Vermont Treasurer: Federal cuts and tariffs could shrink interest income, hit tourism and small businesses

State Treasurer Mike Pachek told the House Appropriations Committee on April 9 that a changing federal funding picture, uncertain interest rates and recently announced reciprocal tariffs could reduce the roughly $90,000,000 in interest income the state earned in the last fiscal year and that some Vermont regions could feel an outsized tourism impact.

Pachek, appearing before the House Appropriations Committee chair, said the treasury office itself receives almost no federal operating funds but does pass through small federal forest-service emergency funds to towns. “We have almost basically no federal funding that impacts our offices operations,” he said. He added that the office generated “about $90,000,000 of interest income over the last fiscal year,” with a significant portion directed to the state general fund.

That windfall, Pachek said, arose from two factors that may not persist: a larger cash position and higher interest rates. He warned both balances and rates are uncertain. “We did expect generally it to come down a bit as federal spending is out the door,” he said, citing about $400,000,000 in ARPA spending that will be expended in the next 18 months to two years and roughly $400,000,000 in FEMA reimbursements the state is still awaiting. If federal funds decline or state revenues fall in a slowing…