Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HJR7 by Harris (Proposing a constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas water fund.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HJR7, As Engrossed: a negative impact of ($191,689) through the biennium ending August 31, 2027.
However the bill would result in a negative impact of ($2,000,000,000) through the biennium ending August 31, 2029.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($191,689)
2027
$0
2028
($1,000,000,000)
2029
($1,000,000,000)
2030
($1,000,000,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue Gain from Texas Water Fund 484
Probable (Cost) from General Revenue Fund 1
2026
$0
$0
($191,689)
2027
$0
$0
$0
2028
($1,000,000,000)
$1,000,000,000
$0
2029
($1,000,000,000)
$1,000,000,000
$0
2030
($1,000,000,000)
$1,000,000,000
$0
Fiscal Analysis
The joint resolution would propose amendments to the Texas Constitution to dedicate a portion of state sales and use tax revenue to the Texas Water Fund (TWF).
The resolution would require the Comptroller of Public Accounts to annually deposit the first $1 billion to TWF from the amount of revenue derived from the sales and use tax under Chapter 151 of the Tax Code once that amount exceeds $48 billion.
The proposed amendment would allow the Legislature, by adoption of a resolution approved by a two-thirds majority, to direct the Comptroller to adjust the amount deposited to the TWF by an amount not to exceed 50 percent below or 100 percent above the amount that would otherwise be deposited. The Comptroller could only adjust the amount to be deposited in the state fiscal year in which the resolution is adopted or in the two following state fiscal years.
The Comptroller's duty to make the annual deposits described above would expire August 31, 2035, unless extended by the Legislature. Such an extension would be for a ten-year period.
Funds deposited to the TWF under the provisions of the resolution and transferred by the Texas Water Development Board (TWDB) to Fund 0485 – New Water Supply for Texas Fund would be prohibited from providing financial assistance to projects for which the primary purpose of which is to produce groundwater, or transport groundwater produced from a well in this state unless the water is brackish.
The resolution would direct the sales and use tax deposited to the TWF be maintained in a separate account in the TWF and would prohibit the funds from being drawn from the treasury unless a specific appropriation is made by law.
The proposed constitutional amendment would be submitted to voters in a statewide election on November 4, 2025. If approved by voters, the resolution would take effect September 1, 2027.
Methodology
The proposed amendment would require the Comptroller to annually deposit $1 billion from the amount collected in sales and use tax, after $48 billion is collected, to the TWF. This analysis assumes that condition will be met each year during the next five fiscal years. The table below reflects the amounts projected to be deposited, as well as the resolution's effective date of September 1, 2027, to the TWF based on estimates from the 2026-27 Biennial Revenue Estimate.
The cost to the state for publication of the resolution is $191,689.
The proposed constitutional amendment would only require the deposit of revenue into the TWF but would not make any changes to the current administration of the fund. Consequently, any cost would be shown in the fiscal note for the associated enabling legislation (HB 16).
Local Government Impact
The resolution would result in additional funding available for existing financial assistance programs administered by the Texas Water Development Board.
Source Agencies:
304 Comptroller of Public Accounts, 580 Water Development Board