Garden Pests and Diseases: Help!! Freaky Fungus/photos, 1 by Cottage_Rose

Cottage_Rose wrote:
Please excuse the blurry photos but I didn't want to re-take them. I got a new load of wood chips this year to mulch my flower beds with. Something unusual has been growing in the wood chips only. We have had alot of rain this year and maybe this has had something to do with this. I assume this is some type of fungus although I have never seen anything like this in the 25 years I have been gardening.
It crops up quickly and is yellowish colored as seen in the first 2 photos. Then by the next day it smooths out, turns a tan color and shrinks (in third photo). If you spray it with water from the hose a big puff of black cloud/spores? comes out of it.
Whatever it is I don't like it!
Does anybody know what this is and how I can kill it?