State agency warns federal grant freezes could stall water, conservation projects

The House Appropriations Committee on April 23 heard from Agency of Natural Resources (ANR) Secretary Julie Moore and Chief Financial Officer Steve Gomez that suspensions and freezes of federal grant reimbursement accounts are disrupting projects and could reduce the agency's ability to support municipal loans and conservation work.

Moore told the committee that "our FY 24 budget as passed was $230,100,000," and that roughly 40% of that total is federal funding. She said the agency administers State Revolving Funds that together make up about half of ANR's federal dollars and that those loan programs provide the majority of pass-through funding to municipalities for drinking water and wastewater projects.

The committee was told why the issue matters: much of ANR's work is reimbursement-based and many subrecipients lack cash reserves to proceed if reimbursements stop. "We are unable to" draw down at least one account, Moore said when describing how grant portals show a status of "suspended" rather than active.

Moore and Gomez said ANR identified 51 federal account lines in its FY24 budget and that about 10 of those accounts accounted for 90% of federal expenditures. Of the FY24 federal funds they reviewed, roughly $92.7 million was recorded in the agency's expenditure data, with about $61.2 million described as "fully out the door" in wages and on-the-ground projects.

Gomez said some accounts have been subject to legal action and administrative review. "There is a court order to unsuspend and unfreeze that funding for states," he told the committee, referring to a Regional Conservation Partnership Program (RCPP) account that had been inaccessible but which he said was the subject of recent court activity.

Committee members asked for more detail on how the freezes affect revolving loan capacity. Moore said ANR typically capitalizes its loan funds by $10 million to $15 million a year and that demand this year was about two dollars of demand for every dollar available. She said the agency made more than 70 loans to municipalities in 2024 and loaned "over $100,000,000 on the clean water, the wastewater side" during the year, while promising to provide more precise figures on loan balances and annual repayments after the hearing.

ANR staff described steps the agency is taking to reduce partner risk, including shifting contracts from milestone-based reimbursements to more frequent time-and-materials invoicing so partners can submit monthly or biweekly invoices. Moore said that in many cases courts have promptly reinstated suspended awards, making it harder to vacate a fully executed agreement.

Witnesses also described downstream effects on partners: ANR cited the New England Interstate Water Pollution Control Commission's temporary freeze of Lake Champlain Basin Program projects after January freezes, and the situation of a local nonprofit with a $350,000 dam-removal project and only $30,000 on hand.

Committee members and ANR officials discussed federal administrative changes and staffing reductions at agencies such as EPA and USDA Rural Development, which ANR said could lengthen review times and slow distributions. ANR said it maintains weekly debriefs on high-level federal funding issues and has a point person to escalate payment-portal problems to agency leadership.

No formal votes or committee actions were taken during the ANR presentation. ANR agreed to follow up with the committee on specific loan-balance figures and more detailed expenditure breakdowns.

ANR officials emphasized the uncertainty of timing and scope for any federal changes. Moore said some awards are multi-year apportionments that, even if changed, may not have immediate practical effects for several years. The agency asked partners to manage risk but said it cannot absorb all partner exposure with state funds.

The committee recessed ahead of a scheduled Department of Public Safety presentation at 3:30 p.m.