# When Federal Funds Freeze: A County Grapples with Construction Contracts and Cash Flow ## Meeting Overview The Whatcom County Finance and Administrative Services Committee convened on a crisp March morning with an agenda that would prove far more consequential than its routine appearance suggested. Committee Chair Todd Donovan called the hybrid meeting to order at 10:20 a.m. in the familiar council chambers, with all three committee members present: Tyler Byrd, Barry Buchanan, and Donovan himself. The broader council was also in attendance, including Ben Elenbaas, Kaylee Galloway, Jon Scanlon, and Mark Stremler. What began as a standard committee meeting — with thirteen consent agenda items covering everything from childcare contracts to jail services — would evolve into a sobering discussion about federal funding uncertainty and the county's financial vulnerability. The specter of frozen federal reimbursements hung over the proceedings, casting doubt on major infrastructure projects and forcing difficult conversations about cash flow, contractor obligations, and the potential impact on rural taxpayers. The meeting's most significant moment came during discussion of the North Lake Samish Bridge replacement project, where staff revealed they were potentially facing millions in unreimbursed federal funds, with no clear timeline for resolution and diminishing confidence that the money would ever arrive. ## Consent Agenda: Routine Business and Gift Card Questions The meeting opened efficiently with Buchanan moving to approve all thirteen consent agenda items en masse — a collection of contracts and interlocal agreements totaling over $2.5 million in various health, safety, and social service programs. But before the vote, Councilmember Stremler raised his hand with a question about item one: an $8,840 amendment to an agreement with the Washington State Department of Children, Youth and Families. "It says retail gift cards to be used for groceries, gas, and other essential needs," Stremler noted, reading from the contract language. "The contractor shall make reasonable efforts to assure that the gift cards are not used for..." He paused, scanning the prohibited items list. "How does the contractor do that? What is a reasonable effort?" Sarah Simpson from Health and Community Services fielded the initial response, but had to defer to Charlene Ramont, the assistant director, who joined the meeting to explain the practical mechanics. "Gift cards can be purchased that are restricted," Ramont explained. "There are various places where you can buy a gift card that only works for that place, where you wouldn't have the opportunity to purchase tobacco, alcohol, and other things that are restricted." Stremler pressed further, noting that Target — Ramont's example — sells liquor in Washington. "The gift cards themselves don't allow for that purchase," Ramont clarified, though she acknowledged the specifics might vary by retailer and program. The question would resurface later in the meeting when Ann Beck from Health and Community Services provided additional context about the Nurse Family Partnership program. "These are not actually given to contractors to give to folks," Beck explained. "These are our own nurse family partnership nurses... They have very long standing relationships with [families]. They've been with them since the four 24 weeks of pregnancy." The nurses, Beck added, often accompany families to stores when using gift cards, and many program participants are young mothers who wouldn't legally be able to purchase restricted items anyway. The consent agenda ultimately passed unanimously, but the exchange highlighted the detailed oversight council members exercise even over seemingly routine expenditures. ## Technology Update: Modernization and Security Concerns Perry Rice, the county's IT manager, delivered his quarterly update with characteristic enthusiasm, acknowledging the challenge of condensing 70+ active projects into 15 minutes. "I think this slides. The presentation was just emailed to us recently, so it is an art," Rice began, immediately establishing the informal, conversational tone that would mark his presentation. Rice outlined significant infrastructure improvements happening largely behind the scenes: a new backup system with 300 extra terabytes of storage, file server migration, and expanded multi-factor authentication. "We've got about half to two-thirds of the county. We've got multi-factor authentication turned on with to access email," he reported. "This prevents threats and things like that from outside." A new FBI mandate was requiring all sheriff's office and prosecutor's office employees to use multi-factor authentication, regardless of whether they work in the field. Rice also highlighted the county's transition to a .gov domain — a months-long federal approval process that Donovan had championed. "Thanks to your sponsorship and Sat Paul's and the county auditor, we now possess whatcomcounty.gov," Rice announced. The financial system upgrade was perhaps the most significant project Rice discussed. The county had gone live with Enterprise One software on January 1st, replacing the legacy Workday system. "But there's more to do. A lot more to do," Rice emphasized. "There's a lot of end of month, end of quarter reporting and things like that that we haven't done yet." When Scanlon asked about department access to real-time budget information — noting concerns from staff who couldn't track program spending — Rice acknowledged the limitation. "Initially we were really focused on making sure we could do payroll and then accounts payable, purchase orders and things like that. So there's a lot of the management pieces that we have not really focused on yet and that'll be real soon." The permit system represented another major modernization effort. After going live in 2022, the system finally opened a citizen access portal the previous month, allowing residents to apply for basic permits, make payments online, and request inspections. "Really, if you think about all this work, this is really a big moment for planning and public works," Rice noted. Looking ahead, Rice discussed the challenge of moving IT staff out of the courthouse's third floor to make room for a new superior court courtroom. About two-thirds of the IT department would relocate to the recently acquired building at 400 North