New state funding and HB500 could deliver one‑time grants to Texas water systems, TWDB says

Scott Galloway, an outreach specialist at the Texas Water Development Board, told the Texas Commission on Environmental Quality’s Drinking Water Advisory Work Group on Jan. 13 that Proposition 4 will dedicate $1,000,000,000 a year for 20 years to water‑supply projects and aging infrastructure, split roughly 50/50.

Galloway said the fund is a sales‑tax carve‑out that will deposit money into an umbrella Texas Water Fund and then into existing financial‑assistance programs. "It's $1,000,000,000 annually for the next 20 years for water supply projects," he said. He warned that guardrails and thresholds must be met before deposits begin and that program details will vary by cycle.

The TWDB also outlined House Bill 500, a newly published water‑supply and infrastructure grants program intended to provide a one‑time 100% grant opportunity for drinking‑water projects. Political subdivisions—cities, counties, water districts—are eligible; investor‑owned utilities are ineligible. TWDB staff said applications will be accepted electronically by email for this initial rollout, with one application allowed per applicant under the draft rules.

Galloway said the TWDB plans a public webinar on Jan. 20 and is accepting public comment on the HB500 implementation plan. He described other SRF and technical programs that remain active: the Drinking Water and Clean Water State Revolving Funds (recently offering principal forgiveness structures), an asset‑management program that helps very small systems, and a utility technical assistance program that now accepts applications at any time for up to $150,000 of professional services.

TWDB staff emphasized practical readiness steps for applicants: have an up‑to‑date independent financial audit, maintain three years of reporting (water‑use surveys and water‑loss audits as required by state law), and be prepared to show how any loan repayment component would be funded. Galloway noted that while HB500 funds may be available to communities starting in 2026 for some closings and that new dollars tied to Proposition 4 are expected to flow into existing programs beginning later in the decade, exact dates and funding caps are still draft and subject to revision after public comment.

The TWDB presentation included links and instructions for registering for the webinar and for submitting public comments; staff offered to post the presentation to the TCEQ work‑group web page after the meeting. The TWDB encouraged rural and small communities to reach out for application assistance and technical guidance.

What’s next: the TWDB expects to refine HB500’s draft allocation and take a final plan to its board; interested systems should review the implementation plan, attend the webinar and prepare audits and required reporting before the application window.