Public Works Board delays emergency fund decision after governor's budget introduces a $75 million transfer

Maria (staff presenter) outlined options for an emergency program allocation that would use up to 20% of the Public Works Assistance Account's $365,000,000 appropriation for emergency and preconstruction programs. She said staff's memo modeled three options: a full 20% utilization (about $50,000,000 in fiscal year 2026); a two-year split ($43,000,000 in FY26 and $15,000,000 in FY27); and a third option that front-loads $30,000,000 in FY26 and $28,000,000 in FY27.

Maria warned the board that the governor's proposed budget, released earlier that day, would transfer $75,000,000 from the account into the state general fund. "With the governor's proposed budget looking to transfer $75,000,000 from the account, there is going to be a monthly negative balance closer to 68,000,000," she said, and staff's models showed month-to-month lows that could drop well below typical working capital reserves.

Board members asked whether staff should model the board's choices without including the governor's proposal, and whether awarding funds now would jeopardize applicants if the legislature later enacted the transfer. Brian Baumlender said, "Isn't he just effectively coming to the legislature with a different proposal than us? Our proposal was $50,000,000 for emergency purposes." Gary Rowe and others cautioned that approving awards now could place applicants at risk if the funds were later taken from the account.

Laura Petso asked whether the board could preserve a smaller emergency set-aside (staff materials referenced roughly $7.5 million to $8.5 million). Maria replied staff could maintain the currently budgeted emergency and preconstruction amounts for FY26 but that the timing of the $75,000,000 transfer is the determining factor: if the transfer occurs at the start of the next fiscal year it could affect current awards; if it occurs at the end of the fiscal year (June 30, 2027) it would not. Maria said staff would seek clarification from the governor's office on the transfer timing.

Members repeatedly expressed concern about the risk of moving money or soliciting applications before the governor's intent is clear. Dean Reynolds and Sharon Trask said they preferred to defer action until staff had answers from the governor's office. The board agreed to postpone the two emergency items and to revisit them at a future meeting once staff provides clarifying information from the governor's office.

Next steps: staff will seek clarification from the governor's office about the $75,000,000 transfer timing and present updated cash-flow modeling at the board's next meeting. No award decisions were made at this session.