Commercial Street, with the remainder moving to the courthouse basement. "Everybody wants us to move tomorrow. The facility is not quite ready yet. I'm anticipating that we'll be able to move within the next 30 to 45 days." Galloway raised an intriguing question about communication tools for advisory committees, asking whether the county was exploring platforms like Microsoft Teams to help committee members collaborate while avoiding Open Public Meetings Act violations. Rice indicated this was part of their planning scope and noted he'd been consulting with the City of Bellingham, which was further along in implementing such solutions. ## The Bridge Crisis: When Federal Funding Disappears The meeting's tone shifted dramatically when discussion turned to the North Lake Samish Bridge replacement project. What began as a request to increase cash flow loan authority became a stark illustration of the county's vulnerability to federal funding uncertainty. Elizabeth Kosa, Public Works Director, opened with an update on the construction progress before diving into the financial crisis. The $9.9 million construction contract was supposed to be funded with $9.55 million in federal money, with the Samish Water District contributing $350,000 for utility reconnections. But those federal reimbursements had stopped coming. "Grant funding. They owe us 1.4 million dollars in reimbursement," Kosa reported, explaining that the county typically paid contractors first, then submitted invoices to the state for federal reimbursement. "Normally reimbursement timeline is about one month. We can expect to see those reimbursements." But those expectations had been shattered. Julia Green from Public Works provided the disturbing timeline: they had hit 30 days without reimbursement the previous Thursday. The $1.4 million represented payment for the bridge girders — "the big girder invoice" — and more invoices were coming. The county had just paid another $400,000 and expected another $383,000 invoice for March. "Potentially pretty soon, if the next payment doesn't come in, we might be two million in the hole," Green confirmed. The federal funding freeze wasn't unique to Whatcom County. Donovan shared intelligence from a recent Washington Counties Association meeting: "They're waiting even longer for grants that were supposed to show up that are not showing up. There's no one picking up the phone that used to be people we had contact with. There's no expectation that they're going to get one month or two months or three months." The county was requesting authority to increase road fund cash flow loans from $2 million to $6.6 million to cover potential shortfalls through the project's August completion. But this raised profound questions about what would happen if federal reimbursements never materialized. Deputy County Executive Aly Pennucci emphasized this was currently a cash flow issue, not a funding problem. "We don't have an indication that we are still expecting reimbursement from the federal government. This is a dynamic situation right on all of our federal funding," she explained. "We haven't had any specific indication that any of our funds have been rescinded like awards that have already been made, but it's like I said, it's dynamic." But if reimbursements didn't come, the county faced an impossible choice: continue funding the project from other sources or breach their contract with Cascade Bridge. County Engineer Doug Ranney outlined the consequences of stopping work: violation of state prompt payment laws, breach of contract, responsibility for contractor idle costs, increased final project costs, and damage to the county's reputation with contractors. "We would be in violation of state prompt payloads. We would be in breach of contract with cascade bridge our contractor," Ranney stated bluntly. The contractor had expensive equipment on site and workers whose idle time the county would have to cover. Stopping and restarting would trigger additional costs for demobilization and remobilization. Byrd raised a crucial question about the county's legal position, asking whether they had reviewed contracts with the state. The answer was sobering: while the county's contract was with Washington State through the Local Programs division, the state's contract language essentially made it clear that if federal funding dried up, local governments were on the hook. "Basically states that if they don't pay us or federal funding, then we're stuck with the bill regardless," Ranney confirmed. The discussion revealed the project's broader context. The North Lake Samish Bridge replacement was happening during water rights adjudication proceedings — described as "the largest proceeding in the history of Whatcom County government" that would potentially last until 2045 and involve 35,000 claimants. Any significant delay could jeopardize permits and require starting the approval process over. Scanlon pushed for a broader strategy, noting that multiple counties faced similar situations. "I think we need a bigger strategy on this because I think all of our federal funding may be at risk," he argued. "There are people here who have relationships with state elected officials and appointed officials. There are people in our community that have relationships with federal elected and appointed officials." The conversation highlighted the cascading effects on the road fund, which supports not just construction projects but the county ferry and other rural services. If federal reimbursements didn't materialize, either those programs would suffer, or the county would need to find alternative funding sources from other reserves. Kosa warned that decisions about summer construction projects needed to be made within 30 days. The county was already pausing notices to proceed on some projects until federal funding uncertainty resolved. The implications extended far beyond a single bridge to potentially reshape the county's entire capital improvement program. The item was left for further discussion, with the ordinance scheduled for introduction at the evening's full council meeting. Staff promised to notify council members immediately if any federal reimbursements arrived — a small hope in an otherwise troubling situation. ## Budget Amendment and Technical Corrections The committee also discussed the quarterly budget amendment ordinance — the third supplemental