In Texas, local governments are primarily responsible for financing local water infrastructure. They typically issue bonds to pay for the projects.
These projects can be costly, however, so many comunities need state assistance to pay for them.
The Texas Water Development Board (TWDB) provides federal and state funding, primarily in the form of loans, for such water projects. This includes projects recommended in TWDB’s State Water Plan.
The Legislature first appropriated funding for water plan projects in 2007 providing about $80 million in general revenue funds. These funds allowed TWDB to issue more than $1.47 billion in bonds at below-market rates to support project development.
As a result of these appropriations, TWDB has provided more than $1.05 billion in low-interest loans and grants for 46 projects across the state.
Once fully implemented, these projects will supply Texas with more than 1.5 million acre-feet of water.
The 46 projects funded consist of a variety of water management strategies including groundwater desalination, water transmission lines, treatment facilities, wetland reuse projects, new groundwater wells and new reservoirs.
TWDB also issues bonds to help local water entities lower their borrowing costs. The Legislature sets strict limits on the amount of bonds they can issue. This is referred to as TWDB’s bonding authority. Bonding authority is not the same thing as having cash on hand. It is more comparable to a maximum limit on a credit card.
TWDB has constitutional authority to issue bonds via several different funds. The Development Fund, or D-Fund, is most significant for state water projects.
The D-Fund is supported by more than $4 billion in one-time use bonding authority dating back to 1957. Of this total, $3.9 billion has been used.
|Year Granted||Constitutional Bonding Authority (Development Fund)|
In 2011, Texas voters approved a constitutional amendment that gave TWDB an additional $6 billion of so-called “evergreen” bonding authority. This means that TWDB can re-issue bonds as previous ones are paid off.
To date, TWDB has not used any of its evergreen bonding authority. Currently, this is the major financial tool TWDB has to finance nearly $26.9 billion in requested state financial assistance.
In recognition of Texas' increasingly severe water problems, the 2013 Legislature made sweeping changes to Texas' administration of water projects. Lawmakers restructured the board that develops the State Water Plan and, with voter approval, moved $2 billion from the Rainy Day Fund to back water development projects.
To see details on the new structure of the board as well as the way that the $2 billion will help support water projects on page 20 of Texas Water Report: Going Deeper for the Solution (PDF).