The final supplemental state budgets adopt the Senate’s proposed sweep of the Public Works Assistance Account (PWAA) and provide bond funding to backfill that diversion but at a smaller amount than originally proposed.

In a preliminary review, the Public Works Board (PWB) indicated that the backfill, coupled with changes to the timing of specific diversions, eliminates any threat that the board will need to rescind previous awards. The board also said it means that the PWAA will not experience a negative cash balance in 2028, as was feared under the House’s initial capital budget proposal, and that the board may still be able to open a call for applications in FY 2027.

The final operating budget (SB 5998) transfers $375 million from the PWAA to the general fund, while the final capital budget (SB 6003) provides an additional $279.5 million in bond revenue to backfill the reduction. That funding, combined with $100 million in existing bond revenue backfill and $10 million in new funding for emergency grants to public works projects impacted by extreme weather events in 2025, gives the PWB authority to award up to $389.5 million in grants and loans for infrastructure projects in FY 2027. All this results in an increase of $14.5 million over the appropriations to the PWAA in the biennial budget.

The capital budget also cuts in half an existing diversion from the PWAA to the Water Pollution Control Revolving Account, eliminating a $20.5 million transfer that was scheduled for FY 2027.

Despite that good news, the final 2025-27 budgets represent the latest in a series of blows to the PWAA in recent years that call into question its long-term predictability and sustainability. The $389.5 million bond backfill covers less than half of the total $829.4 million that state budgets collectively divert from the account over the biennium.

Additionally, the state will still need to determine where to find some $5 billion needed to remove state-owned culverts and other structures that block fish passage in order to comply with a federal court order. The state appears unlikely to meet the order’s 2030 deadline and is currently in mediation with Tribes that brought suit. A bill introduced in 2025, SB 5804, that would have permanently redirected much of the PWAA’s revenue streams to pay to remove those barriers did not move forward this session.

The supplemental operating and capital budgets now go to the Governor, who must sign or veto them—in whole or in part—ahead of April 6, when they will otherwise take effect.

For more details on budget impacts to funding for local governments, refer to AWC’s budget matrix.

Senate Capital budget includes backfill for PWAA sweep; AWC still opposes diversions

February 25, 2026

With all the proposed state budgets finally released, and the full picture of the proposals becoming clear, AWC has an important update on the Senate’s proposed sweep of the Public Works Assistance Account (PWAA). While the Senate operating budget would divert $375 million from the PWAA, the Senate capital budget backfills that diversion, mitigating what would have been a devastating blow to local infrastructure funding.

AWC is grateful to the city officials that responded to our action alert issued on Monday morning. Your immediate action sent a clear message to legislators about the importance of the PWAA. AWC issued that action alert after reviewing the operating budget released on Sunday. The capital budget was released at 3 pm on Monday so AWC was not aware of the potential for backfill until reviewing the capital budget.

While this news is a relief, city leaders still need to clearly communicate to legislators that cities do not support sweeping the account. The House proposal of a $75 million diversion does not include any backfill. The Senate proposal, despite the backfill with bond revenues, still reduces certainty for funding future projects. Cities must continue to help legislators understand how critical the PWAA is to funding local infrastructure.

The Senate proposal:

• Diverts $375 million in the operating budget (SB 5998) at the end of FY 2027.
• Backfills with $330 million in new bond revenue in the capital budget (SB 6003).

The House proposal:

• Diverts $75 million in the operating budget (HB 2289) at the end of FY 2027.
• Provides no backfill in the capital budget.

Impacts to current and future PWAA awards

While both the Senate and House proposed diversions would not jeopardize current PWAA funding awards, it is an open question as to how much funding will be left to award future projects.

Cities still oppose both proposed sweeps. However, as legislators continue to negotiate the final budgets, cities request that budget writers, at the very least, include a plan to backfill any diversion they ultimately adopt.

