(a) The Texas Water Development Fund, referred to as the “development fund,” is a special revolving fund in the State Treasury.
(b) Except as provided by Subsections (f), (h), (j), and (k) of this section, proceeds from the sale of water development bonds, together with all proceeds (excluding accrued interest which shall be deposited into the interest and sinking fund) from the sale, refunding, or prepayment of political subdivision bonds acquired in carrying out the purposes set out in Article III, Sections 49-c, 49-d, 49-d-2, 49-d-6, and 49-d-7, of the Texas Constitution, shall be deposited in a special account in the development fund designated “water supply account,” and other money for deposit therein as provided in this chapter shall be credited to the water supply account.

(c) The water supply account may be used for any water supply project and in any manner consistent with the provisions of the constitution, including retail distribution.
(d) Except as provided by Subsections (j) and (k) of this section, proceeds from the sale of water quality enhancement bonds, together with all proceeds (excluding accrued interest which shall be deposited into the interest and sinking fund) from the sale, refunding, or prepayment of political subdivision bonds acquired in carrying out the purposes in Article III, § 49-d-1, of the Texas Constitution, shall be deposited in a special account in the development fund designated “water quality enhancement account,” and other money for deposit therein as provided in this chapter shall be credited to the water quality enhancement account.
(e) The water quality enhancement account may be used for construction of treatment works in any manner consistent with the provisions of the constitution and this code.
(f) All proceeds from the sale of the $400 million in water development bonds authorized by Article III, § 49-d-2, of the Texas Constitution for the purposes of state participation in the acquisition and development of facilities, together with all proceeds, excluding accrued interest, from the sale, refunding, or prepayment of political subdivision bonds acquired in carrying out the purposes of the state participation program, shall be deposited in a special account designated as the state participation account created in the development fund. Other money designated for deposit in that account by this chapter and Chapter 16 of this code shall be deposited in the state participation account. Accrued interest from the proceeds of the sale, refunding, or prepayment of political subdivision bonds shall be deposited in the interest and sinking fund.