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.

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.