A Sustainable Water Plan for Texas

Wednesday, November 20, 2013

Financing a Sustainable Water Plan for Texas

In a series of three guest blogs over the next several days, Sharlene Leurig, Water Program Director for CERES, examines the details of Proposition 6, the water project financing measure approved by Texas voters on November 5^th.  Proposition 6 amends the Texas constitution to appropriate $2 billion from the state’s Rainy Day Fund to seed a new water infrastructure loan fund directed to water supply projects included in the State Water Plan. 

 Sharlene’s three posts examine how this new fund will work (in concert with House Bill 4, passed in the recent session of the Texas legislature) and what it could achieve—or fail to achieve—in terms of Texas’ water security.  Today’s post focuses on the mechanics of the fund and what choices the Texas Water Development Board (TWDB) is likely to face in ensuring that the $ 2 billion appropriation is used for maximum public benefit.  The second post looks at how administration of the fund will be affected by the new project prioritization process authorized by House Bill 4, the companion legislation passed earlier this year.  The third post explores whether and how the fund can be used to support water conservation projects. 

 Installment 1: Proposition 6 and the Mechanics of

Funding State Water Plan Projects

This post examines how the new infrastructure loan fund will operate and the choices that will need to be made to ensure that the funds are allocated for maximum public benefit.  It explores the tensions between using the new fund for “state participation” in longer-term, big-ticket projects, such as reservoirs and pipelines, versus distributing funds more widely to smaller, near-term projects across the state.  (Note: the following discussion draws on an excellent analysis of the mechanics of Prop 6 and differences with existing financing mechanisms by the Energy Center at the University of Texas School of Law.)

The 2012 State Water Plan estimates that the cumulative capital cost of all recommended water management strategies through 2060 would be $53.1 billion, only $26 billion of which the Regional Planning Groups reported could be financed through local capacity.  As part of the 2012 Plan, TWDB recommended that the Legislature “develop a long-term, affordable, and sustainable method to provide financing assistance for the implementation of the state water plan.”

 This recommendation was taken up by the Legislature in the 2013 session in three pieces of legislation: House Bill 4, House Bill 1025 and Senate Joint Resolution 1. Collectively, these bills:  restructured the Texas Water Development Board (see TCPS’s post on the restructuring here), established the State Water Implementation Fund for Texas (SWIFT); and sent voters a ballot proposition to approve the transfer of $2 billion from the Economic Stabilization Fund (“Rainy Day Fund”) to SWIFT. With Proposition 6 approval, the $2 billion will be permanently transferred from the State Treasury to a trust held by the state on behalf of the Texas Water Development Board, to be used exclusively for the financing of recommended water management strategies in the State Water Plan. More...