Texas House Bill HB 4657

Texas 2025 - 89th Regular

• Filed: 3/12/25

Caption

Relating to establishing the Local Government Water Redevelopment Fund.

Summary

HB 4657 creates the Local Government Water Redevelopment Fund as a special fund in the state treasury, administered by the Texas Water Development Board. The fund would be used to provide disbursements for the repair and redevelopment of existing water infrastructure located within the boundaries of eligible political subdivisions that impose a sales or use tax and apply for funding. The board would be required to establish application procedures, adopt rules, and publish the amounts each applicant is eligible to receive. The bill also amends the Tax Code to dedicate four percent of state sales tax proceeds, after certain existing allocations, to the new fund before the remainder is deposited to general revenue. Eligibility for annual funding would be based on each applicant’s share of sales tax collections relative to total statewide collections in the prior 12-month period, creating a formula-driven distribution mechanism. The act would take effect January 1, 2026, but only if a related constitutional amendment creating the fund is approved by voters; otherwise, the bill would have no effect.

Impact

If enacted and triggered by voter approval of the companion constitutional amendment, HB 4657 would divert a portion of state sales tax revenue away from general revenue and into a dedicated water infrastructure fund. It would add a new subchapter to Chapter 15 of the Water Code and amend Section 151.801 of the Tax Code to establish the revenue stream, eligibility rules, and administrative framework for grants or disbursements to local governments for water system repair and redevelopment. The bill would primarily affect the Texas Water Development Board, the comptroller, and eligible local political subdivisions that collect sales or use taxes.

Sentiment

The available record shows the bill was referred to the House Natural Resources Committee and there are no recorded votes or committee transcripts in the provided materials. Based on the bill’s structure and purpose, the measure appears to be framed as a targeted infrastructure financing proposal intended to support local water system needs, with an emphasis on dedicated funding and administrative oversight. No explicit support or opposition is documented in the provided context.

Contention

The main policy issue is the diversion of four percent of sales tax proceeds from general revenue to a restricted water redevelopment fund, which may raise concerns about reduced flexibility for the state budget. Another potential point of contention is the eligibility and distribution formula, which ties funding to a political subdivision’s share of sales tax collections and limits applicants to taxing political subdivisions, potentially favoring larger or more economically active local governments. The bill is also contingent on voter approval of a constitutional amendment, so the fund’s creation depends on separate statewide action.