February 12, 2026940March 5, 20263810

I, Bernard Dean, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is HOUSE BILL 2353 as passed by the House of Representatives and the Senate on the dates hereon set forth.

Chief Clerk

Secretary of State

State of Washington

HB 2353.PLHOUSE BILL 2353Passed Legislature2026 Regular Session69th Legislature2026 Regular SessionRepresentatives Keaton, Leavitt, Klicker, Zahn, and JacobsenPrefiled 01/09/26.Read first time 01/12/26.Referred to Committee on Capital Budget.Concerning predesign thresholds. AN ACT Relating to predesign thresholds; amending RCW 43.88.110, 43.82.035, and 43.88.0301; and creating a new section. Sec. 1.

The legislature finds that construction costs have increased rapidly in recent years, while the state's cost threshold for predesign of capital facilities has remained constant since 2021. Therefore, to improve governmental efficiency, the legislature intends to update the cost threshold for predesign requirements to better align with the current costs of construction. Further, the legislature also intends to address future construction cost changes by adding an inflation adjustment factor to the predesign cost threshold.

 Sec. 2. RCW 43.88.110 and 2021 c 54 s 2 are each amended to read as follows:Expenditure programs—Allotments—Reserves—Monitor capital appropriations—Predesign review for major capital construction.

This section sets forth the expenditure programs and the allotment and reserve procedures to be followed by the executive branch for public funds.

(1) Allotments of an appropriation for any fiscal period shall conform to the terms, limits, or conditions of the appropriation.

(2) The director of financial management shall provide all agencies with a complete set of operating and capital instructions for preparing a statement of proposed expenditures at least thirty days before the beginning of a fiscal period. The set of instructions need not include specific appropriation amounts for the agency.

(3) Within forty-five days after the beginning of the fiscal period or within forty-five days after the governor signs the omnibus biennial appropriations act, whichever is later, all agencies shall submit to the governor a statement of proposed expenditures at such times and in such form as may be required by the governor.

(4) The office of financial management shall develop a method for monitoring capital appropriations and expenditures that will capture at least the following elements:

(a) Appropriations made for capital projects including transportation projects;

(b) Estimates of total project costs including past, current, ensuing, and future biennial costs;

(c) Comparisons of actual costs to estimated costs;

(d) Comparisons of estimated construction start and completion dates with actual dates;

(e) Documentation of fund shifts between projects.

This data may be incorporated into the existing accounting system or into a separate project management system, as deemed appropriate by the office of financial management.

(5)(a) Except as provided for under subsection (6) of this section, the office of financial management, prior to approving allotments for major capital construction projects valued over ten million dollars $15,000,000, shall institute procedures for reviewing such projects at the predesign stage that will reduce long-term costs and increase facility efficiency. The procedures shall include, but not be limited to, the following elements:

(a) (i) Evaluation of facility program requirements and consistency with long-range plans;

(b) (ii) Utilization of a system of cost, quality, and performance standards to compare major capital construction projects; and

(c) (iii) A requirement to incorporate value-engineering analysis and constructability review into the project schedule.

(b) Beginning July 1, 2027, the office of financial management shall adjust the $15,000,000 cost threshold in (a) of this subsection (5) annually to reflect the C-100 form's inflation factor.

(6) The office of financial management may make an exception to some or all of the predesign requirements in subsection (5) of this section. The office of financial management shall report any exception to the fiscal committees of the legislature and include: (a) A description of the major capital project for which the predesign waiver is made; (b) an explanation of the reason for the waiver; and (c) a rough order of magnitude cost estimate for the project's design and construction.

(7) In deliberations related to submitting an exception under subsection (6) of this section, the office of financial management shall consider the following factors:

(a) Whether there is any determination to be made regarding the site of the project;

(b) Whether there is any determination to be made regarding whether the project will involve renovation, new construction, or both;

(c) Whether, within six years of submitting the request for funding, the agency has completed, or initiated the construction of, a substantially similar project;

(d) Whether there is any anticipated change to the project's program or the services to be delivered at the facility;

(e) Whether the requesting agency indicates that the project may not require some or all of the requirements in subsection (5) of this section due to a lack of complexity; and

(f) Whether any other factors related to project complexity or risk, as determined by the office of financial management, could reduce the need for, or scope of, a predesign.

(8) If under subsection (6) of this section, some or all of the predesign requirements under subsection (5) of this section are waived, the office of financial management may instead propose a professional project cost estimate instead of a request for predesign funding.

(9) No expenditure may be incurred or obligation entered into for such major capital construction projects including, without exception, land acquisition, site development, predesign, design, construction, and equipment acquisition and installation, until the allotment of the funds to be expended has been approved by the office of financial management. This limitation does not prohibit the continuation of expenditures and obligations into the succeeding biennium for projects for which allotments have been approved in the immediate prior biennium.

