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 Savings/(Cost) from Texas Water Fund 484	Change in Number of State Employees from FY 2025
2026	($5,290,832)	32.0
2027	($17,812,727)	132.0
2028	($16,972,727)	132.0
2029	($16,972,727)	132.0
2030	($17,068,727)	132.0

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 create the Administrative Account (AA) as an account in the Texas Water Fund No. 484 (TWF) and administered by TWDB. The bill would direct TWDB to transfer two percent of all deposits to the TWF in each fiscal year to the AA, and to use the AA to pay for necessary and reasonable expenses of administering the TWF. The AA would consist of money appropriated to TWDB for deposit to the credit of the account, money transferred by TWDB to the account, and depository interest allocable to the account.

The bill would establish the responsibility that TWDB facilitate joint planning and coordination between entities related to the development of infrastructure to transport water. As the lead entity conducting water supply conveyance coordination, TWDB would also be responsible for developing guidance, standards, and recommendations to achieve these efforts. TWDB would be able to procure professional and consulting services and form ad hoc committees with any entities deemed appropriate by TWDB to advise and assist with achieving these efforts. The bill would require TWDB to use the AA to pay all administrative, staffing, and professional service expenses incurred in administering these responsibilities.

The bill would amend eligible uses of the New Water Supply for Texas Fund (NWSTF). The bill would add reservoir projects meeting specific criteria and infrastructure projects to transport or integrate into a water supply system as projects eligible to receive financial assistance from the NWSTF. The bill would also add infrastructure to transport or integrate into a water supply system, including surface water for which a permit for storage, taking, or diversion has already been issued, and water that originated outside of the state for the purpose of providing water for the use or benefit of the state, as eligible NWSTF projects. Water supply infrastructure developed for the transport of water would be restricted from transporting groundwater produced from state wells meeting certain criteria, and this restriction would also apply to groundwater produced from certain aquifer storage and recovery (ASR) project wells. 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. The bill would allow the NWSTF to be used for the purchase of water rights by a water supply contract or a lease of the rights from its owner.

The bill would add the Flood Infrastructure Fund (FIF) and the AA to the list of accounts and funds that TWF is eligible to transfer money to. The bill would amend TWF sources to remove the return of money to the TWF from an authorized transfer to a receiving fund as a source, and add the dedication of revenues from the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, (HJR 7, as introduced) as a source. The bill would amend statutes so that the AA would be used to pay for administrative expenses incurred by TWDB in administering water supply conveyance coordination responsibilities. Additionally, the bill would allow TWDB to enter into an agreement with the Texas Commission on Environmental Quality (TCEQ) to pay no more than $2,000,000 from the AA of the administrative expenses incurred by TCEQ before August 31, 2027. The agreement would cover the TCEQ expenses related to the review of permit applications for water supply projects receiving financial assistance originating from the TWF during the 2026-27 biennium only. The bill would also add wastewater projects 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 exempt a transfer of water or water rights originating from outside the state from being subject to certain water supply contract requirements.

The bill would amend eligible uses for 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 ASR 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 to the Texas Water Fund 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; 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; 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; and outlines the confidentiality requirements of the Committee related to certain sensitive information.

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 September 1, 2025, except for the provision adding the dedication of revenues from a proposed constitutional amendment as a source to the TWF, which would take effect January 1, 2026, but only if the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, (HJR 7, as introduced) providing for the dedication of certain sales and use tax revenue to the TWF is approved by the voters.

This analysis and the tables above reflect the fiscal impact based on information provided by TWDB and other impacted 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 AA and that the constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, (HJR 7, as introduced) providing for the dedication of certain sales and use tax revenue to the TWF would be approved by the voters resulting in a 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, with two percent of all deposits being transferred to the AA.

