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Published on Monday, March 30, 2015

Unexpected deficit balance of Public Works Assistance Account means it cannot absorb any further sweeps

AWC recently received some alarming news from the staff of the Public Works Board (PWB). They informed us that if the legislature adopts a budget that sweeps any more incoming revenues (including loan repayments) it would not merely result in no new loans being provided, but would result in canceling further payments for projects that are already under contract (i.e. already have approved loans). The state’s obligation would be to reimburse for project expenses that have already been incurred, but nothing beyond that.

This situation has come about from a combination of two primary factors:

  1. The 2013 Legislature swept $277 million in cash resources and approximately $170 million in projected revenues per biennium through the 2017-2019 biennium. The 2013 Capital Budget provided $158m in backfill (from bond revenues) for loans that had already been approved in previous biennia. This amount ended up being too conservative. Those bond resources have already been used up.
  2. These structural problems were then exacerbated by a long construction season due to our mild winter leading to loan draws much higher than projected.

The result of this situation leaves the account with a negative fund balance from June 2015 through June 2017. It’s not unusual for the Public Works Assistance Account to go into the red since money is being loaned out regularly but loan payments come in only once a year, but this level of deficit is unprecedented.

Fortunately PWB staff have stated that without further cuts and with funding for the loan list proposed in the Governor’s and the House’s budget ($69.7 million) the account will return to fiscal health and stability starting in July 2017.

AWC is working to make sure legislators understand that the Public Works Trust Fund cannot absorb any further sweeps or diversions without causing significant disruption or cancellation for projects that are already underway.