(10) If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods. Except for the legislative and judicial branches and other agencies headed by elective officials, the governor shall review the statement of proposed operating expenditures for reasonableness and conformance with legislative intent. The governor may request corrections of proposed allotments submitted by the legislative and judicial branches and agencies headed by elective officials if those proposed allotments contain significant technical errors. Once the governor approves the proposed allotments, further revisions may at the request of the office of financial management or upon the agency's initiative be made on a quarterly basis and must be accompanied by an explanation of the reasons for significant changes. However, changes in appropriation level authorized by the legislature, changes required by across-the-board reductions mandated by the governor, changes caused by executive increases to spending authority, and changes caused by executive decreases to spending authority for failure to comply with the provisions of chapter 36.70A RCW may require additional revisions. Revisions shall not be made retroactively. However, the governor may assign to a reserve status any portion of an agency appropriation withheld as part of across-the-board reductions made by the governor and any portion of an agency appropriation conditioned on a contingent event by the appropriations act. The governor may remove these amounts from reserve status if the across-the-board reductions are subsequently modified or if the contingent event occurs. The director of financial management shall enter approved statements of proposed expenditures into the state budgeting, accounting, and reporting system within forty-five days after receipt of the proposed statements from the agencies. If an agency or the director of financial management is unable to meet these requirements, the director of financial management shall provide a timely explanation in writing to the legislative fiscal committees.

(11) It is expressly provided that all agencies shall be required to maintain accounting records and to report thereon in the manner prescribed in this chapter and under the regulations issued pursuant to this chapter. Within ninety days of the end of the fiscal year, all agencies shall submit to the director of financial management their final adjustments to close their books for the fiscal year. Prior to submitting fiscal data, written or oral, to committees of the legislature, it is the responsibility of the agency submitting the data to reconcile it with the budget and accounting data reported by the agency to the director of financial management.

(12) The director of financial management may exempt certain public funds from the allotment controls established under this chapter if it is not practical or necessary to allot the funds. Allotment control exemptions expire at the end of the fiscal biennium for which they are granted. The director of financial management shall report any exemptions granted under this subsection to the legislative fiscal committees.

2021 c 54 s 2; 2014 c 162 s 4; 2009 c 518 s 3; 2003 c 206 s 1; 1997 c 96 s 6; 1994 c 219 s 5. Prior: 1991 sp.s. c 32 s 27; 1991 c 358 s 2; 1987 c 502 s 5; 1986 c 215 s 4; 1984 c 138 s 8; 1983 1st ex.s. c 47 s 1; 1982 2nd ex.s. c 15 s 1; 1981 c 270 s 5; 1979 c 151 s 138; 1975 1st ex.s. c 293 s 6; 1965 c 8 s 43.88.110; prior: 1959 c 328 s 11. Findings—Intent—2021 c 54: "The legislature finds that predesigns are often done due to statutory requirements regardless of whether it is necessary to the capital project. The legislature also finds that the cost of unnecessary predesigns includes not only limited resources in the capital budget, but an extended project timeline. Therefore, the legislature intends to reduce the number of predesigns by raising the cost threshold and adding exceptions to the predesign requirements." [2021 c 54 s 1.] Effective date—2003 c 206: "This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2003." [2003 c 206 s 2.] Findings—Purpose—1997 c 96: See note following RCW 43.82.150. Finding—1994 c 219: See note following RCW 43.88.030. Section headings not law—1991 sp.s. c 32: See RCW 36.70A.902. Effective date—1991 c 358: See note following RCW 43.88.030. Severability—1982 2nd ex.s. c 15: "If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected." [1982 2nd ex.s. c 15 s 5.] Effective date—Severability—1981 c 270: See notes following RCW 43.88.010. Exception: RCW 43.88.265. Sec. 3. RCW 43.82.035 and 2021 c 54 s 3 are each amended to read as follows:Predesign process for requests to lease, purchase, or build facilities for state programs—Approval of plans for major leased facilities.

(1) The office of financial management shall design and implement a modified predesign process for any space request to lease, purchase, or build facilities that involve (a) the housing of new state programs, (b) a major expansion of existing state programs, or (c) the relocation of state agency programs. This includes the consolidation of multiple state agency tenants into one facility. The office of financial management shall define facilities that meet the criteria described in (a) and (b) of this subsection.

(2) State agencies shall submit modified predesigns to the office of financial management and the legislature. Modified predesigns must include a problem statement, an analysis of alternatives to address programmatic and space requirements, proposed locations, and a financial assessment. For proposed projects of twenty thousand gross square feet or less, the agency may provide a cost-benefit analysis, rather than a life-cycle cost analysis, as determined by the office of financial management.

(3) Projects that meet the capital requirements for predesign on major facility capital construction projects with an estimated project cost of 10 million dollars or more pursuant to chapter 43.88 RCW 43.88.110 shall not be required to prepare a modified predesign.

