementation Fund for Texas (SWIFT) Advisory Committee as the Texas Water Fund (TWF) Advisory Committee and redesignate its section within the Water Code. The bill would repeal statutes related to other Advisory Committees and reviews of the TWF, FIF, and the Texas Infrastructure Resiliency Fund (TIRF) to consolidate this oversight within the new TWF Advisory Committee. The bill would amend the following aspects of the Advisory Committee including: the number of members from seven to eight and the composition of certain members; the composition of agency-designated support staff and require the designees to serve at the will of the appointees; designates the House and Senate chairs of the committees with primary jurisdiction over water resources as co-presiding officers; replacing SWIFT-specific recommendation language with requirements that the Committee make semi-annual recommendations regarding the use of money in the SWIFT, TWF, FIF, and TIRF (and to make recommendations regarding posting information online related to the use of these funds, as necessary); allowing the Committee to make any other recommendations to TWDB; exempting the Committee from Sunset review and abolishment; requiring the Executive Administrator of TWDB to provide an annual report to the Committee; and allowing the Committee the ability to access all records related to the administration of the four funds that are maintained by any entity under contract with TWDB, as necessary.

The bill would require TWDB, by rule and in consultation with the Texas Commission on Environmental Quality (TCEQ), the Public Utilities Commission (PUC), and institutions of higher education, to develop and perform WAAs to determine the extent of water access needs among water utilities in the state, with assessments occurring at least once every ten years for each utility. The WAA would identify utilities that are failing or at risk of failing through a ranking system that considers the following factors: (1) the overall condition of the utility's infrastructure; (2) the availability of water to the utility; (3) the quality of the utility's water; (4) the affordability of the utility's services; and (5) the financial, managerial, and technical capacity of the utility. To achieve these efforts, TWDB may: (1) consult with TCEQ and PUC to develop risk factors and scoring criteria; (2) reevaluate its risk factors and scoring criteria every two years; (3) enter into a memorandum of understanding (MOU) with any of TCEQ, PUC, and the Department of State Health Services (DSHS) for relevant sharing of utilities' data; and (4) contract with institutions of higher education to conduct assessments.

The bill would require TWDB to notify relevant entities when a WAA identifies a utility as failing or at risk of failing, and for the results of any WAA performed to be posted online. The bill also requires TWDB to develop and maintain an online tool that is updated at least once a year and provides the following information: (1) state progress toward implementing water supply projects and water management strategies from the most recent state water plan; (2) how many utilities were classified as failing or at risk of failing from a WAA; and (3) the proportion of failing or at risk utilities that have taken steps to improve their classification.

The bill would require TWDB, no later than December 31 of each even-numbered year, to submit and publish online a report to the legislature regarding financial assistance administered in the preceding biennium and the state's progress toward specific water-related goals.

The bill would take effect January 1, 2026, but only if the constitutional amendment proposed by the Eighty-ninth Legislature, Regular Session, 2025, providing for the dedication of certain sales and use tax revenue to the TWF is approved by the voters.

This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.

This analysis and the tables above reflect the fiscal impact based on information provided by TWDB and other source agencies. This analysis is also based on information provided by TWDB in its experience supporting the current level of funding ($1.0 billion) provided through the TWF.

For the purpose of this analysis, it is assumed that TWDB's costs associated with implementing the provisions of the bill would be paid from the TWF and funds transferred from the TWF to the newly created GR-D WAAA, and that the constitutional amendment proposed by the Eighty-ninth Legislature, Regular Session, 2025, (HJR 7, as introduced) providing for the dedication of certain sales and use tax revenue to the TWF would be paid from the TWF, assuming approval by the voters and a resulting deposit of $1,000,000,000 beginning in fiscal year 2027 with a similar amount being deposited each subsequent fiscal year through fiscal year 2035.

This analysis also assumes that: (1) the Legislature would not adopt a resolution authorized in HJR 7, as introduced, that would be approved by a two-thirds majority, to direct the Comptroller to decrease or increase the amount deposited to the TWF; (2) that the available balance of the TWF at the beginning of fiscal year 2026 would be $768,600,000 based on the 2026-27 Biennial Revenue Estimate; (3) that transfers would be made from TWF available balances to the new GR-D WAAA in amounts necessary to cover all costs to implement and administer the WAA program and that these transfers and payments would not be made from the TWF's two percent administrative allocation due to the GR-D WAAA being created as a separate fund for specific purposes; (4) that up to two percent of the amount deposited to the credit of the TWF ($20,000,000) would be available and would be used by TWDB to cover any eligible TWF administrative expenses estimated in fiscal years 2026 and 2027 from the $1,000,000,000 deposited in fiscal year 2024 which capitalized the TWF; (5) that an additional $20,000,000 would become available to cover any eligible TWF administrative expenses estimated in fiscal year 2027 as a result of the enactment and voter approval of HJR 7 depositing $1,000,000,000 to the TWF in fiscal year 2027; and (6) that any additional deposits from legislative appropriations to the TWF in the 2026-27 biennium, should they occur, would also include two percent of the amount deposited for administrative costs.

