Government
12:05 am
Mon October 28, 2013

$2 Billion Water Fund: Solution To A Crisis Or A Slush Fund?

Top elected officials across the state are campaigning hard for Proposition 6, which would create a $2 billion fund to finance water projects.  But opponents claim the constitutional amendment on the Nov. 5 ballot is just a slush fund. 

Story airing on KERA 90.1

Here are some facts no one disputes. Texas’ population is expected to double in fifty years. Current water supplies will not meet the growing demand. Drought has heightened the concern that Texas taps could run dry.

The Texas legislature’s solution is the plan before voters.  Proposition 6 would transfer $2 billion from the state’s Rainy Day savings account to the Texas Water Development Board which would use the money to jump-start new water projects.

“I think drought is going to become the norm for us in Texas and that we’ve got to have projects that will help us diversify our water supply,” said Linda Christie, government relations director for the Tarrant Regional Water District, which builds big water projects like pipelines that can cost billions of dollars.

“For design of these huge projects that take 10 to 15 years we are very reluctant to get that money on the bond market because our customers have to begin repaying that immediately if it’s bond debt,” she explained. 

But the state water board could use the new fund in two ways to reduce bond debt which is usually passed on to consumers.

It could pick up part of a water district’s interest payment on the money borrowed to build projects. The water board could also make the early payments on a water district’s loan which the district would then repay when its project is up and running and generating revenue.

“That’s tremendous because it’s a huge cost savings to our cities which they can pass it on to customers using the water,” said Christie.

Tarrant Water has had a taste of just how much this kind of financing can save.  Under a similar state program, Tarrant was able to cut the interest rate it paid on an $83 million loan from 3.83 percent to 1.93 percent.  That will save the water district and its customers $17 million dollars over twenty years.

But what seems like a good deal for water districts seems like a windfall for big business to Linda Curtis of Independent Texans. She’s leading the effort, Nix Prop 6.

“State leaders starting in Rick Perry’s office are trying to make a water crisis into a funding crisis and make a slush fund for water projects,” said Curtis

Curtis doesn’t like the process for deciding who will get the money.  House Bill 4, the legislation that calls for creating the fund, also did away with the water board’s part-time members and administrator. It replaced them with three full-time, paid board members who are all appointed by the governor.

“These three people are going to determine who is going to get the funding,” said Curtis.

Curtis is concerned their decisions will be influenced by Perry, other top officials and big campaign donors.  She points to a report published by Texans for Public Justice which found the Texas Water political action committee has collected almost a million dollars to promote the water fund.  The largest contributors are general contractors who build big projects.

“Why is Dow Chemical and the Associate of Texas Contractors- those are the big boy developers- why are they pushing for Proposition 6?  Are they really for water conservation and water resources?” Curtis asked. 

Supporters say safeguards are built into the legislation. Twenty percent of the fund must be used for water conservation projects. Ten percent must be used for rural Texas. 

Carlos Rubinstein, the water board chairman appointed by Gov. Perry, says money will also go to projects that transfer water to areas that need it and to projects that develop new sources.

“In that regard you’re looking at reservoirs. You’re looking at well fields. You’re looking at desalination of brackish ground water and you’re looking at desalination of sea water.  And also aquifer storage and recovery,” Rubinstein said.

Independent Texans says it’s working with other groups opposed to Proposition 6. They’re organizing a social media campaign.

Proposition 6 supporters have held press conferences with top elected officials across the state and they’ve produced a TV ad that enlists Nolan Ryan, who knows a thing or two about pitching.

If Prop 6 passes the Texas Water Development Board will go through a lengthy process of prioritizing projects before financing the first ones in 2015.