(The Center Square) – Since its creation in the 1980s, the Public Works Assistance Account has existed to provide funding for revolving low-interest loans for local governments for infrastructure improvement projects.
In the decades since its creation, the state Legislature has repeatedly raided the account to plug holes in its operating budget.
That practice continues into the current biennium, and could put the account in a negative balance, depending on budget proposals from elected officials as they scramble to cover a multibillion dollar deficit driven increased spending that has outpaced record revenue levels.
Association of Washington Cities Government Relations Advocate Steven Ellis told The Center Square in a phone interview that the chronic account raids could end up costing the state in the long-term.
“Cities and towns across the state have a significant need for infrastructure investment,” he said, adding that they’re “struggling to keep up with the cost of aging systems and supporting increased populations.
“There’s only a finite amount of resources and each time the Public Works Board does a round of funding there are projects that don’t get funded,” he added. “They have to put those projects off until later.”
Established in 1985, the PWAA provides funding for local government projects such as the following:
Drinking water systemsSanitary sewer and wastewater systemsStormwater management and drainageRoads and streetsBridgesSolid waste, recycling, organics, and composting facilities
“We think anytime you’re taking away from a program like this it means there’s less resources to do these necessary projects,” Ellis said. “There’s definitely a need for more housing, but you just can’t build more housing. You need the water and sewer connections to make that possible. In the meantime, these projects are becoming more expensive and the population is going up.”
While the PWAA has provided more than $3.5 billion in its existence to fund those projects, between 1985-2017, $2.2 billion was diverted from the PWAA to cover other expenditures in the operating budget. Many of those raids occurred during the Great Recession amid massive budget deficits, as well as when the Legislature was forced to shift all basic education funding away from local school levies and into the state operating budget in accordance with the State Supreme Court’s 2012 McCleary decision.
Those fiscal raids continued until the 2023-2025 biennium, when the legislature allowed certain diversions to sunset.
Washington Association of Counties Executive Director Derek Young is a former City of Gig Harbor councilmember and Pierce County commissioner. He told The Center Square in a phone interview that for over a period of more than 20 years, “the fund has been shorted or diverted more times than not.
“It’s just been really unreliable as a funding mechanism,” he said. “Housing is a high priority for everyone in this state, but I can tell you while they’re working a lot on permitting streamlining, the top obstacle for projects to get going is water infrastructure. That is a primary barrier for somebody to develop a piece of land. Not having adequate infrastructure gets in the way of lots of other priorities.”
For the 2025-2027 biennium the legislature has already diverted $288 million from the PWAA to the general fund, according to the Public Works Board. Gov. Bob Ferguson’s supplemental budget proposal would increase this by $75 million for the 2027 fiscal year, making the total $363 million.
The Governor’s supplemental budget proposal increases this by proposing an additional $75 million transfer for fiscal year 2027.
PWB Chair Vince McGowan told colleagues at the board’s Jan. 9 meeting that the governor’s proposed transfers “are still concerning – less concerning then maybe we initially thought – but still concerned to see that money being transferred out of the account with impacts in 2028.”
PWB Vice Chair Gary Rowe noted during that meeting that “we should make sure that we let people know that it doesn’t mean we don’t have any money for emergencies. We still do have some money for emergencies.”
Contract lobbyist Brian Bonlender warned the board that the governor’s proposed $75 million transfer is “not certainly not ideal, but it is probably not one, in my opinion, we should go to the mat and raise too many alarms on the hill,”
“We might see more aggressive proposals that are more detrimental by either the House or the Senate budget, in which case those would be real threats to projects getting out the door,” he said. “Not just future projects, but possibly projects that were already awarded. I just want to note that we’re trying to take a strong but measured response as part of our current plan.”
Nevertheless, Bonlender also noted that depending on the exact time of the transfers, the PWAA could actually end up with a negative balance at the beginning of the 2028 fiscal year, accruing $6.5 million in negative interest. This would require a bond backfill of the same amount for the 2027-29 budget to both sustain $215 million in awarded funding for 2027 and meet fiscal demands for the 2027-2029 biennium.
“If this passes, we have to get this backfill during the next budget cycle,” he said.
However, PWB member Jerome Delvin expressed skepticism that the Legislature would provide that bond backfill.
“The path that I see…in two years, their budget isn’t going to be in any better shape the way they’re spending,” Delvin said. “There’s no guarantees on that, asking for some backfill. I think that’s just high hopes in my mind.”
He added that “we’re a sitting duck every legislative session when it comes to the budget, until the Legislature gets their budget act together. It gets tiring, fighting this every time.”
Acknowledging the state’s budget shortfall, Ellis said a priority for AWC will be to help legislators realize that while it might help solve the immediate fiscal problem, “it’s a bad idea in the long-term. There will be a bigger cost down the road.”
Although Young describes the PWAA as the “gold standard” for government grant programs, he said the ongoing account sweeps will likely force local governments to turn to more reliable funding sources moving forward.
“Whenever I see this happen (account sweeps) that’s just what we have to do,” he said. “We can’t trust them.”
