TX SB1261

Creates Chapter 1373 in the Government Code authorizing local government entities to issue bonds and other obligations to finance water supply projects identified in the state water plan with cumulative capital costs of at least $750 million

Obligations may have terms up to 50 years or the weighted average useful life of the project (whichever is less), and cannot be secured by ad valorem taxes but may be backed by revenue bonds, water supply contracts, or other authorized revenues

Requires Attorney General approval and Comptroller registration before obligations can be issued; once approved and registered, obligations become incontestable and legally binding

Extends maximum loan repayment terms from 30 years to 40 years for eligible water projects financed through Texas Water Development Board bond enhancement agreements

Authorizes use of the State Water Implementation Fund and state participation account for eligible water projects as defined in the new chapter, effective September 1, 2025