Senate Appropriations panel reviews tax and revenue sections of FY26 Appropriations Act

The Senate Appropriations Committee on Thursday received a detailed briefing from Joint Fiscal Office staff on the tax and revenue provisions included in the FY26 Appropriations Act, including one-time appropriations, changes to pilot special fund accounting and proposed funding shifts affecting childcare and provider rate increases.

The briefing focused on sections of the bill that fall under the committee’s jurisdiction and on session-law language that mirrors or replaces items that otherwise would appear in standalone tax or miscellaneous bills. Chris of the Joint Fiscal Office walked members through the bill text and accompanying summary sheets the office posted for committee members.

The overview stressed that much of the bill “is bigger than your typical big bill because it also contains current-year adjustments that would have been in the BAA,” and that committee staff added technical conforming language where no separate miscellaneous tax bill will be enacted this year.

Key items discussed included a $1,000,000 one-time appropriation from the pilot special fund for a municipal granular stabilization program that would reimburse municipalities for lost grand-list value when flood-prone properties are acquired and taken out of development; a $148,000 one-time appropriation for the Volunteer Income Tax Assistance (VITA) program; and several session-law technical changes that conform state tax filing practices to federal filing in limited cases (notably the E.1/11 conforming language).

Committee staff flagged language, carried as a one-year session law, that prevents Vermont from automatically adopting any federal change to an entity’s tax-exempt status for tax year 2025. Senate counsel Kirby described that provision as a short-term measure intended to “freeze April 1 of this year as the date that the Department of Taxes would use for federal interpretation of the law,” giving the Legislature time to consider longer-term changes should federal action occur.

Members also reviewed routine but consequential adjustments to several special funds and pilot-program accounting. Staff explained a $25.8 million shift that reflects moving cash-fund appropriations previously shown in the capital bill into the Appropriations Act (the Fund for Capital and Other Essential Investments, often called the cash fund). The committee heard that some pilot payments—previously provided as supplemental payments to Montpelier—are being folded into the base pilot formula, eliminating a separate supplemental payment line item.

A set of fee adjustments proposed in the attorney general’s budget was noted: inflationary increases to registration fees for paid fundraisers and a filing fee for notices of solicitation (fees not adjusted since 2013) and an inflationary update to an annual disclosure filing fee for manufacturers of prescribed products (not adjusted since 2009). These amounts, which staff said total about $42,000 in expected revenue for the AG’s special fund, were described as recommendations from the attorney general’s office.

The committee reviewed accounting changes for cannabis excise tax revenue: current statutory allocation (30% for substance-misuse prevention up to $10 million) remains unchanged but would be routed through a newly created special fund to improve transparency and reporting on expenditures.

On health-care and provider funding, staff noted adjustments that would increase general-fund and federal-match spending to support provider rate increases. The Senate draft includes additional federal dollars to match provider rate investments and preserves a Senate decision to transfer approximately $19,000,000 from the Child Care Contribution special fund into the general fund rather than simply shifting spending authority between funds. Staff said that treatment keeps the general-fund appropriation for the Child Care Financial Assistance Program at its current level while using the special-fund revenue as a transfer to the general fund. That accounting choice increases general-fund base appropriations in the Senate version compared with the House position.

Other program-level items flagged for members included a $10,000,000 allocation tied to universal school meals (reflected in the education fund construct), one-time and base changes for provider rate increases (including a roughly $4.9 million set-aside for infant-and-toddler rate increases), and approximately $9.9 million reflected from opioid-settlement funding in the all-funds totals.

Staff walked the committee through how the bill carries customary session-law language requiring executive-branch fee reports and giving JFO a role in standardizing fee-report submissions so data arrive in a usable format. They also reminded members that multiple pieces of the package appear in other bills (for example, language tied to H.397, H.481 and S.63) and that, where necessary, committee staff will try to harmonize identical language across vehicles.

No formal committee votes occurred during the hour-long briefing. Committee staff said they would continue to take questions and anticipated moving some witnesses and items to the next day’s calendar to allow additional review time.

The committee’s next agenda item was property classification and valuation — the presenters paused to allow an interim break and rescheduling of witnesses.