Appropriations from all funds in the 2021–23 capital budget (as amended by the 2022 supplemental) are 54.7% higher than in 2019–21. That’s the largest increase in capital budget spending going back to at least the mid-1990s. Bonds make up a significant percentage of capital budget resources; thus, the capital budget is constrained by the constitutional debt limit. However, the 2021–23 capital budget had access to extraordinary non-bond resources:

• Appropriations from federal funds grew by 394.9% in 2021–23 (including federal pandemic relief money and funding from the federal infrastructure investment and jobs act).
• The 2022 supplemental operating budget appropriated $650.0 million from the general fund–state to a new capital community assistance account. The 2022 supplemental capital budget then appropriated $590.0 million from the account (including $240.0 million for rapid capital housing acquisition, $111.0 million for affordable housing projects, and $72.0 million for crisis stabilization facilities).

Now, state agencies have made capital budget requests for 2023–25 totaling $10.770 billion (from all funds). That would be a 37.9% increase over the already high appropriations in the 2021–23 capital budget.

One major capital request for 2023–25 is $895.0 million for a new forensic hospital (in the request from the Department of Social and Health Services, see page 1153 of the pdf).

In 2018, Western State Hospital lost its certification for federal funding, which had been $53 million a year. To help address the problems that led to the loss of certification, the 2021–23 capital budget included $51 million for design of a new forensic hospital. That budget estimated that building the new hospital would cost $560.2 million in future biennia.

In the 2023–25 request, the cost has increased to $895.0 million. According to the request, the initial cost estimate was “prepared in the summer of 2020 before the pandemic impacts on the construction market were understood.” The new estimate “more accurately describes the new facilities and is based on our best understanding of how escalation, supply chain issues, and changing labor markets are likely to impact the cost of this project.”

When David Schumacher of the Office of Financial Management gave a preview of the upcoming budget cycle last week, he highlighted the request for a new forensic hospital and said that, given the constitutional debt limit, the capital budget is

not big enough to do all of the things that we typically want to do and build the hospital. And I will say that the hospital is a higher priority than some of the other things, but we’re trying to figure out how we can do that and not have to . . . leave regular things people have come to expect behind.

It seems that expectations for operating budget spending aren’t the only ones that need to be managed.

(Previous posts on agency budget requests are here.)