Vermont Department of Labor presents largely steady FY26 budget, cites staffing, IT modernization and flood repairs

The Vermont Department of Labor presented its proposed FY2026 budget Tuesday to the House Appropriations Committee, telling lawmakers that the department’s general fund lines increase about 3% while the department’s overall spending authority falls because a major federal grant is being spent down.

Commissioner Michael Harrington said the department’s FY26 request is “pretty pro forma,” with “a 3% increase across all general fund lines,” and that the department had no “large ups or downs” in discretionary general fund spending. He emphasized that the apparent drop in total spending authority — from the FY25 passed total to a smaller FY26 proposed total — largely reflects the drawdown of a multi‑year federal grant, not cuts to core programs.

The FY25 enacted spending authority shown in the department’s packet was $54,872,314; the FY26 proposed spending authority listed in the presentation was $50,787,775. Harrington said the roughly $4 million decline reflects spending down the RETAIN federal grant this year.

Harrington and Chad Wozniak, the Department’s chief financial officer, outlined the department’s funding mix: roughly 59% federal funding in the current proposal compared with about 82% federally funded in pre‑pandemic years. The change, they said, stemmed principally from two budget moves into the department’s base: a transfer of a workforce education and training fund into the base and roughly $5 million added to support unemployment insurance administration after pandemic‑era stresses on the program.

The department described five core program areas: workforce development, economic and labor market information, unemployment insurance, workers’ compensation and workplace safety (including Project WorkSafe and Vermont Occupational Safety and Health, VOSHA). Harrington noted the passenger tramway program — the state’s ski‑lift inspection program — operates under a separate board funded by fees from ski areas.

Staffing and facilities were recurring concerns in the presentation. Harrington and Wozniak said the department’s vacancy rate peaked around 22–23% in some programs and is now about 12–13% overall after recruitment efforts. They said frontline units such as unemployment insurance and workforce development have the highest churn. The department highlighted steps on employee engagement and said its employee survey response rate rose from about 50.6% in 2015 to 90.5% in 2022 and was 88.7% in 2024.

Harrington also reported ongoing capital and facility work after flooding in 2023 left part of the Montpelier office basement offline; the department expects repairs to be completed in late spring or early summer. The department recently completed a multi‑year heating and cooling capital project, replacing aging boilers and a chiller and working on a pending electrical upgrade with Green Mountain Power.

On IT, Harrington said the department is running four modernization projects concurrently, including a full unemployment‑insurance modernization that he described as “on time, on target” and about 18 months from completion under the current contract.

Harrington closed by noting one program that will cease in the department’s base budget next year unless the Legislature chooses to fund it: the federally funded RETAIN project, which the department administered but subawarded to partners and is being spent down in FY26.

The presentation packet and department staff materials were distributed to the committee for further review; committee liaison directions were given at the close of the session.