Water: One of the Most Critical Issues in Texas

AUSTIN - Senator J.E. "Buster" Brown of Lake Jackson and Representative Ron Lewis of Mauriceville held a Water Financing Symposium on December 14th, 2000, at the Capitol Extension. The legislators lead panel discussions by agency officials, and prominent Texas and international experts in the fields of water policy, financing, engineering, municipal government, the private sector, and the Texas state budget.

The first panel discussed the topic of state water programs and funding. Robert J. Huston, appointed by Gov. George W. Bush as Chair of the Texas Natural Resources Conservation Commission (TNRCC), addressed the challenges presented by scarce water resources in the state, due to drought conditions and the rapid population and economic growth that have increased the demand for new supplies. Huston said the limitations on revenue sources do not allow the TNRCC to take needed actions. Besides, he said, every dollar of general tax revenue appropriated to the TNRCC is dedicated to water programs, with nothing left for air quality or waste management programs. He proposed a restructuring of the revenue for water financing, to provide a larger and more stable revenue base, a more equitable distribution of costs among the individual water users, and greater flexibility for the spending authority or TNRCC.

William Madden, Chair of the Texas Water Development Board (TWDB), testified next. His concern was that Texas places nearly all the responsibility for project funding on local governments. Even where the TWDB assists communities, the funding usually comes from loans supported by local ratepayers. Needed work, he explained, is too costly to be done with only local funds. He asked for additional state assistance.

The regional water planning groups have identified $17.7 billion needed to implement water supply solutions. Most of this cost is associated with accessing water supplies such as reservoirs, pipelines, wells and well-fields. Other needs such as internal infrastructure assistance within communities amount to $90 billion, making a total of $107.7 billion in total water needs over the next 50 years. This amount will cover existing and future programs, and help close the gaps in small, rural communities; pollution control and environmental mitigation.

The other participants of the first panel were Andrew Sansom, Executive Director of the Texas Parks and Wildlife Department; and Martin Hubert, Deputy Commissioner of the Texas Department of Agriculture.

The second panel discussed public/private partnerships, that is, the business relationships between public and private sector entities that provide non-traditional methods of delivering public sector services. Its members were Walt Howard, CEO of Poseidon Resources; T. Boone Pickens, President and CEO of Mesa Water Incorporated and Jeff Taylor, Water Resources Management Manager of Brown & Root Services. Taylor talked about design/build and design/build/operate alternatives, how the current public sector laws prohibit this systems of joint bids by designers and builders; and how the State of Texas financing and regulatory procedures may also limit their application. Other issues examined by this panel were water financing alternatives, risk allocation, and the Tampa Bay Desalination Project.

The third and last panel dealt with Potential Financing/Funding Options. Panelists were Billy Hamilton, Deputy Comptroller of the Texas Comptrollers Office; Frank Sturzl, Executive Director of the Texas Municipal League; Eric Altman, Managing Director of JP Morgan; Ron Freeman from Texas Water Resources; Tom Gooch, P.E. of Freese and Nichols, Inc.; Billy Howe, Associate Legislative Director of the Texas Farm Bureau and Jim Bueie, Executive Director of the Texas Bond Review Board. Monte Akers, Director of Legal Services of the Texas Municipal League (TML), also testified. He talked about the willingness of Texas cities and TML to address the critical challenge of water funding. Eric Altman proposed a credit structure composed of: 1) the State contribution to a reserve fund, to provide for credit enhancement for bonds and subsidies to participants; and 2) bonds secured by overall revenues from strong water supply contracts.

Billy Howe from the Texas Farm Bureau said that needed state funds to finance water projects and a statewide water transportation system would be similar to the creation of the gasoline tax created to fund highway construction. A tax on the gallons of water consumed by the end-consumer of this state would be fair, he said, and added that agricultural producers should not pay for the increase in the demand created by industrial and municipal use.

Representative Ron Lewis and Senator J.E. "Buster" Brown offered the closing remarks of the symposium.

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