This analysis also assumes that: (1) the Legislature would not adopt a resolution authorized in HJR 7 (or similar legislation), that would be approved by a two-thirds majority, to direct the Comptroller of Public Accounts (CPA) 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 that up to two percent of the amount deposited to the credit of the TWF ($20,000,000) would be available and transferred to the AA 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 (which includes water supply conveyance coordination expenses and up to $2,000,000 to enter into an agreement with TCEQ to cover TCEQ's administrative expenses related to the TWF in the 2026-27 biennium, as required by the bill); (4) that an additional $20,000,000 million 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 (or similar legislation) depositing $1,000,000,000 to the TWF in fiscal year 2027 and resulting in a subsequent transfer of $20,000,000 to the AA; (5) that any additional deposits from legislative appropriations to the TWF in the 2026-27 biennium, should they occur, would transfer two percent of the amount deposited to the AA for administrative costs; and (6) that the note identified by CPA above would not impact expenditures from the AA.

According to the Comptroller of Public Accounts (CPA), the usage of the newly-created AA - an account within the TWF - for payment of assorted administrative expenses appears potentially at variance with the existing wording of Art III, Section 49-d-16 (Texas Constitution), Subsection (b) which states in part, “The administrator of the Texas water fund may use the fund only to transfer money to other funds or accounts administered by the Texas Water Development Board or that board's successor in function.” Subsection (b) continues to address that money transferred from the Water Fund to other funds, or accounts, may be used for legislatively-defined purposes.

Based on information provided by TWDB, additional staff and resources would be required due to the bill increasing TWDB's water supply conveyance coordination responsibilities which include broadening NWSTF project eligibilities for developing infrastructure to transport or integrate into a water supply system to include permitted surface water. According to TWDB, 32.0 Full-Time Equivalent (FTE) positions and associated costs totaling $5,290,832 in fiscal year 2026 and $4,422,032 in fiscal year 2027 would be needed to administer to implement the provisions of the bill apart from revenue dedications to the TWF from HJR 7 (or similar legislation). According to TWDB, the additional water supply conveyance coordination responsibilities would require 30.0 FTEs to implement these provisions of the bill. The additional 2.0 FTEs would assist with providing support in production of reports required from revising the advisory council and the additional reporting requirements. FTEs would include: three Accountant III, two Administrative Assistant III, two Attorney III, one Budget Analyst III, two Contract Specialist IV, one Data Analyst II, one Director IV, one Engineer IV, four Engineer V, one Geographic Information Specialist IV, two Information Technology Business Analyst III, one Loan Specialist III, one Manager V, two Planner III, four Planner IV, two Program Specialist V, one Project Manager IV, and one Systems Analyst V.

Salary and wage costs for the 32.0 FTEs totals $3,390,505 per fiscal year from 2026 to 2030. Benefit costs total $825,853 per fiscal year from 2026 to 2030. Other administrative and staff costs totals $1,074,474 in fiscal year 2026, $205,674 from fiscal years 2027 to 2029, and $301,675 in fiscal year 2030. This includes initial capital costs for licenses, furniture, equipment, and professional services for contracting related to water supply conveyance coordination responsibilities in fiscal year 2026.

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 and total $13,390,695. 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. 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 $2,747,234 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. This includes initial capital costs for licenses, furniture, and equipment in fiscal year 2027.

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 project as well as the resources required to review specific project applications. This analysis assumes that total costs for this purpose would not exceed $2,000,000 from the AA from September 1, 2025, through August 31, 2027. This analysis assumes that any costs for this purposes recurring in subsequent fiscal years would be paid from from General Revenue-Dedicated Water Resource Management Account No. 153.

The 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 Texas Department of Transportation (TxDOT) would coordinate with TWDB as needed to assist in its water supply conveyance efforts, and likely select designees to serve on advisory committees. Based on information provided by TxDOT, it is assumed that any costs associated with the bill related to assisting TWDB in these efforts could be absorbed using existing resources.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 23, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB7 by Perry (Relating to the oversight and financing of certain water infrastructure matters under the jurisdiction of the Texas Water Development Board.), As Engrossed