(4) The office of financial management shall require state agencies to identify plans for major leased facilities as part of the ten-year capital budget plan. State agencies shall not enter into new or renewed leases of more than one million dollars per year unless such leases have been approved by the office of financial management except when the need for the lease is due to an unanticipated emergency. The regular termination date on an existing lease does not constitute an emergency. The department of enterprise services shall notify the office of financial management and the appropriate legislative fiscal committees if an emergency situation arises.

(5) For project proposals in which there are estimates of operational savings, the office of financial management shall require the agency or agencies involved to provide details including but not limited to fund sources and timelines.

2021 c 54 s 3; 2015 c 225 s 75; 2007 c 506 s 4. Findings—Intent—2021 c 54: See note following RCW 43.88.110. Findings—Intent—2007 c 506: "The legislature finds that the capital stock of facilities owned and leased by state agencies represents a significant financial investment by the citizens of the state of Washington. Capital construction projects funded in the state's capital budget require diligent analysis and approval by the governor and the legislature. In some cases, longterm leases obligate state agencies to a larger financial commitment than some capital construction projects without a comparable level of diligence. State facility analysis and portfolio management can be strengthened through greater oversight and support from the office of financial management and the legislature and with input from stakeholders.The legislature finds that the state lacks specific policies and standards on conducting lifecycle cost analysis to determine the costeffectiveness of owning or leasing state facilities and lacks clear guidance on when and how to use it. Further, there is limited oversight and review of the results of lifecycle cost analyses in the capital project review process. Unless decision makers are provided a thorough economic analysis, they cannot identify the most costeffective alternative or identify opportunities for improving the costeffectiveness of state facility alternatives.The legislature finds that the statewide accounting system limits the ability of the office of financial management and the legislature to analyze agency expenditures that include only leases for land, buildings, and structures. Additionally, other statewide data systems that track stateowned and leased facility information are limited, onerous, and inflexible.Therefore, it is the intent of the legislature to strengthen the office of financial management's oversight role in state facility analysis and decision making. Further, it is the intent of the legislature to support the office of financial management's and the *department of general administration's need for technical expertise and data systems to conduct thorough analysis, longterm planning, and state facility portfolio management by providing adequate resources in the capital and operating budgets." [2007 c 506 s 1.] *Reviser's note: The "department of general administration" was renamed the "department of enterprise services" by 2011 1st sp.s. c 43 s 107. Sec. 4. RCW 43.88.0301 and 2024 c 344 s 7 are each amended to read as follows:Capital budget instructions—Additional information—Staff support from office of community development.

(1) The office of financial management must include in its capital budget instructions a request for "yes" or "no" answers for the following additional informational questions from capital budget applicants for all proposed major capital construction projects valued over $10,000,000 $15,000,000, adjusted annually for the C-100 form's inflation factor beginning July 1, 2027, and required to complete a predesign:

(a) For proposed capital projects identified in this subsection that are located in or serving city or county planning under RCW 36.70A.040:

(i) Whether the proposed capital project is identified in the host city or county comprehensive plan, including the capital facility plan, and implementing rules adopted under chapter 36.70A RCW;

(ii) Whether the proposed capital project is located within an adopted urban growth area:

(A) If at all located within an adopted urban growth area boundary, whether a project facilitates, accommodates, or attracts planned population and employment growth;

(B) If at all located outside an urban growth area boundary, whether the proposed capital project may create pressures for additional development;

(b) For proposed capital projects identified in this subsection that are requesting state funding:

(i) Whether there was regional coordination during project development;

(ii) Whether local and additional funds were leveraged;

(iii) Whether environmental outcomes and the reduction of adverse environmental impacts were examined.

(2) For projects subject to subsection (1) of this section, the office of financial management shall request the required information be provided during the predesign process of major capital construction projects to reduce long-term costs and increase process efficiency.

(3) The office of financial management, in fulfilling its duties under RCW 43.88.030(6) to create a capital budget document, must take into account information gathered under subsections (1) and (2) of this section in an effort to promote state capital facility expenditures that minimize unplanned or uncoordinated infrastructure and development costs, support economic and quality of life benefits for existing communities, and support local government planning efforts.

(4) The office of community development must provide staff support to the office of financial management and affected capital budget applicants to help collect data required by subsections (1) and (2) of this section.

(5) The office of financial management must include in its capital budget instructions, beginning with the instructions for the 2025-2027 biennium, information informing awarding authorities, as defined in RCW 39.116.010, of the requirements of chapter 39.116 RCW, including the data and information requirements in RCW 39.116.020.

2024 c 344 s 7; 2021 c 54 s 4; 2017 3rd sp.s. c 25 s 2; 2002 c 312 s 1. Findings—Short title—2024 c 344: See RCW 39.116.005 and 39.116.900. Findings—Intent—2021 c 54: See note following RCW 43.88.110.