Federal cancellation of digital equity grant removes $10.6 million for Vermont broadband effort

Christine Houltless, executive director of the Vermont Community Broadband Board, told the House Energy and Digital Infrastructure Committee on May 22 that a federal decision to terminate the Digital Equity Capacity Grant removed $5.3 million already issued to Vermont and put a potential additional $5.3 million at risk, forcing the board into what she called “crisis mode.”

The loss, Houltless said, comes from a $2.75 billion federal program created by the Infrastructure Investment and Jobs Act; $840 million of that program had already been distributed nationally, and the remaining allocation would have included Vermont’s additional $5.3 million. “Any expense that occurred after May 9, it comes out of our own pocket,” Houltless said, and she added, “we're not here to ask for money. That's the last thing I would wanna do right now with a position that we're all in.”

Nut graf: The termination cuts funding intended for digital skills, devices, subgrants to community organizations and capacity building tied to Vermont’s fiber buildout. VCBB officials warned the loss will reduce staffing and community subgrants, complicate adoption of newly built networks, and prompt the board to pursue legal and other responses while continuing unaffected infrastructure programs.

VCBB deputy director Rob Fish and Houltless told the committee the board moved quickly after the federal announcement, convening an emergency board meeting and directing the executive director to “figure out how to move forward.” Houltless said the board would present a “skinny down plan” to members on June 2 and that VCBB is coordinating with the Vermont attorney general’s office and the state’s congressional delegation to explore legal options. Houltless said the board’s general counsel, Tony Clitherow, is working with the attorney general’s office on potential injunctions.

Officials described the financial details presented to the committee: the national capacity-grant program totaled $2.75 billion; Vermont’s allocation was $10.6 million, of which $5.3 million had been issued. VCBB staff said $3.3 million of the funds had been planned to flow to community organizations via subgrants and that a separate competitive grant pool of roughly $1.44 billion nationwide also was canceled. Houltless told lawmakers that previously authorized state efforts and other federal programs, including the broadband equity/enhancement program (referred to in testimony as the Broadband Equity, Enhancement and Access Deployment program) and the infrastructure build funding, are not affected by this termination.

Committee members asked how VCBB would identify individuals for skills training and device distribution; Houltless said VCBB hired a data analyst and relied on surveys, public meetings and outreach to community organizations to target services. She said the program’s aims were broad – serving rural residents, low-income households, veterans, people with disabilities, those with limited English, incarcerated people and others – and disputed characterizations of the program as narrowly focused on diversity, equity and inclusion. “It’s not a DEI program,” she said, arguing the statute’s categories were intended to reach many Vermonters.

VCBB staff described program impacts beyond individual connectivity: testimony cited studies they said showed fiber-connected communities can increase new business starts and that basic digital-skills training can boost income for low-skilled individuals. Officials also gave examples of expected benefits in telehealth, agriculture, climate mitigation and wastewater monitoring, and emphasized that adoption programs tied to the equity grant would support network viability by increasing subscriber uptake.

On staffing and program sustainability, Houltless said the termination would affect roughly 20% of VCBB staff capacity and identified funding figures: $1,550,000 over five years tied to capacity-building that had been expected to support roughly five full-time equivalents (two direct positions and three FTEs). She said the board is using other funds to cover some costs incurred after May 9.

Houltless and Fish said the VCBB and state officials are also watching forthcoming federal guidance; testimony indicated states expected new guidance originally in mid-May but that release had slipped to June or July. Committee members and VCBB staff said they and their counterparts in other states are pressing for fiber to be treated as the preferred technology in federal guidance and have pushed back on proposals to rely primarily on satellite solutions.

The board offered no formal vote or new appropriation during the hearing. Instead, staff outlined next steps: present a narrowed plan to the emergency board on June 2, continue coordination with the attorney general and congressional delegation, and continue public outreach while protecting ongoing infrastructure deployment funded through other programs.

Ending: VCBB officials told lawmakers they will return with a staff-prepared plan at their June 2 board meeting and that the attorney general’s office and other states are pursuing legal remedies. Federal guidance expected this summer could alter options; infrastructure build-out programs, VCBB staff said, are currently not affected by the grant termination.