According to the Legislative Budget Board (LBB), the resolution would result in a negative impact of approximately $1 billion per year beginning in fiscal year 2027 and continuing through at least fiscal year 2030. Specifically, it diverts state sales and use tax revenues exceeding $48 billion annually into the Texas Water Fund (TWF), with a cap of $1 billion per year. As such, this action reduces the amount of sales tax revenue otherwise available for general state expenditures.

In the biennium ending August 31, 2027, the net estimated loss to General Revenue is about ($1,000,191,689), which includes an immediate cost of $191,689 associated with publishing the resolution for voter approval. After the initial cost, the ongoing fiscal impact consists entirely of revenue redirection: money that would have remained in the General Revenue Fund will instead be deposited into the Texas Water Fund.

The fiscal note clarifies that the amendment itself only requires deposits into the fund but does not appropriate or spend the money; actual use of the funds would be governed by separate enabling legislation (notably, House Bill 16). Therefore, there are no direct administrative costs associated with managing the new revenue stream at this time.

Finally, the resolution is expected to benefit local governments indirectly by expanding the resources available for water infrastructure grants and financial assistance administered by the Texas Water Development Board.

HJR 7 proposes a constitutional amendment to dedicate a portion of existing state sales and use tax revenue (up to $1 billion annually) to the Texas Water Fund for long-term water infrastructure development. While the resolution addresses a real and important need — strengthening Texas’s water systems — it raises serious concerns about fiscal discipline, government growth, taxpayer protection, and the role of markets versus government in addressing critical infrastructure needs.

First, HJR 7 fundamentally shifts water development toward a government-managed, politicized process by establishing permanent taxpayer-funded contracts, rather than encouraging private-sector, free-market solutions. Infrastructure that could be competitively financed and developed by the private sector would instead become more reliant on political decision-making and bureaucratic administration.

Second, the resolution undermines budget discipline by carving out constitutionally dedicated funding outside the general appropriations process. Rather than making water infrastructure compete with other priorities within the Legislature’s biennial budgeting, this measure locks in automatic spending and bypasses the tough decisions and tradeoffs essential to limited government.

Third, although it does not create new taxes, HJR 7 grows the size and obligations of state government by committing substantial ongoing revenue without offsetting cuts or greater fiscal scrutiny. This automatic diversion of funds reduces the potential for tax relief in future sessions by shrinking the General Revenue pool available for tax cuts or refunds to Texans.

Finally, the resolution enables politicians to avoid direct accountability for future spending decisions. Once the money is automatically deposited into the Texas Water Fund, legislators would no longer need to vote annually to allocate those funds, making it harder for voters to hold them responsible for spending priorities or potential misuse.

Given these concerns — the politicization of water infrastructure, the weakening of budget accountability, the expansion of government fiscal commitments, and the missed opportunity for tax relief — Texas Policy Research recommends that lawmakers vote NO on HJR 7.

• Individual Liberty: The resolution does not directly infringe on individual rights or personal freedoms. Texans would not face new legal restrictions or mandates because of this resolution. However, by encouraging more government-controlled management of water infrastructure (rather than relying on private sector solutions), it indirectly shifts control away from individuals and communities, favoring centralized governmental action.
• Personal Responsibility: The resolution discourages local governments, private businesses, and individuals from taking responsibility for funding or managing water infrastructure by centralizing funding at the state level. By creating a guaranteed government funding stream, it replaces community-driven initiative with reliance on taxpayer-funded programs, reducing incentives for innovation, market solutions, and self-reliance in critical sectors like water development.
• Free Enterprise: Instead of fostering a competitive marketplace for water infrastructure financing and delivery, the resolution promotes politicized, government-backed funding mechanisms. This can crowd out private investment, discourage private sector innovation in water conservation and infrastructure, and lead to preferential contracts driven more by politics than efficiency or entrepreneurship. It shifts the water economy further from market-driven solutions toward a government-subsidized model.
• Private Property Rights: The resolution does not directly expand eminent domain authority, restrict property use, or impose new land regulations. There is no immediate effect — positive or negative — on private property rights based on the language of the resolution itself.
• Limited Government: The resolution violates the principle of limited government by increasing the size and permanence of government spending commitments without requiring fresh legislative approval each year. It expands the state’s fiscal footprint by constitutionally dedicating massive annual revenues ($1 billion/year) outside of the normal appropriations process. Future legislatures would have less flexibility to shrink government or reprioritize spending, and the opportunity for meaningful tax relief would be reduced.

• HB 16 (Enabled by)
• SB 7 (Enabled by)