According to the Legislative Budget Board (LBB), HJR 35 would create the Grow Texas Fund (GTF) in the state treasury, redirecting a portion of severance tax revenue that would otherwise be deposited in the Economic Stabilization Fund (ESF). Specifically, it mandates that 12% of the severance tax revenues normally allocated to the ESF be diverted to the GTF, with a cap of $250 million per biennium. These funds would be appropriated by the legislature for infrastructure needs in oil and gas-producing regions of the state.

The resolution carries a direct cost to the state of $191,689 for publication of the constitutional amendment prior to voter consideration in the November 2025 election. If approved, the measure would take effect on September 1, 2027, and apply to fiscal transfers beginning in the 2028–2029 biennium.

Importantly, the current projection indicates that the ESF will hit its constitutional cap by the start of fiscal year 2026. Once the cap is reached, severance tax transfers to the ESF cease, and the funds remain in the General Revenue Fund. As a result, unless the ESF balance is reduced (through expenditures or a cap increase), the amount available for transfer to the Grow Texas Fund will be zero. Therefore, while the resolution sets up a statutory framework to reallocate funds, its fiscal impact is conditional upon the ESF balance falling below its cap in future years.

No fiscal impact to local governments is anticipated as a result of this resolution.

HJR 35 proposes a constitutional amendment to create the Grow Texas Fund (GTF), a new infrastructure funding mechanism targeted at oil and gas-producing regions of the state. It would divert up to 12% of severance tax revenue currently allocated to the Economic Stabilization Fund (ESF) into this new fund, capped at $250 million per biennium, and establish a seven-member commission to advise and oversee its administration. While well-intentioned, the resolution raises significant structural, equity, and fiscal policy concerns.

Foremost, HJR 35 unnecessarily expands the scope and permanence of state government by constitutionally embedding a new fund and governance structure. It bypasses existing budgetary processes and creates a new advisory body—the Grow Texas Fund Commission—composed of appointed members from the legislature and public. While commission members would serve without compensation, its very existence introduces another layer of bureaucracy to carry out functions that could be administered more efficiently through current legislative committees or executive agencies. Making this structure part of the state constitution limits future legislative flexibility and embeds a permanent regional funding mechanism into Texas’s governing framework.

Second, the proposed allocation of funds is geographically narrow and fundamentally inequitable. Although oil and gas-producing regions do experience infrastructure strain, the severance tax revenues they generate are statewide funds collected for the general benefit of all Texans. Carving out a dedicated, constitutionally protected funding stream for specific areas sets a precedent for regional earmarking, which may prompt other sectors or regions to seek similar treatment. This approach undermines the principle of equal benefit from general revenue and can be viewed as privileging certain communities over others based on political or economic clout.

Third, the legislation fails to address a deeper fiscal concern: the overaccumulation of taxpayer dollars in the ESF due to the fund reaching its constitutional cap. Once that cap is hit, excess severance tax revenue remains in the General Revenue Fund, essentially locking away taxpayer overcollections without any mechanism for relief or return. Rather than redirecting that surplus into new spending vehicles, the state should pursue solutions that prioritize returning funds to taxpayers—such as reducing property taxes, paying down long-term debt, or adopting refund mechanisms when the state’s revenue far exceeds needs. HJR 35 represents a missed opportunity to correct that imbalance and instead focuses on spending, not reform.

Finally, while the bill does not create a criminal offense or impose new regulatory burdens, it represents a significant shift in fiscal policy and governance that may have long-term implications for the state's approach to budgeting and constitutional design. Embedding targeted infrastructure funding into the state constitution without sunset provisions or comprehensive accountability requirements is an ill-advised way to address infrastructure strain—especially when more flexible, statutory alternatives are available.

In summary, HJR 35 embodies well-meaning but fundamentally flawed policy. It expands government structure, creates a geographically preferential spending mechanism, and redirects taxpayer overcollections toward permanent spending rather than relief. As such, Texas Policy Research recommends that lawmakers vote NO on HJR 35.

• Individual Liberty: The resolution does not restrict or expand any individual’s freedoms in a direct or overt way. It does not impact speech, religion, privacy, firearms, or other personal liberties protected by the Texas and U.S. Constitutions. The creation of a new state infrastructure fund does not compel individual behavior nor interfere with private life. Therefore, it neither enhances nor diminishes Individual Liberty.
• Personal Responsibility: By creating a constitutionally dedicated funding stream for infrastructure in energy-producing regions, HJR 35 arguably substitutes state intervention for local initiative. Infrastructure strain in oil and gas regions—such as roads, schools, and healthcare access—is a legitimate concern, but these challenges are traditionally managed through local taxes, bonding, and intergovernmental grants. Creating a permanent state-level fund to address these needs may reduce incentives for local governments to budget responsibly or seek market-based solutions. In this way, HJR 35 erodes the principle of local and individual responsibility for meeting infrastructure demands.
• Free Enterprise: The resolution risks distorting market outcomes by channeling state funds disproportionately to specific industries and regions. While the infrastructure investment may improve logistics and accessibility in oil-producing areas, using constitutionally earmarked state revenue for a sectorally defined purpose is a form of indirect subsidy. This targeted support favors oil and gas-producing regions over others and raises concerns about preferential treatment that undermines a level playing field. A freer market would allocate resources based on need and competition—not geography or political leverage.
• Private Property Rights: The resolution does not modify eminent domain laws or impose new restrictions on private property owners. While the funds created could support infrastructure projects that may implicate land use (e.g., roads or schools), any such projects would proceed through existing legal frameworks. Thus, the proposal does not directly threaten or strengthen private property rights.
• Limited Government: The resolution significantly expands the footprint of state government by creating a new, constitutionally enshrined fund and an appointed advisory commission to oversee it. This represents a shift away from the principle that government should be narrowly tailored and temporary in its interventions. The Grow Texas Fund would be locked into the Texas Constitution, making it harder for future legislatures to redirect funds or repeal the program. It circumvents normal appropriations processes, prioritizes permanent regional earmarks over taxpayer relief, and introduces new governance mechanisms—each of which runs counter to the philosophy of limited, responsive government.

• HB 265 (Enabled by)