With Texas’ population increasing, longer droughts, and worsening floods, our water systems are under pressure like never before. Supplies are shrinking just as demand rises, and aging infrastructure can’t keep up. If nothing is done, millions of Texans could face serious water shortages and flood risks in the years ahead. Texas voters will have the opportunity to vote on Proposition 4, a proposed amendment to the state constitution that would create a dedicated and long-term funding source for water infrastructure.
The State Water Plan and State Flood Plan outline clear strategies to manage these growing challenges, but their success depends on having the support and funding needed to move from planning to implementation.
Houston and the Lower Galveston Bay watershed face some of the state’s most acute water challenges, including extreme water loss, chronic sewage overflows in low-income neighborhoods and severe flooding.
What Is Prop 4?
Prop 4 is a constitutional amendment that resulted from the passage of House Joint Resolution 7 (HJR 7) and its enabling legislation Senate Bill 7 (SB 7) in the 89th Texas Legislative Session. Its main purpose is to establish a consistent, long-term funding source for water projects across the state.
Prop 4 will appear on the statewide ballot in November as follows:
“The 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.”
If approved by voters, Prop 4 would dedicate up to $1 billion each year to the Texas Water Fund, a special state fund established to finance water projects in Texas.
Funding Source: The money would come from existing state sales and use tax revenue, but only once collections exceed a high annual threshold (currently $46.5 billion). This means Prop 4, if approved, wouldn’t create any new taxes.
Timeline: If approved by voters, the amendment takes effect on September 1, 2027 (SFY 2028), and the sales tax revenue will begin being allocated to the fund. Contingent upon legislative appropriations and exceeding the revenue threshold, funding may be transferred to the TWF late in State Fiscal Year 2028 and may be available for financial assistance (grants/loans) through the Texas Water Development Board (TWDB) starting in SFY 2029.
Duration: The $1 billion allocations would start in Fiscal Year 2027 and last for 20 years (until 2047), providing up to $20 billion for water projects.
Management: The Texas Water Development Board (TWDB), which manages the fund, would be responsible for allocating these funds through grants and loans to local communities. The Texas Legislature must still pass the budget bill for these funds to be appropriated.
What Types of Projects Could Be Funded?
The fund would be designed to address the state’s multi-faceted water crisis by supporting four key areas through the Texas Water Fund:
Repairing Aging Infrastructure: Providing grants and low-interest loans to local utilities to replace old, leaky pipes, reduce water loss, and eliminate service failures and boil water notices.
Developing New Water Supplies: Financing large-scale projects like seawater and brackish desalination, new reservoir construction, aquifer storage and recovery (ASR), and the reuse of oil and gas wastewater (“produced water”).
Flood Mitigation: Investing in projects through the Flood Infrastructure Fund to increase community resilience, with a focus on nature-based solutions and structural improvements.
Conservation: Supporting conservation efforts through the Agricultural Water Conservation Fund, other programs aimed at improving efficiency and planning across the state, and funding a statewide water public awareness program.
How Will Funds Be Managed and Allocated?
The Texas Water Development Board (TWDB) would decide how the allocations would work across programs and accounts and the types of projects.
Based on SB7 and HJR7, we know that at least 50% of the funds must go toward the New Water Supply for Texas Fund (NWSFT) and the State Water Implementation Fund for Texas (SWIFT). There is no mandated split between NWSFT and SWIFT; the TWDB board determines the exact percentage each program receives from this 50% minimum.
The remaining 50% would be divided between the rest of the programs in the Texas Water Fund, including the Flood Infrastructure Fund, Agricultural Water Conservation Fund, Economically Distressed Areas Program (EDAP), Rural Water Assistance Fund, State Participation Program, Water Loan Assistance Fund, Texas Water Development Fund (DFund), and Clean Water and Drinking Water State Revolving Funds. This part of funding also doesn’t have any mandatory split, so how much each program receives will be left to decide by TWDB to address different state-wide needs.
Is this good?
We recognize that Prop 4 presents a complex mix of fiscal and environmental policy considerations.
The Positives (Arguments in Favor)
The Concerns (Arguments Against)
Reliable, Long-Term Funding: The amendment creates a stable, 20-year funding stream that could allow state and local governments to finally undertake major, long-term infrastructure projects (like replacing pipes) that were previously impossible to fund.
Addressing Aging Infrastructure: The funds can be used to repair and replace old, leaky systems. Addressing the estimated 88 billion gallons of treated water lost annually to leaks could stop massive, preventable waste and increase our state’s water supply. This efficiency could help utilities keep operating costs down, which is crucial for keeping water bills low for families. These repairs could also help cut down on boil water notices and improve service reliability.
Flood and Conservation: Funds are explicitly eligible for the Flood Infrastructure Fund and Agricultural Water Conservation Fund, which are critical for increasing community resilience to extreme weather and improving water-use efficiency.
No New Taxes: The funding is drawn from existing state revenue, meaning it does not raise or create new taxes for hardworking Texans.
Constitutional Dedication: Critics argue that permanently dedicating state revenue in the constitution reduces legislative flexibility to respond to future budgetary needs or economic downturns, potentially limiting surplus funds for other priorities like education or healthcare.
Accountability and Oversight: Fiscal watchdogs prefer that large appropriations remain under the annual review of the Legislature, rather than becoming automatic “auto-piloted” appropriations administered by an unelected board (TWDB).
Funding Split Priorities: Requiring at least 50% of the funds to be split between the NWSTF and SWIFT has the potential to prioritize new, costly, water supply development over funding existing core local issues. This means funds could go toward controversial initiatives like seawater desalination and produced water rather than funding more efficient solutions like conservation and repair. Water loss is our region’s largest water supply issue.
What This Could Mean for Houston
Houston and the Lower Galveston Bay watershed face some of the state’s most acute water challenges, including extreme water loss, chronic sewage overflows in low-income neighborhoods and severe flooding. Prop 4 has the potential to provide critical funding for our region, but our advocacy is essential to ensure that funding is directed toward equitable solutions.
Addressing Local Inequity: We know that communities in historically underinvested neighborhoods experience the heaviest burden of systemic failure (raw sewage overflows, lack of safe drinking water). The funds provide an opportunity to advocate for greater investment in these Water Justice Zones that have been left behind for decades.
If Prop 4 Passes, What Comes Next?
For Bayou City Waterkeeper, our work of securing a sustainable and equitable water future continues far after the ballot measure is approved. We are committed to staying engaged to ensure these historic investments are used responsibly and address systemic inequities in water infrastructure.
Our work will continue to focus on:
Advocating for Equitable Funding Allocation:We will continue to pushthe TWDB to prioritize grants and loans to Disadvantaged Communities and for projects in historically disinvested neighborhoods (like our Water Justice Zones) based on need, affordability, and vulnerability.
Prioritizing Sustainable Solutions:We will continue to advocate at the local, state and federal levels for funds to prioritize cost-effective and environmentally sustainable strategies, such as water conservation, water loss mitigation, and water reuse, before focusing on expensive and sometimes controversial new water supply projects.
Ensuring Transparency and Public Engagement:We will continue to mobilizecommunities to participate in the public process related to the State Water Plan and State Flood Plan, ensuring community voices are heard in the TWDB’s decision-making on project selection and funding distribution.
Addressing Local Inequities: Locally, we will maintain our focus on closing gaps in infrastructure funding, such as advocating to ensure funds and projects in our watershed’s historically disinvested communities.
For questions about Prop 4 and our policy work, please contact Guadalupe Fernandez at guadalupe@bayoucitywaterkeeper.org or Usman Mahmood usman@bayoucitywaterkeeper.org.
