Texas Water Fund and Water-Infrastructure Financing

Texas voters approved Proposition 4 on November 4, 2025, dedicating a defined slice of state sales-tax revenue to the Texas Water Fund — a fund the Texas Water Development Board (TWDB) uses to move money into its water-infrastructure financing programs, not a grant window homeowners apply to directly.

What changed

Two measures work together. SB 7 was signed June 20, 2025, and most of its provisions took effect September 1, 2025; it expanded the funds and accounts the Texas Water Fund can feed, the funding priorities, and eligibility under the New Water Supply for Texas Fund. HJR 7 appeared on the November 4, 2025 ballot as Proposition 4, and voters approved it — the Governor's proclamation certifying the election was published through the Texas Secretary of State. The provisions tied to the constitutionally dedicated revenue follow their own schedule: under the constitutional amendment, the dedication takes effect September 1, 2027 and expires August 31, 2047. The whole law did not “start” on one date — the statutory framework is in effect now, while the dedicated transfers begin under the constitutional and statutory schedule.

The funding formula — precisely

Each state fiscal year during the dedication period, the Comptroller deposits to the Texas Water Fund the first $1 billion of net state sales-and-use-tax revenue that exceeds the first $46.5 billion of that revenue coming into the treasury that year. That is not an unconditional guaranteed $1 billion every year: if collections do not exceed the $46.5 billion threshold, nothing transfers. Per TWDB's official Proposition 4 materials, the availability of this money for financing also depends on legislative appropriation, and the dedication has a constitutional end date. TWDB anticipates the first constitutionally dedicated transfer could occur late in fiscal year 2028, with availability through financing programs to follow.

Where the money goes — not a 50/50 split

Of the constitutionally dedicated money deposited to the Texas Water Fund, TWDB must allocate no less than 50 percent for transfer to the New Water Supply for Texas Fund, the State Water Implementation Fund for Texas (SWIFT), or a combination of those funds. The statute does not require an equal division between those two funds, and the remainder can flow to the fund's other eligible accounts under TWDB's allocations.

Eligible priorities

The Legislature's priorities for the fund, as expanded by SB 7, include new water supplies; water and wastewater infrastructure, including rehabilitation or replacement of deficient or deteriorating systems; grants and assistance for rural political subdivisions and municipalities below the statutory population threshold; water-loss mitigation; conservation; and technical assistance for applicants. Through the New Water Supply for Texas Fund, eligible project types include desalination (marine and brackish), produced-water treatment, water and wastewater reuse, aquifer storage and recovery, certain qualifying reservoirs that meet the statute's land-acquisition and permitting criteria, acquisition of water originating outside the state, and infrastructure to transport and integrate new supplies. Projects with required permitting substantially completed receive attention under the fund's directives.

Eminent domain and easements

SB 7 directs TWDB to coordinate conveyance planning and encourages the use of existing transportation or utility easements when practical, to reduce the need for additional property acquisition. What the law does not do matters just as much: it does not eliminate eminent domain, does not prohibit condemnation, does not guarantee that existing easements will be used for any particular project, and does not create new compensation rights for every affected owner. Landowners near proposed conveyance routes retain the eminent-domain protections of existing law.

Disaster suspension

During a declared disaster, allocations can be suspended only through the official constitutional and statutory process — the governor may not simply cancel the statutory allocation unilaterally. The specific suspension mechanics come from the constitutional amendment and implementing statute, not from executive discretion alone.

How the money is actually applied for

The Texas Water Fund is not one universal direct-grant application, and it is not a program individual homeowners apply to. It supplies money to specific TWDB-administered funds and programs; eligible political subdivisions and project sponsors then apply through the appropriate program. Each program has its own eligibility rules, application cycles, financing structures, loan or grant authority, engineering requirements, environmental reviews, and — in some cases — an intended-use plan. Rural communities and small water systems should start with the program pages TWDB maintains.

Texas Water Fund — Official TWDB Page