House Corrections and Institutions reviews capital-bill reallocations, statutory clawbacks and project updates

The House Corrections and Institutions committee met Wednesday, March 12, to continue markup of the capital bill and review reallocations of unspent or unencumbered capital funds.

Committee members discussed an audit of prior capital appropriations and identified funds that have remained unencumbered for five years or more, triggering statutory clawback requirements. Staff told the committee that agencies have provided explanations for keeping some funds and that the committee will consider not‑withstanding language to allow agencies to retain monies where projects remain active.

Why it matters: those decisions determine whether towns and state agencies keep capital grant money for ongoing projects or return it to the capital pool for reallocation. Members said some sums are held for transportation and clean-water projects that have active contracts or planned work through fiscal 2026.

Committee staff explained that most of the amounts under discussion are bonded dollars rather than cash, though about $6,300,000 from 2023 cash allocations remained available in the accounts staff reviewed. Members emphasized that different legal rules apply to bonded versus cash allocations and that not‑withstanding language will be needed in some instances to override automatic statutory recapture requirements tied to multi‑year inactivity.

Members reviewed examples from the Agency of Transportation (AOT): a municipal mitigation contract with the town of Essex shows roughly $537,000 remaining on an executed contract, another with South Burlington shows about $225,000 remaining, and one unobligated contract line showed roughly $19,000. AOT staff told the committee it expects the larger contract balances to be spent by the end of fiscal 2026, which would support leaving those funds in place with explicit not‑withstanding language in the bill.

Members also discussed Better Back Roads grants and related returns: Craftsbury has an executed grant for slope stabilization (about $2,525,000 noted in the packet), the town of Kirby completed a project and returned roughly $38,600, and smaller executed grants remain with towns such as Lincoln (about $40,000) and Victory (about $36,000). Committee staff noted two unobligated Better Back Roads lines totaling roughly $2,638 that could be recaptured.

Committee members said they were surprised to learn the statutory clawback applies automatically after roughly five years of inactivity and discussed being more proactive next session about tracking project encumbrances. Staff noted that some programs received large one‑time capital injections in prior two‑year capital bills (transportation and clean‑water programs were singled out) and that those programs subsequently drew down large sums from federal partners such as the Federal Highway Administration (FHWA).

Directions and next steps: staff were asked to draft not‑withstanding language where agencies contend projects remain active; Scott Moore and other staff were asked to collate spreadsheets and to bring project updates and further documentation to the next meeting. The committee planned follow-ups with Agency of Natural Resources (ANR) and AOT staff to confirm project schedules and to ensure any retained funds align with planned expenditures.

The committee did not take any formal roll‑call votes during the session; members agreed to reconvene with additional agency updates before finalizing reallocations.

Ending: Members scheduled a follow-up meeting the next morning to review a revised spreadsheet and to hear updates from agency staff before the committee completes its markup.