budget request of 2025, originally titled at $1.751 million. Deputy County Executive Pennucci explained the new process of bringing these amendments to committee for discussion before introduction, allowing for modifications before formal consideration. The discussion was brief, with most items being routine adjustments and grant-funded programs. Scanlon noted that the Birch Bay incorporation feasibility study contract would come before the full council on March 25th, and Pennucci clarified that parks headquarters HVAC work was unrelated to the controversial Plantation Rifle Range project. But at the meeting's end, a technical issue emerged. George Roche from the Prosecutor's Office and Finance Director Randy Rydel revealed that the ordinance title contained an error — listing $265,000 more in budget authority than actually requested. The correct amount was $1,485,889, not the $1,751,265 in the title. Staff scrambled to prepare an amended version for that evening's introduction, highlighting the complexity of budget management even for routine adjustments. ## Cy Pres Funding: Sheriff's Office Seeks Gun Safety Resources Sheriff Donnell Tanksley returned to advocate for a $125,000 cy pres funding agreement with the Washington Attorney General's office — money that would support four distinct programs aimed at gun safety and evidence management. This was a follow-up to discussions from January, with additional detail responding to council concerns. Tanksley had researched other agencies receiving similar funding, presenting an impressive list: Seattle PD had received $343,000, Auburn PD $203,000, Kitsap County Sheriff's Office $140,000, among others. The funding came with specific allocations: $25,000 for a voluntary firearm turn-in program, $60,000 to expand the property and evidence room, $30,000 for deputy storage improvements, and $10,000 for firearm safety classes that could include providing storage devices to participants. The sheriff addressed previous council concerns about the effectiveness of gun turn-in programs, citing one agency that had collected nearly 550 firearms since 2022 with zero stolen weapons among them. "Hopefully if you approve this and we do have our program with the 20% for the voluntary firearm turning program, hopefully our success will be the same as their success." When Stremler asked how the sheriff had determined the funding breakdown, Tanksley explained that each category was based on quotes from facilities staff and firearms instructors. The evidence room expansion was particularly urgent — while Tanksley wouldn't detail security measures in public, he confirmed they were "at capacity" for secure firearm storage. The discussion took an unexpected turn when Byrd raised concerns about potential state legislation requiring permits for firearm purchases, which might include live fire training requirements. This sparked discussion about whether the sheriff's proposed courses could meet such requirements and what additional staffing might be needed. "At this point, if that did pass, that would be another unfunded mandate," Tanksley noted. "So I really can't answer any further questions." The committee ultimately recommended the cy pres agreement by a 2-0-1 vote, with Byrd abstaining and noting his concerns about the broader policy implications. ## Infrastructure and Modernization: The Steady Work of Government Throughout the meeting, a consistent theme emerged: the county's ongoing efforts to modernize systems and infrastructure while managing fiscal uncertainty. Perry Rice's IT update showcased impressive progress across dozens of projects, from enhanced cybersecurity to citizen-facing permit systems. The sheriff's request represented creative grant-seeking to address public safety needs. Even the routine consent agenda items reflected investments in children's services, behavioral health, and community partnerships. But the federal funding crisis cast a shadow over these achievements. The North Lake Samish Bridge project exemplified the county's vulnerability to federal policy changes and administrative dysfunction. Local officials found themselves potentially liable for millions in federal commitments, with no clear recourse and limited communication from federal agencies. The meeting illustrated the complex interplay between different levels of government and funding sources. While the county successfully pursued state grants for various programs and maintained local revenue streams, major infrastructure projects remained dependent on federal partnerships that were proving unreliable. ## Closing and Next Steps The committee adjourned early at 11:23 a.m., seven minutes ahead of schedule for the next committee meeting. But the day's discussions would continue reverberating through county planning and budget processes. Staff committed to providing immediate updates on any federal reimbursements received for the bridge project. The budget amendment would move forward with its corrected title for introduction that evening. The cy pres funding agreement would also proceed to the full council with committee recommendation. Most significantly, the federal funding crisis demanded broader strategy and coordination. As Scanlon had argued, Whatcom County wasn't alone in facing these challenges, and the county's response would need to extend beyond individual project management to advocacy and potentially legal action at state and federal levels. The meeting captured a moment of uncertainty in local government finance, where routine procedures collided with unprecedented federal dysfunction. County officials found themselves simultaneously managing day-to-day operations and confronting the possibility that fundamental assumptions about federal partnership might no longer hold. The North Lake Samish Bridge replacement project had become more than infrastructure investment — it was a test of whether local governments could maintain essential services when federal commitments proved unreliable. As staff prepared to make critical decisions about summer construction projects within 30 days, the county faced questions that extended far beyond engineering and budgeting to the basic relationship between federal promises and local accountability. The bridge might get built, but the broader issues raised in this March morning meeting would likely persist long after the last girder was in place.