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Appropriations committee outlines FY25 closeout carryforward, $45M contingency and new federal‑funds rescission triggers
Summary
Staff described a FY25 closeout plan that would designate $138.52 million to carry into FY26, create contingent appropriations including a $45 million appropriation available for emergency board transfer in case of federal fund reductions, and propose statutory triggers and reporting around possible federal funding rescissions.
Joint Fiscal Office staff briefed the Appropriations Committee on closeout language and a rescue/contingency framework to address possible mid‑year federal funding losses.
Emily Burns of the Joint Fiscal Office explained the closeout sequence: the state will first restore the stabilization reserve per 32 V.S.A. §308, then designate $138,520,000 of unallocated/unreserved FY25 balances to be carried forward into FY26 "notwithstanding" normal waterfall rules, Burns said. After those designations, finance and management would calculate which contingent appropriations from a pre‑ordered list could be funded; any remaining balance would flow into the rainy‑day and pension allocations under existing statute.
Two contingent appropriations were highlighted. First, up to $10,000,000 would be set aside to help the Communications and Information Technology special fund manage transitional billing costs; Burns said the contingency would use $10 million of the designated carryforward and that an initial $15 million had already been discussed in prior versions. Second, $45,000,000 would be appropriated to the secretary of administration "solely to be transferred by the emergency board pursuant to the emergency board authority in the event that federal funds are reduced," Burns said. The appropriation is intended to act as parked backfill money so state operations would not be forced to immediately find offsets across unrelated programs if federal grants were cut.
Committee members discussed mechanics and downstream effects. One question was whether money set aside for the contingency but never used by the emergency board would later flow into the statutory 32 V.S.A. §308(c) distribution to the rainy‑day fund and pensions; staff said those are open procedural questions for next steps but noted the final sentence in the closeout draft directs residual balances into the 32 V.S.A. §308(c) reserve flows.
Separately, staff sketched proposed rescission triggers for federal funds. The draft would treat the budget’s federal fund baselines as the starting point, then require administration reporting to the Joint Fiscal Committee if a government‑function area (general government; protection; human services; education; labor; etc.) faced a reduction equal to 1% of that function’s federal funds or $50 million (whichever is less). Smaller reductions could be handled administratively; larger reductions would require Joint Fiscal approval or reconvening the General Assembly, mirroring the rescission structure that exists for general revenues.
Why it matters: The package is intended to give the state short‑term tools to absorb sudden federal funding losses while preserving a path to longer‑term legislative decisions; it would also delay some appropriations' effective dates and otherwise preserve flexibility pending federal developments.
