On Monday, the Texas House of Representatives approved House Bill 4 with broad bipartisan support, moving Texas a step closer to having a fund that could back local water projects for the next couple of decades.
HB 4, authored by Natural Resources Committee Chairman Allan Ritter of Nederland, creates the State Water Implementation Fund. Structured like a bank, the fund would make low-interest loans to cities, water districts and other regional entities so they can build and improve pipelines and other facilities, and construct reservoirs to provide for the water needs of the people of Texas.
Step two is a big one.
HB 11, joint-authored by Ritter, Kyle Larson of San Antonio, Jim Pitts of Waxahachie, Brandon Creighton of Conroe and Phil King of Weatherford, takes $2 billion from the state’s Economic Stabilization or “Rainy Day Fund” and sets it aside for water projects.
It would, in effect, finally fund the State Water Plan, which was approved in 1997 but never got any money.
King, whose district includes Wise and Parker counties, said getting the Legislature and Gov. Rick Perry to agree on using those funds is shaping up to be a real battle – but it’s one he and other supporters are willing to fight with a great deal of passion.
“We know we’re going to have to do $50-plus billion of water infrastructure in the decades to come,” he said. “We have an opportunity to take $2 billion and – because of the way it will be used to do low-interest loans to municipalities and water districts throughout the state – it will spin out to about $27 billion. It will literally take water off the Legislature’s table for a couple of decades.
“It’s a huge opportunity.”
RESERVE FUND OVERFLOWS
King, a staunch conservative, is not one to toss money around for pet projects. But he said the Rainy Day Fund has far more money in it than the state needs.
“The state has no business just hoarding money,” he said. “We need to either give it back to the taxpayers, or use it for something we really need that benefits the entire state.
“There are very few things I would use it for, but I think it’s a very good, conservative practice to use this cash on hand to fund the state water plan, which has been sitting un-funded since 1997.”
HB 4 and HB 11 would create a fund that could make low-interest loans to build reservoirs, upgrade water and wastewater pipelines, plants and other infrastructure, and help secure water supplies for Texas’ cities and towns for years to come.
King said the fund is structured so loans will get the same kind of scrutiny a big commercial bank loan would get.
“It was a big fight to set up this process so that you avoid cronyism and mis-use of this money,” he said. “That’s why it’s an infrastructure bank. It was very hard to set it up so that I felt comfortable with it, but I do.”
Tarrant Regional Water District, which owns and operates Lake Bridgeport and Eagle Mountain Lake as well as Richland-Chambers and Cedar Creek, would be one of the entities eligible to apply for loans through the fund.
Chad Lorance, spokesman for the district, said they are currently pursuing all the projects available to them – but they would likely use the fund in the future as needed.
More likely users of the fund would be smaller cities and water utilities that do not have the resources of a TRWD. Some of those entities – particularly cities out to the west – have been deeply affected by the last three years of drought and are in real danger of running out of water if they do not secure more supplies and upgrade their distribution systems.
“The Texas Water Development Board says critical water shortages are expected to increase throughout the state over the next 50 years, requiring a long-term reliable funding source to finance water and wastewater projects,” Lorance said. “This money would help offset the financial burden on the local water providers who are already planning for these shortages. Any delay in funding would put long-term planning of water projects in jeopardy and increase the overall cost to customers.”
King said he views this as an extremely rare opportunity.
“We may never have $2 billion in reserve again,” he said. “This can has been getting kicked down the road since 1997, and I’m really tired of that. This is the conservative, prudent, right thing to do for Texas.”
With the state’s population expected to increase from 25 million today to 46 million by 2060, King said not securing the state’s water needs would place a damper on growth. Businesses considering a move to the state are already beginning to question whether, in the long-term, the state will have enough water for them to justify the move.
“If we don’t have water, we don’t have a state,” he said. “New businesses ask about workforce, the regulatory climate, taxes – but more and more, they are asking about water. Nobody wants to invest millions of dollars in your state if you’re not going to have enough water 10, 20 or 30 years down the line. They’re asking about it because they’re hearing we don’t have it.”
The 2012 State Water Plan shows that over the next 50 years, Texas’ water supply is going to decrease 18 percent while water demands increase by 27 percent. If inaction continues, Texas could be short 8.3 million acre-feet per year by 2060 – almost 3 trillion gallons of water.
The plan outlines more than 500 strategies that, if fully implemented, would develop 9 million acre-feet of new water over the next 50 years.
“We have created a a good, grassroots, locally-driven water plan, but it has not been funded because it’s so much money,” King said. “I think it’s a very prudent practice to take cash you have on hand and use it to fund water projects for decades to come.”
For many people, water is simply not a priority, King said. In urban areas, far removed from agricultural producers, “they turn on the tap and it’s there. They don’t think about it.”
For others, the big concern is money.
“There are people who think – and it’s a legitimate position – that we should not spend any of the money in the Rainy Day Fund,” King said.
But he said it’s projected that the fund, by the end of the next budget cycle, will have $12 to $13 billion. It receives an automatic percentage of the state severance tax on oil and gas, which has grown faster than most experts imagined, and shows no signs of slowing down.
King said the state simply does not need $12 billion in reserves.
“At the very most, we need to maintain a fund of around $6 billion,” he said. “That helps us keep that triple-A bond rating and gives us an emergency fund – as in the case of Hurricane Ike, when we needed $1.5 billion on very short notice. But if you’ve got that much more than you need, you need to give it back to the taxpayers.
“It’s a huge fight,” he said. “I strongly support funding the water plan. It’s a top legislative priority, and it’s going to be a tremendously hard fight because we’re dealing with a lot of money.”