Based on information provided by TWDB, additional staff and resources would be required to implement the provisions of the bill directing TWDB to develop, perform, and publish the results of WAAs conducted for utilities across the state. The table above includes revenue gains and costs in the new GR-D WAAA for this purpose. According to TWDB, 5.0 Full-Time Equivalent (FTE) positions and associated costs totaling $649,828 in fiscal year 2026 and $607,828 in fiscal year 2027 would be needed to administer to implement the provisions of the bill specific to WAAs and apart from other administrative support and revenue dedications to TWF from HJR 7 (or similar legislation). FTEs would include: one Contract Specialist II, one Engineer IV, one Planner IV, and two Program Specialist II.

Salary and wage costs for the 5.0 FTEs totals $449,229 per fiscal year from 2026 to 2030. Benefit costs total $127,671 per fiscal year from 2026 to 2030. Other administrative and staff costs totals $72,928 in fiscal year 2026, $30,928 per fiscal year from fiscal years 2027 to 2029, and $45,928 in fiscal year 2030, which includes initial costs for licenses, furniture, and equipment.

Based on information provided by TWDB, additional staff and resources would be required to provide support functions which include: assisting with production of new required reports (3.0 FTEs); assisting in administration of the Water Bank (2.0 FTEs); and assisting with information technology duties (1.0 FTE), to implement the provisions of the bill. According to TWDB, the 6.0 FTE positions and associated costs totaling $790,906 in fiscal year 2026 and $740,506 in fiscal year 2027 would be needed to provide support functions apart from provisions of the bill specific to WAAs and revenue dedications to TWF from HJR 7 (or similar legislation). FTEs would include: one Accountant III, one Attorney II, one Data Analyst II, one Information Technology Business Analyst III, one Planner III, and one Program Specialist IV.

Salary and wage costs for the 6.0 FTEs totals $547,628 per fiscal year from 2026 to 2030. Benefit costs total $155,636 per fiscal year from 2026 to 2030. Other administrative and staff costs totals $87,642 in fiscal year 2026, $37,242 per fiscal year from fiscal years 2027 to 2029, and $55,242 in fiscal year 2030, which includes initial costs for licenses, furniture, and equipment.

Based on information provided by TWDB, it is assumed that 100.0 FTE positions and associated costs, including enhancements to existing technical systems would be needed to administer funding resulting from the new TWF revenue dedications beginning in fiscal year 2027. The revenue dedications to TWF from HJR 7 (or similar legislation), if enacted and approved by the voters, would not take effect until fiscal year 2027. Therefore, these FTEs and associated costs are reflected beginning in fiscal year 2027 through 2030. The costs in fiscal year 2027 would total $13,252,966. According to information provided by the TWDB, the FTEs would include: four Accountant III, two Accountant V, two Administrative Assistant V, two Attorney I, four Attorney III, two Budget Analyst III, two Information Technology Business Analyst III, six Contract Specialist III, four Data Analyst III, two Engineer III, four Engineer IV, two Executive Assistant II, four Financial Analyst I, four Financial Analyst III, two Human Resources Specialist II, four Human Resources Specialist III, four Hydrologist III, twelve Information Technology Support Specialist III, two Loan Specialist II, two Management Analyst III, two Manager V, two Program Specialist II, two Program Specialist III, four Program Specialist IV, six Program Specialist V, two Program Specialist VI, six Project Manager III, four Project Manager IV, and two Training and Development Specialist V.

Salary and wage costs for the 100.0 FTEs totals $9,181,932 per fiscal year from 2027 to 2030. Benefit costs total $2,609,505 per fiscal year from 2027 to 2030. Other administrative and staff costs totals $1,461,529 in fiscal year 2027 and $621,529 in fiscal years 2028 through 2030, which includes initial capital costs for licenses, furniture, and equipment.

Based on information provided by TCEQ, this analysis assumes additional resources could be needed for TCEQ for the review of permit applications for water supply projects receiving financial assistance from the TWF due to increased funding being deposited to the TWF. However, the exact costs and the level of staffing and resources that would be needed by TCEQ cannot be determined at this time due to the variability in the timing, amount, and type of projects as well as the resources required to review specific project applications. This analysis assumes that any costs for these purposes would be paid from the General Revenue-Dedicated Water Resource Management Account No. 153.

This analysis assumes the TWF Advisory Committee would add the Executive Director or a designee of the Texas Division of Emergency Management (TDEM) as a board member. Based on information provided by TDEM and the Texas A&M University System, it is assumed that any costs associated with the bill related to the new TWF Advisory Committee provisions could be absorbed using existing resources.

This analysis assumes the TCEQ, PUC, and institutions of higher education would coordinate with TWDB as necessary regarding the development and implementation of WAAs. TCEQ and PUC specifically could provide consultation in the development of risk factors and scoring criteria for the WAAs. Additionally, the bill allows TWDB to enter into an MOU with TCEQ, PUC, and DSHS for data sharing purposes, and to contract with institutions of higher education to conduct WAAs. Based on information provided by these entities, it is assumed that any costs associated with the bill related to assisting and consulting with TWDB in these efforts could be absorbed using existing resources.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 1, 2025

TO:	Honorable Cody Harris, Chair, House Committee on Natural Resources

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB16 by Harris (Relating to the oversight and financing of certain water infrastructure matters under the jurisdiction of the Texas Water Development Board.), As Introduced