While we appreciate the intent of the Senate to backfill its diversion with bond revenues, we remain concerned about the timing of the significant sweeps and the implications for current and future projects. The state’s continual reliance on diversions from PWAA resources erodes the certainty and reliability of dedicated infrastructure dollars for cities. Furthermore, one-time bond backfills are only a temporary solution and perpetuate the state’s problem of using unsustainable funding practices.

Additionally, waiting until the end of the fiscal year and relying on the potential for a future Legislature to fund the account are not enough. Given the rising costs of construction, and the growing need for infrastructure improvements, more than ever local governments need reliable access to this critical funding source that keeps costs down for cities, and in turn, for ratepayers.

Keep advocating for the PWAA

We urge cities to contact your legislators to express the above concerns and ask them to fully fund the PWAA. If you haven’t already, find your legislators in AWC’s directory and contact them today.

Contact AWC Government Relations Advocate Steven Ellis with questions or comments.

Act now: Tell your local legislators today – ‘Don’t destroy the Public Works Assistance Account!’

February 23, 2026

As AWC has been warning for months, state budget writers proposed new sweeps of the Public Works Assistance Account (PWAA). The Senate operating budget proposal (SB 5998) diverts an alarming $375 million from the account at the end of FY 2027. The House operating budget proposal (HB 2289) diverts $75 million, also at the end of FY 2027.

The Senate proposal would effectively end the program and leave the account unable to sustain the loan draws of active projects underway or fund new projects in coming years. If either proposal is enacted, the PWAA will see a negative cash balance in FY 2028.

Every city official needs to contact your local legislators today to object to these damaging sweeps. Ask them to talk to the legislative budget leaders and their caucus leader about the need to preserve the PWAA.

Cities strongly oppose both sweeps of the PWAA. The proposed diversions add to a long list of ongoing, previously adopted diversions:

• $288 million to the state general fund
• $114 million ($57 million/year) to the Move Ahead WA Account
• $41 million for the Water Pollution Control Revolving Account
• $25 million for the Drinking Water Assistance Account

Legislators argue that diverting the funds at the end of FY 2027, instead of at the beginning of the FY 2027, reduces the impact on the account and allows time for the 2027 Legislature to appropriate more funding to the PWAA to mitigate the loss. They may also propose to use bond resources to “backfill” the account through the capital budget.

Cities disagree. Waiting until the end of the fiscal year and relying on the potential for a future Legislature to fund the account are not enough. Given the rising costs of construction, and the growing need for infrastructure improvements, more than ever local governments need reliable access to this critical funding source that keeps costs down for cities, and in turn, for ratepayers. Additionally, a one-time bond backfill is only a temporary solution and perpetuates the state’s problem of using unsustainable funding practices. Backfilling does not ensure that dollars are available for future projects.

Don’t wait—both bills are scheduled for hearings this afternoon. Find your legislators in AWC’s directory and contact them today to urge them to oppose the diversions. Share these messages:

• Waiting until the end of FY 2027 to sweep the account doesn’t address the need to ensure that funds are available for future projects. Relying on a future Legislature to make up for the loss is too risky. We ask the Legislature to preserve the funding now for critical local infrastructure needs.
• The PWAA has funded projects in communities large and small for 41 years.
• Show legislators how important the PWAA is to your city or town with examples of past and planned projects, especially those with implications for public health, safety, affordable housing, or economic growth.
• Removing access to low-cost public works funding will directly result in higher utility bills for residents, working counter to the state’s efforts to improve affordability for families in our state.
• The need for funding is only growing: needs assessments for Washington’s water, wastewater, and solid waste systems total more than $31 billion over the next 20 years.
• Given the uncertainty surrounding the federal government, the PWAA is one of the few tools available to cities to fund critical infrastructure projects.
• Investing in infrastructure through the PWAA provides a strong return on investment to the state with more economic activity, job creation, environmental protection and improved affordability for families.

Act now: Ask your legislators to talk to their leadership and their budget writers about the importance of preserving this critical infrastructure funding program. If providing written testimony on the budgets, whether you sign in ‘pro’, ‘other’ or ‘con’, make sure to include mention of your strong opposition to the proposed PWAA sweep.

Find more talking points here and contact your legislators now.