According to the Legislative Budget Board (LBB), SB 14 is expected to have no fiscal implications for the State of Texas. The bill primarily affects the operations and financial procedures of local political subdivisions rather than requiring state-level appropriations or administrative changes.

However, the bill could have a fiscal impact on local governments. Specifically, political subdivisions that impose water and wastewater impact fees may experience a reduction in impact fee revenue when required to provide credits to builders and developers who construct or contribute qualifying water conservation or reuse infrastructure. The extent of this fiscal impact would vary depending on the number and scope of qualifying projects and the valuation of the credits applied. While this could result in a short-term decrease in collected impact fees, it may also yield long-term cost savings by reducing demand on public water infrastructure systems, potentially deferring the need for future capital investment.

Local governments would also need to establish and administer fair and consistent procedures for calculating and reviewing the credits, which could involve administrative costs related to staff time, verification processes, and system updates. Nevertheless, the bill does not mandate new expenditures or staffing levels, allowing for local flexibility in implementation. Overall, the fiscal impact on localities is indeterminate and dependent on how widely the credit system is utilized and how each subdivision structures its program.

SB 14 delivers a focused, incentive-driven strategy for promoting water conservation and reuse in new developments while steering clear of the property rights concerns that led to the veto of similar legislation (SB 1253) in the regular session. The bill amends Subchapter B, Chapter 395 of the Local Government Code to require political subdivisions to grant credits against water and wastewater impact fees when builders or developers install eligible facilities, systems, or products that produce measurable water savings. Eligible improvements include those that reduce per-unit water consumption, decrease wastewater treatment needs, improve stormwater management, or exceed standard water efficiency compliance thresholds. By rewarding voluntary private investment in water efficiency infrastructure, the bill fosters conservation without imposing new regulatory mandates.

From a fiscal perspective, the Legislative Budget Board projects no cost to the state. While local governments could experience reductions in impact fee revenues, these near-term losses may be offset by long-term savings from reduced demand on public water, wastewater, and stormwater infrastructure. Political subdivisions would also benefit from greater resilience in their utility systems, potentially avoiding or deferring costly capacity expansions. The bill mandates that local governments establish transparent, fair, and consistent procedures for calculating, applying, reviewing, and approving these credits, ensuring predictability for developers and accountability to the public.

Importantly, SB 14 is a cleaner, more narrowly tailored version of the policy previously considered in SB 1253. Governor Abbott’s veto of SB 1253 was prompted not by its conservation incentives but by unrelated provisions added on third reading in the House that applied only to a single groundwater conservation district, imposed new fees that escalated annually, and allowed government entry onto private property without owner consent. SB 14 avoids these late-stage amendments entirely, focusing solely on the conservation credit mechanism and leaving property rights intact. This change directly addresses the governor’s stated objections and makes the bill a stronger, more defensible piece of legislation.

Finally, SB 14 could help improve housing affordability. Impact fees are often passed on to buyers in the form of higher home prices; by reducing those fees for developments with water-efficient systems, the bill can modestly lower upfront costs and encourage builders to incorporate conservation measures as a standard practice. This combination of resource sustainability, property rights protection, and pro-growth economic policy makes SB 14 a prudent and practical reform. For these reasons, Texas Policy Research recommends that lawmakers vote YES on SB 14.

• Individual Liberty: The bill allows builders and developers to decide voluntarily whether to implement water conservation and reuse technologies in their projects, without imposing mandates or restricting their ability to develop property. By offering credits against impact fees as an incentive, it preserves freedom of choice while making it financially advantageous to adopt sustainable practices.
• Personal Responsibility: The bill rewards developers who take proactive steps to reduce the strain their projects place on public infrastructure. Those who invest in water-efficient systems bear the initial cost of conservation measures but receive a direct financial benefit through fee credits. This reinforces the principle that individuals and private actors should take responsibility for their impact on shared resources.
• Free Enterprise: The measure uses a market-based approach to drive water conservation, encouraging competition among developers to innovate and incorporate cost-effective water-saving solutions. Reducing impact fees for qualifying projects enhances the business case for investing in efficiency technologies and fosters growth in the conservation products and services sector.
• Private Property Rights: Unlike the regular session version (SB 1253), the bill does not impose new burdens, special fees, or government access requirements on property owners. Instead, it respects property rights by focusing solely on voluntary improvements and ensuring that the decision to participate remains with the property owner or developer.
• Limited Government: Rather than expanding regulation or creating costly new programs, the bill works within existing impact fee structures to incentivize beneficial behavior. It potentially reduces the need for public infrastructure expansion by decreasing water and wastewater demand, leading to long-term cost savings for taxpayers and avoiding unnecessary growth in government responsibilities.

• HB 13 (Similar To)