Proposing a constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas water fund and to provide for the allocation and use of that revenue.
LowStandard timeline
Low Cost
Effective:2025-06-02
Enforcing Agencies
Comptroller of Public Accounts • Texas Water Development Board (TWDB)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: The resolution is effective immediately to place the proposition on the ballot. The Constitutional Amendment takes effect September 1, 2026, if approved by voters.
Compliance Deadline:November 4, 2025 (Voter Approval). Financial transfers begin September 1, 2027 (FY 2027).
Agency Rulemaking: The Texas Water Development Board (TWDB) will engage in significant rulemaking throughout 2026 and early 2027 to define project eligibility, specifically for the "New Water Supply for Texas Fund."
Immediate Action Plan
1.November 2025: Monitor election results for Proposition approval.
2.Q1 2026: Engineering and Utility firms must engage with TWDB during the rulemaking comment period to influence "New Water Supply" definitions.
4.Legal Review: Insert "Source of Water" representations in vendor contracts for pipeline/transport infrastructure to align with constitutional restrictions.
Operational Changes Required
Contracts
Government Contractors: If bidding on projects funded by the Texas Water Fund (TWF), you must review Joint Venture and P3 agreements to ensure capacity for large-scale state water projects.
Exclusionary Warranties: Contracts for water transport infrastructure must include representations and warranties regarding the water source. The law explicitly prohibits using TWF funds for infrastructure transporting non-brackish groundwater. You must contractually certify the water source to avoid claw-back liability.
Hiring/Training
Business Development: Engineering and construction firms should train proposal teams on TWDB grant/loan criteria.
Lobbying/Advocacy: Assign government affairs staff to monitor TWDB rulemaking regarding the definition of "New Water Supply." This definition will determine which technologies (desalination, produced water, etc.) are eligible for the mandated 25% fund allocation.
Reporting & Record-Keeping
General Business: No changes. Continue standard sales tax remittance to the Comptroller.
Fund Recipients: Entities receiving TWF grants or loans must establish segregated accounting codes. You must be able to trace every dollar to ensure it is not used for prohibited groundwater transport projects, as these funds will be subject to Legislative Budget Board and State Auditor scrutiny.
Fees & Costs
No New Fees: This bill reallocates existing revenue; it does not increase the sales tax rate.
Project Bonding: Anticipate standard performance and payment bond costs for state-backed infrastructure projects.
Strategic Ambiguities & Considerations
"New Water Supply" Definition: The bill mandates 25% of the fund goes to the "New Water Supply for Texas Fund." The TWDB has discretion to define what constitutes "new." Businesses must watch if this includes aquifer storage, recovery, or strictly desalination and treatment technologies.
Revenue Volatility: The $1 billion transfer only triggers if total state sales tax revenue exceeds $48 billion. If a recession causes revenue to drop below this threshold, funding for that fiscal year will be zero. Long-term projects must account for this "financial force majeure" risk.
"Brackish" Definition: The restriction on groundwater transport relies on the statutory definition of "brackish." If the Legislature amends the Water Code's definition of brackish water, the scope of eligible infrastructure projects will shift automatically.
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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
In 2023, the 88th Texas Legislature took a significant step towards securing water access and fueling job creation and economic expansion across the state by creating the Texas Water Fund through a constitutional amendment, which, according to the Texas Legislative Council's Amendments to the Texas Constitution Since 1876 publication, was approved by voters with 77.7 percent support. Water infrastructure investments can support Texas businesses, agriculture, and communities that depend on reliable water infrastructure for daily operations and long-term sustainability. According to a report from the Center for Energy Studies at Rice University's Baker Institute commissioned by Texas 2036, Texas will need to invest at least $154 billion in water infrastructure over the next 50 years, but the state's current projected financial assistance effort for water infrastructure falls beneath this amount by about $112 billion. Notably, per Texas 2036, 85 percent of Texas voters support a long-term state funding strategy for water infrastructure. H.J.R. 7 seeks to secure a long-term funding source for the state's critical water infrastructure needs by ensuring that the Texas Water Fund receives constitutionally dedicated revenue.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this resolution does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this resolution does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.J.R. 7 proposes an amendment to the Texas Constitution to require the comptroller of public accounts, in each state fiscal year and subject to constitutional provisions relating to the appropriation and allocation of revenue from the state sales and use tax on sporting goods, to deposit to the credit of the Texas Water Fund the net revenue derived from the imposition of the state sales and use tax on the sale, storage, use, or other consumption in Texas of taxable items under applicable state law that exceeds the first $48 billion of that revenue coming into the treasury in that state fiscal year, provided that the total amount so deposited in a state fiscal year may not exceed $1 billion.
