Legislative finance staff flag $6 billion capital backlog and outline new reauthorization rules

Kelly Carswell, capital LA analyst for the Legislative Finance Committee, told members the committee’s quarterly capital appropriations report shows about $6,000,000,000 in outstanding capital balances across more than 5,000 active projects. "At the end of the third quarter of FY26, outstanding capital balances totaled about $6,000,000,000 across more than 5,000 active projects across the state," Carswell said.

The presentation, which committee staff circulated as a detailed memo and spreadsheet, also noted roughly $890,000,000 in spending or reversions since the last quarter and persistent piecemeal funding: requests totaled nearly $6 billion while enacted capital outlay and GO bond bills supplied about $1.7 billion, or roughly 29% of requested funding. Carswell said higher construction costs and a thin bidding pool — sometimes "only a couple bidders, sometimes only one" — are slowing project completion.

Carswell summarized reforms the legislature adopted this session in what staff described as House Bill 247: limits on time extensions for reauthorized projects (one extension, maximum two years), a prohibition on changing an appropriation’s purpose through reauthorization except for technical corrections, and a requirement that at least 10% of an appropriation be encumbered for a project to be eligible for reauthorization. She said the law also directs DFA to freeze balances on projects six months from reversion that show no activity and to report those projects to the legislature by Jan. 15.

"They will provide a report to the legislature, by January 15, so before the session, on what those projects are," Carswell said, describing the new reuse-and-repurpose guardrails.

Carswell also reviewed other session actions that affect capital oversight. She said House Bill 8 establishes a Higher Education Major Projects Fund to allow state support for auxiliary and student-housing projects while requiring more design work before construction and institutional matching for large projects. House Bill 9 temporarily suspends legislative authorization for Water Trust Board projects so the board can deploy larger infusions of cash more quickly; Carswell said the board anticipates about $380,000,000 available for awards in the 2026 cycle.

Members asked how to increase competition for large projects and whether projects can be split or regionally bid to attract more contractors. "We probably have 5 or fewer GCs who are capable of taking these big jobs," Carswell said, adding that staff will explore procurement alternatives, regional bidding and capacity-building supports.

Committee members raised multiple implementation concerns that staff said they will pursue: discrepancies in reported project status (a $3.2 million magistrate-court appropriation that appears to have reverted despite a reported ground-breaking), supply-chain or procurement timing problems in parts of the state, and hundreds of projects rated red for no or minimal reporting. Carswell said staff will follow up on specific items and circulate sponsor reports and detailed attachments to members.

The committee adopted its work plan and policies earlier in the meeting. In procedural business, the chair started the meeting by asking for adoption of the minutes and later sought motions; the record shows the work plan and policies were approved by voice or unanimous consent.