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Texas Leg Decides It’s Dry Enough for Rainy Day Fund

Once every two years, all eyes are on the lawmakers in Austin who are busy passing new state laws.  Texas often passes water laws after drought so it was no surprise that after the summers of 2011 and 2012, water was a priority among state leaders in the regular session of the 83rd Texas Legislature this spring. Over the past three years most of Texas has struggled with drought conditions , which continues to affect much of the state today.

House Bill 4

Although several bills dealt with water (many of which we will discuss in upcoming weeks), most of the media attention focused House Bill 4 (HB 4).  Among other things, HB 4 allows for the movement of $2 billion from the state’s Economic Stabilization Fund or “rainy day fund”.  This money will be used to establish a revolving fund to provide state financial assistance to help implement the State Water Plan.  This new fund will be known as the State Water Implementation Fund for Texas (SWIFT).  This bill was inspired by both the need to install new technologies for additional water supply, but also to assist in the funding of old infrastructure replacement and repair.  Although the bill passed, it will not become effective unless voters approve a constitutional amendment this November.

We can all agree that two billion dollars is a lot of money.  The critical question is: where will that money go? To some extent, we don’t know yet, but the bill included a few important requirements for how the money must be distributed.  The bill requires Texas Water Development Board (TWDB) apply no less than 20% of the money (disbursed in each five-year period) to support projects designed for water conservation or reuse, including agricultural irrigation projects.  In addition, TWDB cannot apply less than 10% of the money to support projects for rural political subdivisions or agricultural water conservation.

The Process

Beyond the few directives already listed, the TWDB has great discretion to choose projects, but the bill establishes a complex process to determine which projects will be prioritized.  First, the chairs of the Regional Water Planning Groups are tasked with developing “uniform standards to be used by the regional water planning groups” to prioritize projects. These standards must be developed by December 2013 and “approved by the Board.” This prioritization will be conducted for both the existing 2012 plan and for the new plans now under development. The RWPGs must consider at a minimum such factors as the feasibility, viability, sustainability, and cost-effectiveness of a project.  TWDB is required to consider the effect of the proposed project on water conservation.  Also, SWIFT cannot be used for a water project if the applicant has failed to submit or implement a water conservation plan.  This prioritization list, once approved, will provide a guidepost for project approval.

Although the water funding aspect of the bill got lots of attention, the bill also dictates an important restructuring at the TWDB.  The current six-member unpaid, part-time board will be changed to a three-member, paid, full-time board. These changes will occur regardless of the November voting results.  The Governor will appoint the new board much like the commissioners for the Texas Commission on Environmental Quality (TCEQ).  HB 4 further dictates that of the new three-member board, one must have experience in engineering, one in public or private finance, and one in law or business.  The new board is then required to hire a new Executive Administrator by October 1, 2013.

While this bill creates the potential for exciting new water supply projects, many questions remain about what those projects will look like.  It makes sense to prioritize conservation projects, as they are often the least expensive opportunity to avoid the need for new supply.  We will certainly be watching this process and talk to you more before the November vote.

 

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