Public Works Board flags $75 million governor proposal to transfer funds; seeks bond backfill

Chair Vince McGowan convened the Public Works Board on Jan. 9, where staff outlined potential impacts of the governor's proposed operating budget on the state's Public Works Assistance Account.

Maria, a board staff member, told the panel the governor's proposal includes "an additional 75,000,000 that is being transferred from the Public Works Assistance Account for fiscal year 2027," bringing total transfers from the account in the biennium to "363,000,000." She said staff have modeled several timing scenarios and are assessing consequences for monthly cash balances.

Maria said officials at the state Office of Financial Management and the treasurer's office indicated there is "flexibility in the transfer date, with the treasurer's office," and that alternatives could include quarterly or end‑of‑year transfers. She warned timing matters: if the $75 million is transferred late in the fiscal year, the account could show an extended period of anticipated negative monthly balances in fiscal 2028.

Brian Baumlender, the board's contract lobbyist, urged a measured legislative response and described the practical implication of the proposal: "we're going to have to get a backfill for the next next year's budget... We'll be seeking a dollar for dollar backfill of $75,000,000 in bonds in order to ensure that we do not end up in a month to month basis in the red, beginning August of the 2028 fiscal year." He also cautioned that pushing too aggressively early could invite more damaging proposals in the House or Senate.

Several board members pressed staff on operational implications for the board's 2027 awards cycle. Member Justin Clary said he worried the governor's proposal could represent a "low watermark for transfers" and asked how the board could responsibly run a cycle if backfill is uncertain. Maria replied that the board's 2025–27 budget contains prescriptive language requiring the account to maintain a sufficient monthly balance for project draws, but she noted that language is tied to the 25‑27 biennium budget—"it's in the budget language, and it doesn't carry to the 27‑29 biennium." She added that historically OFM and the treasurer have at times approved carrying a negative cash deficit month to month.

Board members and staff agreed the next steps are to finalize forecasting before the legislature's decisions, refine messaging for legislators and the Hill Day (Jan. 22) and press for a bond backfill if the transfer is enacted. Chair McGowan said the board is not accepting the proposal and intends to "figure out what are the consequences" and how best to communicate them to lawmakers.

The board did not take a formal vote on a legislative position at the meeting; members received staff analysis and directed staff and lobbyists to pursue messaging and options ahead of the legislative session.