Election information: Proposition 6
Editor's Note: The Advocate is offering information about the upcoming constitutional amendment election Nov. 5. This feature, provided by the League of Women Voters, will look at the pros and cons of each of the nine amendments on the ballot. This is a look at Proposition 6.
Official ballot language
The constitutional amendment providing for the creation of the State Water Implementation Fund for Texas and the State Water Implementation Revenue Fund for Texas to assist in the financing of priority projects in the state water plan to ensure the availability of adequate water resources.
The Texas Water Development Board (TWDB) develops a state water plan based on information from each of 16 regional water-planning groups. Existing state funding relies primarily on issuance of general obligation bonds, legislative appropriations and federal grants that finance loans to local and regional water suppliers. In November 2011, voters approved a constitutional amendment that authorized the TWDB to issue additional general obligation bonds not to exceed $6 billion at any time.
Proposition 6 establishes two funds to finance water plan projects: the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). The two funds would receive financial resources for water projects, including revenue authorized by the state Legislature, investment earnings and interest and proceeds from the sale of bonds. The two funds would be part of the state treasury but outside the general revenue fund, a constitutional requirement to give the Legislature control over disbursements.
Under Proposition 6, TWDB would have the power to enter into bond enhancement agreements to make bonds more attractive to purchasers. If the Legislature provides authorization and the Legislative Budget Board approves, TWDB would have the authority to issue bonds and related credit agreements and to make direct loans for water projects in the state water plan. Repayment of loans would provide a revolving cash flow for additional loans.
HB 1025 authorizes the transfer of $2 billion from the economic stabilization fund, commonly known as the Rainy Day Fund, if the amendment passes. Money in the fund would be available to provide support for low-interest loans, longer repayment terms for loans, incremental repurchase terms for projects in which the state owns an interest and deferral of loan payments. The enabling legislation for the proposed amendment, HB 4, prescribes how the funds are to be invested and how they may be apportioned within the state water plan. At least 10 percent of funds would be applied to projects designed to serve rural areas and 20 percent for water conservation or reuse.
• Ensuring an adequate water supply is essential to the public and economic health of Texas. These two funds provide a sustainable mechanism for funding water development projects with an initial transfer of $2 billion from the Rainy Day Fund to seed a revolving cash flow for making loans for water projects.
• Responding to the current drought emergency is an appropriate use of the Rainy Day Fund and will provide a better return on investment than if the money were left in that fund.
• Without the necessary funding for priority projects in the state water plan, Texas stands to lose millions of jobs and suffer reduced economic activity and decreased tax revenues.
• These two new funds are unnecessary, as there is already available funding for water development projects administered by TWDB.
• While TWDB needs to proceed with priority projects, taking money from the Rainy Day Fund is inappropriate. Reducing the amount in this fund could reduce the state's excellent credit rating and affect the state's ability to respond to a natural disaster or other emergency situations. The Legislature should make a separate appropriation from the general fund.
• The state should not take on the financing of water plan projects. Financing should be provided by those benefiting from the projects.