According to the Legislative Budget Board (LBB), HB 29 is not expected to have a significant fiscal impact on the State of Texas. The anticipated costs and revenue effects associated with implementing the bill are assumed to be minimal and manageable within existing resources. No additional appropriations or staffing increases at the state level are forecasted as a result of this legislation.

However, the bill may impose localized fiscal implications for municipally owned water utilities that meet the criteria set forth in the legislation, namely, those providing potable water through more than 150,000 service connections. These large utilities would be required to undertake several new compliance activities, including conducting water loss audit validations, developing comprehensive water loss mitigation plans, and integrating these plans into their existing water conservation strategies. Each of these steps could entail administrative, consulting, or operational expenses depending on the utility’s internal capabilities.

Moreover, the bill establishes a $25,000 administrative penalty for each violation of its provisions, which could result in significant costs for noncompliant utilities. While this is intended as an enforcement mechanism, it may further impact utilities that are already struggling with infrastructure or reporting deficiencies. The extent of these fiscal effects will likely vary based on the current state of compliance and data systems among the affected utilities.

HB 29 addresses a significant and growing concern in Texas—widespread water loss from aging or inefficient infrastructure in large municipally owned water utilities. With over 88 billion gallons of water lost statewide in 2023, including 21 billion gallons in San Antonio alone, the bill responds to both environmental and taxpayer concerns by requiring utilities with over 150,000 service connections to verify their water loss audits and take corrective action when they exceed loss thresholds set by the Texas Water Development Board.

The bill requires these utilities to validate water audit data through independent, certified professionals and to develop comprehensive water loss mitigation plans with clear, measurable goals. If a utility continues to exceed the threshold for three consecutive years, it must perform a more detailed review and revise its plan accordingly. Utilities must also incorporate these plans into their conservation reports and may face $25,000 administrative penalties for noncompliance.

From a liberty principles perspective, HB 29 aligns well with limited government and personal responsibility. It holds public utilities accountable without expanding state government, creating new agencies, or regulating private individuals or businesses. It promotes responsible stewardship of public resources while avoiding excessive regulatory overreach. The bill does not raise taxes or expand state bureaucracy, and the Legislative Budget Board concluded there would be no significant fiscal impact to the state, though some localized compliance costs for utilities are possible.

However, some concerns should be acknowledged:

The bill could lead to unfunded mandates for local governments, particularly for those utilities that lack internal resources to carry out third-party validations or develop robust mitigation plans. While the burden is limited to a small number of large utilities, the upfront costs for compliance may be challenging for those already struggling with infrastructure issues.

There's a risk that penalties could divert resources from the very infrastructure repairs the bill seeks to encourage, especially if enforcement is overly rigid or fails to account for utility-specific challenges.

Despite these concerns, the bill strikes a reasonable balance between enforcing accountability and avoiding heavy-handed state control. It focuses on efficiency, transparency, and responsible governance, which benefits ratepayers, taxpayers, and the broader public without growing the regulatory state or expanding the burden on individuals or businesses. For these reasons, Texas Policy Research recommends that lawmakers vote YES on HB 29, with the caveat that oversight agencies should work constructively with utilities during implementation to ensure the reforms are effective without being unnecessarily punitive.

• Individual Liberty: The bill does not impose any mandates or restrictions on individuals. It strictly applies to large, municipally owned water utilities—government-operated entities. Therefore, it preserves individual liberty by avoiding new restrictions, fees, or regulatory burdens on private citizens or households. Customers stand to benefit from more efficient water service and potentially lower costs in the long term, without losing any personal freedoms.
• Personal Responsibility: The bill directly encourages government accountability by requiring large utilities to take responsibility for excessive water loss. The audit validation and water loss mitigation plans force public entities to own their performance data and act to fix known inefficiencies. In this sense, the bill is a clear application of the personal responsibility principle, directed at public institutions funded by ratepayers and taxpayers.
• Free Enterprise: While the bill does not apply to private businesses or private water utilities, it could positively influence the free enterprise ecosystem in the long term. By requiring better infrastructure performance from public utilities, it may set a higher efficiency standard, which can encourage healthy comparisons with private sector performance. It also opens opportunities for private-sector professionals and consultants to offer third-party audit validation services, creating niche business opportunities.
• Private Property Rights: The bill does not infringe on private property in any way. In fact, by working to reduce system-wide water waste, it arguably enhances the value of private property by improving the quality and sustainability of public water infrastructure, an essential service tied to housing, agriculture, and economic development.
• Limited Government: This is where most scrutiny lies. The bill adds new obligations and oversight mechanisms for certain public utilities, including penalties and compliance timelines. However, it applies only to large, government-run utilities—not private entities and it uses existing state agencies (TWDB and TCEQ) without creating new bureaucracies. The scope is narrow and targeted, not broad or open-ended. Critics might argue that the administrative penalty provision and the mandated timelines reflect a modest increase in state oversight. However, supporters would counter that the bill actually strengthens limited government by ensuring that taxpayer-funded entities are efficient and transparent.

• HB 2605 (Same As)
• SB 1190 (Same As)