Tex. Water Code § 53.182

(a) For the purpose of constructing, purchasing, repairing, improving, and extending authorized improvements, a district may issue bonds payable solely from the revenues of:

(1) the operation of the district's water system, less the reasonable cost of maintaining and operating the system; or

(2) the operation of the district's sanitary sewer system, less the reasonable cost of maintaining and operating the system; or

(3) both the water system and the sanitary sewer system.

(b) The district may also issue bonds for the purposes set out in this section, payable both from ad valorem taxes and the revenues of:

(1) its water system; or

(2) its sanitary sewer system; or

(3) both its water system and sanitary sewer system.

(c) If the district issues combination tax and revenue bonds, it shall levy, assess, and collect ad valorem taxes until the net revenues from the operation of the water system or the sanitary sewer system, together with the revenue from taxes, have accumulated a surplus in the sinking fund at least equal to the principal of and interest on the bonds scheduled to accrue in the next year. When this accumulation is completed, the board may reduce the tax levy to a rate that will produce at least 25 percent of the principal and interest requirements for each of the next succeeding years. When actual experience of three successive years demonstrates that the net revenues are adequate to pay the principal of and the interest on the bonds as they mature, the board may discontinue the tax until it becomes necessary to levy the tax again to avoid default in paying the bonds and interest.

(d) For the purposes of Section 53.123, a district may issue bonds payable from ad valorem taxes, revenues, or a combination thereof.