Small victories on public works overshadowed by PWAA diversions

AWC saw small victories for its advocacy in the public works and infrastructure sphere during the 2026 legislative session, but they were overshadowed by deeper diversions from the Public Works Assistance Account (PWAA) to address the state’s ongoing budget woes.

Despite expectations that lawmakers would make more adjustments to public procurement policy, just two bills on the topic advanced. Significantly, HB 2420 raises the cost limit up to which state agencies and local governments can use a small works roster to award public works contracts from $350,000 to $530,000 on January 1, 2027. That cap increases by $30,000 each following July until it reaches $650,000 in 2030.

But that win was accompanied by an additional operating budget (SB 5998) transfer of $375 million from the PWAA to the general fund on top of a $288 million transfer approved in 2025. Although lawmakers provided $379.5 million in bond funding in the capital budget (SB 6003) to backfill the transfers, plus another $10 million in emergency funding to address impacts to public works projects from extreme weather in 2025, the latest sweep was yet another blow to the PWAA and again raised concerns about the account’s long-term sustainability.

Those concerns were not allayed by an operating budget proviso directing the State Treasurer to study how public banking tools could be applied to leverage and extend existing legislative appropriations for infrastructure currently provided through the Public Works Board and the departments of Commerce, Ecology, and Health.

Observers had anticipated that another pair of procurement bills introduced in 2025 relating to public works projects would see movement this year following stakeholder work during the legislative interim in which AWC participated. However, both again faltered amid concerns that they could drive cost increases.

SB 5061 would have required that workers be paid the prevailing wage in effect when work is performed, rather than at time of contract. In a possible response to the bill’s death, the capital budget includes a proviso directing the Capital Projects Advisory Review Board to study requiring public works contracts to include language stipulating annual adjustments tying worker payment to the latest prevailing wage rate. A report is due to the Legislature at the end of this year.

SB 5176 reiterated that owners must make payment within 30 days of receipt of a properly completed invoice and would have required owners to give contractors and subcontractors payment and invoicing information in writing prior to the project.

Stakeholder work had allayed much of AWC’s concerns over the two bills. Both policies reflect priorities of organized labor and are likely to be the subject of bills introduced in 2027. AWC staff will work over the legislative interim on several procurement issues to address ongoing public owner challenges with public works projects to find possible improvements.

A handful of other bills that did not pass this session also could potentially return next year. In addition to two public works-related bills addressing transportation issues, two other bills raised potentially substantial implications for cities.

SB 6096 would have required cities to adopt a system for deferring water and sewer utility connection fees for certain residential construction by 2030. SB 6234 would have prevented local governments from limiting the installation of sewage grinder pumps in new residential buildings. AWC staff plan to engage with both bills’ sponsors over the interim to gauge their intent to pursue similar policies in the future.

Ultimately, while the Legislature advanced fewer new public works policies in 2026 than anticipated and lawmakers exhibited a willingness to incorporate cities’ suggestions for amendments, the lack of coordination with cities prior to bill introduction on proposals carrying significant potential impacts constituted a somewhat disheartening trend.