According to the Legislative Budget Board (LBB), the fiscal implications of SB 7 are substantial, though not directly borne by the General Revenue Fund. The bill imposes no immediate fiscal impact on General Revenue for the biennium ending August 31, 2027, but it lays the groundwork for long-term spending through the Texas Water Fund (TWF) and related accounts. Key financial obligations would be met from existing and anticipated future deposits into the TWF, pending voter approval of a constitutional amendment authorizing dedicated tax revenue streams.

To implement the bill's provisions, the Texas Water Development Board (TWDB) is expected to incur $5.3 million in FY 2026 and $4.4 million in FY 2027 from the TWF, supporting 32 new full-time equivalent (FTE) positions. These initial hires will help TWDB fulfill expanded responsibilities related to water supply conveyance coordination, infrastructure standardization, and reporting. If the proposed constitutional amendment is passed, authorizing dedicated tax revenue, projected TWF deposits of $1 billion annually beginning in FY 2028 would trigger additional implementation costs. From FY 2028 to FY 2030, TWDB is projected to need 132 FTEs, with annual costs exceeding $17 million.

The bill also allows for up to $2 million from TWF administrative allocations to reimburse the Texas Commission on Environmental Quality (TCEQ) for reviewing water project permits. Furthermore, administrative expenses will be capped at 2% of the fund, ensuring some fiscal restraint. Other provisions expand the eligible uses of various water-related funds and programs, including allowing the purchase or lease of water rights and lifting previous restrictions on interregional funding requirements.

While the fiscal note indicates a well-structured funding mechanism via the TWF and associated dedicated revenues, it also highlights the need for significant staffing and system upgrades. These costs underscore the state's commitment to scaling its water infrastructure capabilities, contingent on reliable long-term revenue flows and voter support for constitutional amendments authorizing the funding model.

SB 7 seeks to address Texas's mounting water infrastructure and supply crisis through a multi-pronged strategy that includes creating a statewide framework for water conveyance coordination and enhancing financial mechanisms for water infrastructure development. The bill is a response to sobering forecasts of water shortages—up to 6.86 million acre-feet annually by 2070—along with economic analyses projecting significant job losses and GDP decline due to inadequate water infrastructure. The bill is also linked to Governor Abbott’s declared emergency priority and to the companion constitutional amendment proposal (SJR 66), which would dedicate $1 billion annually in state tax revenues to the Texas Water Fund.

The bill has clear merits from a policy standpoint: it empowers the Texas Water Development Board (TWDB) to coordinate infrastructure planning across multiple jurisdictions, promotes standardization for future interoperability, and explicitly seeks to minimize the use of eminent domain by encouraging shared use of existing easements. It also expands the use of key funds, including the New Water Supply for Texas Fund and the Flood Infrastructure Fund, to enable financing for large-scale reservoir projects, wastewater treatment in rural areas, and even the importation of out-of-state water. Importantly, it enhances legislative oversight through a revamped Texas Water Fund Advisory Committee and mandates a biennial progress report to ensure accountability.

However, concerns remain regarding the scope and control of the expanded authority granted to the TWDB. While administrative costs are capped at 2% of the Texas Water Fund and initial funding is accounted for via dedicated constitutional revenues, the bill empowers TWDB to form ad hoc committees and contract professional services with little direct legislative input. Additionally, although the bill takes steps to avoid unnecessary eminent domain usage, it does not go far enough in strengthening property rights or ensuring protections for landowners. From a limited government and individual liberty perspective, these issues warrant amendments that increase transparency, limit bureaucratic discretion, and bolster property rights safeguards.

In summary, while SB 7 is a timely and largely constructive effort to secure Texas’s water future, and while Texas Policy Research recommends that lawmakers vote YES on this effort, we also recommend that lawmakers amend the bill to better align with liberty principles, especially in areas of property rights, fiscal oversight, and government accountability.

• Individual Liberty: The bill makes a deliberate effort to minimize the use of eminent domain by encouraging joint planning and the use of existing transportation and utility easements for water conveyance infrastructure. This is a meaningful safeguard for landowners, as eminent domain is one of the clearest threats to individual liberty in land use policy. However, while the bill encourages alternatives, it does not prohibit eminent domain outright, leaving room for future governmental takings where coordination fails.
• Personal Responsibility: The legislation focuses on coordination between state agencies, utilities, and project sponsors and does not impose mandates on individuals or households. While it empowers local and regional planning efforts that could benefit long-term sustainability, it doesn’t explicitly encourage behavioral changes or responsibility on the part of individual water users.
• Free Enterprise: On one hand, the bill opens opportunities for private sector engagement through the TWDB’s authority to contract with consulting and professional service providers. It also supports the broader market by investing in water infrastructure, a foundational component of economic activity. On the other hand, by expanding the reach of a state agency into infrastructure planning and standard-setting—without clear market-competition mechanisms—it may inadvertently favor larger, established players and create regulatory barriers for smaller enterprises or independent utilities.
• Private Property Rights: As mentioned under individual liberty, the bill aims to avoid unnecessary land takings, which bolsters property rights. However, it does not provide additional protections, compensation frameworks, or appeals mechanisms for landowners affected by future infrastructure projects. Moreover, by enabling the state to purchase or lease water rights (including from out-of-state sources), the bill expands the state’s market presence in water resources, potentially competing with or displacing private holders in certain scenarios.
• Limited Government: The bill centralizes substantial new responsibilities in the Texas Water Development Board (TWDB), including rulemaking, coordination authority, and advisory committee formation. While there is some oversight through the newly created Texas Water Fund Advisory Committee and mandated biennial reports, these bodies are not subject to sunset review, and the TWDB retains broad discretion. The bill could be strengthened by adding checks on TWDB authority, requiring greater legislative oversight, and ensuring public transparency of ad hoc committee actions and procurement processes.

• HJR 7 (Enabling for)
• SJR 66 (Enabling for)