H.J.R. 7 authorizes the legislature, by adoption of a concurrent resolution approved by a record vote of two-thirds of the members of each house of the legislature, to direct the comptroller to increase or reduce the amount of money deposited to the credit of the Texas Water Fund under the resolution's provisions. The comptroller may be directed to make the increase or reduction only:
·in the state fiscal year in which the resolution is adopted, or in either of the following two state fiscal years; and
·by an amount or percentage that does not result in:
oan increase of more than 100 percent of the amount that would otherwise be deposited to the fund in the affected state fiscal year under the resolution's provisions; or
oa reduction of more than 50 percent of the amount that would otherwise be deposited to the fund in the affected state fiscal year under the resolution's provisions.
H.J.R. 7 sets the comptroller's duty to make a deposit under these provisions to expire August 31, 2035, but the legislature by adoption of a concurrent resolution approved by a record vote of a majority of the members of each house of the legislature may extend that duty beyond the applicable expiration date in 10-year increments. The resolution's provisions take effect September 1, 2026.
ELECTION DATE
The constitutional amendment proposed by this joint resolution will be submitted to the voters at an election to be held November 4, 2025.
Honorable Cody Harris, Chair, House Committee on Natural Resources
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HJR7 by Harris (Proposing a constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas water fund.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HJR7, As Introduced: a negative impact of ($1,000,191,689) through the biennium ending August 31, 2027.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($191,689)
2027
($1,000,000,000)
2028
($1,000,000,000)
2029
($1,000,000,000)
2030
($1,000,000,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue Gain from Texas Water Fund 484
Probable (Cost) from General Revenue Fund 1
2026
$0
$0
($191,689)
2027
($1,000,000,000)
$1,000,000,000
$0
2028
($1,000,000,000)
$1,000,000,000
$0
2029
($1,000,000,000)
$1,000,000,000
$0
2030
($1,000,000,000)
$1,000,000,000
$0
Fiscal Analysis
The joint resolution would propose amendments to the Texas Constitution to dedicate a portion of state sales and use tax revenue to the Texas Water Fund (TWF).
The resolution would require the Comptroller of Public Accounts to annually deposit to TWF the amount of revenue derived from the sales and use tax that exceeds $48 billion, provided the Comptroller not deposit more than $1 billion of this revenue to the TWF each fiscal year.
The proposed amendment would allow the Legislature, by adoption of a resolution approved by a two-thirds majority, to direct the Comptroller to adjust the amount deposited to the TWF by an amount not to exceed 50 percent below or 100 percent above the amount that would otherwise be deposited. The Comptroller could only adjust the amount to be deposited in the state fiscal year in which the resolution is adopted or in the two following state fiscal years.
The Comptroller's duty to make the annual deposits described above would expire August 31, 2035, unless extended by the Legislature. Such an extension would be for a ten-year period.
The proposed constitutional amendment would be submitted to voters in a statewide election on November 4, 2025. If approved by voters, the resolution would take effect September 1, 2026.
Methodology
The proposed amendment would require the Comptroller to deposit the amount collected in sales and use tax in excess of $48 billion to the TWF, up to $1 billion per fiscal year. This analysis assumes, once the condition exists that sales and use tax revenue exceeds $48 billion in a fiscal year, no more than $1 billion would be deposited to the TWF during that fiscal year. The table above reflects the amount projected to be deposited to the TWF based on estimates from the 2026-27 Biennial Revenue Estimate.
The cost to the state for publication of the resolution is $191,689.
The proposed constitutional amendment would only require the deposit of revenue into the TWF but would not make any changes to the current administration of the fund. Consequently, any cost would be shown in the fiscal note for the associated enabling legislation (HB 16).
Local Government Impact
The resolution would result in additional funding available for existing financial assistance programs administered by the Texas Water Development Board.
Source Agencies:
304 Comptroller of Public Accounts, 580 Water Development Board
LBB Staff:
JMc, TUf, SD, KK, AJL
Related Legislation
Explore more bills from this author and on related topics
HJR7 proposes a constitutional amendment to dedicate up to $1 billion annually from existing state sales tax revenue to the Texas Water Fund, subject to voter approval in November 2025. This measure creates a massive, predictable capitalization stream for water infrastructure projects starting in FY 2027 but imposes no new tax collection or remittance requirements on Texas businesses. Implementation Timeline Effective Date: The resolution is effective immediately to place the proposition on the ballot.
Q
Who authored HJR7?
HJR7 was authored by Texas Representative Cody Harris during the Regular Session.
Q
When was HJR7 signed into law?
HJR7 was signed into law by Governor Greg Abbott on June 2, 2025.
Q
Which agencies enforce HJR7?
HJR7 is enforced by Comptroller of Public Accounts and Texas Water Development Board (TWDB).
Q
How urgent is compliance with HJR7?
The compliance urgency for HJR7 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HJR7?
The cost impact of HJR7 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HJR7 address?
HJR7 addresses topics including resolutions, resolutions--constitutional amendments, state finances, state finances--management & control and taxation.
Legislative data provided by LegiScanLast updated: November 25, 2025
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