Committee probes proposed change to cash fund spending rules for capital projects

The House Committee on Corrections & Institutions on Jan. 31 heard an overview of the statute creating the state’s Cash Fund for Capital and Essential Investments and questioned a proposed Budget Adjustment Act (BAA) amendment that would alter how spending authority and encumbrance requirements apply to cash-funded capital projects.

Legislative counsel John Gray walked members through the statutory text (Title 32, Section 1001b) and described two subaccounts in the fund: a capital infrastructure subaccount for long-lived capital projects and a broader “other infrastructure, essential investments and reserves” subaccount added in 2023. Gray told the committee, “This creates a fund for capital and essential investments to be administered by finance and the state treasurer,” and he described permissible uses and limits written into the statute.

Committee members pressed for specifics about how monies get into the accounts and where the cash can be used. Gray explained that the capital infrastructure subaccount may be funded by transfers of up to 4% of the most recently completed fiscal year’s general fund appropriations, “less the amount necessary to fund the state’s general obligation debt service,” and that interest earned on the subaccount remains in…