Appropriations reviews FY26 fund transfers, drafts $2M housing appropriation from cash fund

The House Appropriations Committee on March 21 reviewed proposed FY2026 interfund transfers and cash-fund reallocations and discussed a draft $2 million line-item appropriation to the Agency of Commerce and Community Development (ACCD) for housing and related infrastructure.

Committee members and staff focused first on transfers that do not involve the general fund, including a $12,500,000 transfer out of a cash-fund subaccount to the transportation fund to serve as federal match for IIJA-funded projects and an annual downtown/transportation contribution from the transportation fund to capital-related debt service. Emily Byrne, Joint Fiscal Office staff, summarized the non‑general-fund items as “the other transfers that are not related to the general fund,” and walked the committee through the spreadsheet detail.

Why it matters: those cash‑fund moves affect how the state draws down federal Infrastructure Investment and Jobs Act (IIJA) dollars, relieve or add pressure on specific capital accounts, and change the pool of cash available for other capital projects. Scott Moore of the Joint Fiscal Office warned the committee that current plan language would ‘‘spend all the cash down’’ in the cash fund over the two‑year cycle unless new transfers occur.

Key facts and decisions discussed

- IIJA match: Committee staff explained that $12,500,000 was reserved in the cash fund’s other‑infrastructure subaccount (subaccount B) and is proposed to move to the transportation fund to provide the state match needed to draw federal IIJA funds. The discussion described the federal match profile (typically 80/20, sometimes 90/10) rather than a uniform 1:1 match.

- Subaccount reallocation: Committee members reviewed a $1,000,000 undesignated balance in cash fund subaccount B from FY25. Staff proposed transferring that $1,000,000 from subaccount B to subaccount A so it becomes available for capital investments managed from subaccount A.

- Cash‑fund spending/reconciliation: Members said institutions and capital committees had identified unspent balances and reprioritized some projects; as a result, the committee reported about $7.3 million in reduced transfer needs from the general fund into the cash fund. That reduction yields roughly $5.3 million in cash that the Appropriations Committee may use for other purposes in FY26 after accounting moves.

- Draft $2 million housing appropriation: The committee discussed language to include a one‑time $2,000,000 appropriation in FY26 from the cash fund subaccount (or, if necessary, a general-fund substitute appropriation) to ACCD for housing development and related infrastructure. Legislative counsel John Gray described the item as “a line item” insertion; committee members agreed to post language and to route administration through ACCD or, if needed, the Department of Housing and Community Development (DHCD). The committee did not record a formal vote in the transcript; staff said the language will be posted and circulated for committee consideration.

- Property transfer tax distribution and VHCB: Staff walked members through the property transfer tax forecast used in the budget (the January consensus forecast cited in committee materials) and how statutory formulas and recent changes (Act 181 of 2024 was cited in discussion) affect the Vermont Housing & Conservation Board (VHCB) and other recipients. Staff said the consensus forecast for property transfer tax revenue used in the FY26 budget was roughly $80.6 million and showed VHCB receiving a larger statutory share than in FY25; staff noted the statutory distribution can be changed by appropriation language despite the formula in statute.

- Other transfers to the general fund: Emily Byrne summed a set of special‑fund transfers that are treated as direct applications to the general fund in FY26. Among those, the committee discussed an anticipated $6,000,000 unclaimed property transfer, recurring Attorney General settlement assumptions (roughly $2,000,000 in the worksheet), and combined transfers from special funds that the staff summarized as about $102,000,000 in anticipated transfers into the general fund in FY26 (this figure reflects multiple special fund lines including liquor control and sports wagering receipts as presented to the committee).

What was not decided

No formal roll‑call vote appears in the transcript for the $2 million language or for the larger cash‑fund reallocation; committee members agreed to draft and post appropriation language and continue consideration when the capital bill is released. Staff also acknowledged some spreadsheet entries contained errors and committed to circulating corrected copies (for example, a Clean Water Fund line and a mislabeled copy/paste that staff said she would fix).

Context and next steps

Committee staff said capital bill language and the final capital package will be circulated next week; the Appropriations Committee planned to return to the items when the capital bill and corrected spreadsheets are posted. Staff cautioned that the current FY26 proposal spends down the cash fund balance over the two‑year budget cycle unless a recurring transfer or future infusion restores the fund.

Ending: The committee paused for a short break and scheduled continued work as capital‑bill language is finalized and posted for the Appropriations Committee’s review.