House Appropriations reviews FY2026 budget language, flags transfers and one‑time housing, health and infrastructure spending

The House Appropriations Committee met Feb. 4, 2025, to review the administration’s FY2026 budget language, focusing on several large transfers and a mix of one‑time appropriations for housing, health testing and remediation, public safety communications, and workforce classification work.

Committee members were shown the full draft language and supporting spreadsheets as Commissioner of Finance and Management Adam Greshen and Deputy Commissioner Hardy Merrill (Finance and Management) explained the major items. “Having voted out the budget adjustment yesterday, we are moving right along to the FY ’26 budget,” the committee chair said at the start of the session.

The proposal includes an approximately $81.2 million transfer from the general fund to the general obligation bond debt‑service fund, an increase from the prior year. Administration staff said the year‑over‑year change is driven by increases in outstanding debt service tied to prior bond sales and interest rates. The language also contains a $77.2 million transfer from the general fund to the education fund intended for property‑tax relief; staff described that transfer as being calculated to support a “0% statewide average” change in property tax burden under current assumptions.

Housing and infrastructure were among the largest singled‑out investments. The draft directs $9.1 million to a new Vermont Infrastructure Sustainability Fund to support municipal wastewater and other housing‑enabling infrastructure, $15 million to the Vermont Housing Finance Agency (VHFA) rental revolving loan fund, and $15 million to VHFA’s middle‑income homeownership development program. The package also includes a $2 million appropriation to the Brownfields Revitalization Fund and a $1.63 million appropriation to support the Land Access Opportunity Board (administratively housed at VHCB).

Administration staff described the housing funds as one‑time investments meant to substitute for ARPA waterfall funding that fell short. “These are programs that were set up through the HFA to help create more housing,” an administration presenter said; committee members asked that VHFA appear to explain program rules, maximum subsidy percentages and application processes.

Public‑health and environmental remediation items drew extended discussion. The proposal pairs a $9.52 million transfer into an Environmental Contingency Fund for PCB testing and remediation with a $480,000 general fund appropriation to the Department of Health to fund a limited‑service senior environmental health risk assessor and operating costs to continue PCB work in schools through 2027. Committee members were told the DEC appropriation and the VDH position are complementary and intended to sustain testing and mitigation capacity for about two years.

Human services and corrections items included a $2 million appropriation to expand shelter capacity and a $30.5 million appropriation for General Assistance to carry the program through FY2026 under current law. The draft also contains roughly $300,000 described as a consulting and initial fit‑out appropriation to convert part of a work camp into a treatment facility and to pilot a recovery campus, which staff indicated is likely to be sited in the Northeast Kingdom but that a final location has not been chosen.

The Department of Public Safety would receive $600,000 in state match funding for federal cybersecurity grants and $920,000 to replace outdated mobile and portable radio equipment, administration staff said. Fish and Wildlife and State Police requests tied to recent classification and RFR (request for review) outcomes were reflected as budget adjustments to make affected pay changes whole for FY2025.

Agency of Education would receive a $4 million one‑time appropriation to support a transformation initiative within the agency and to build capacity to work with school boards and districts; administration staff described the amount as a starter allocation with potential base adjustments in later years.

Administration presenters explained a proposed $1,575,000 one‑time appropriation for the Department of Human Resources to continue a classification modernization project that, staff said, would move the state away from an older Willis classification system toward a job‑task based framework intended to reduce unanticipated RFR pressures in the future. Committee members asked Human Resources to come to a future hearing to explain prior appropriations, consultant involvement and expected outcomes.

Members pressed staff on special fund health. Fish and Wildlife received a one‑time transfer into its special fund and a matching one‑time special fund appropriation intended to bridge anticipated revenue shortfalls and avoid immediate staffing reductions while a financial restructuring proceeds. Staff also noted other special funds with declining revenues—such as criminal history background checks and certain civil‑violation funds—may require further attention.

Committee members asked for follow‑up briefings on several items, including: a detailed presentation by AHS on the ACO→AHEAD transition and provider bridge payments; VHFA/DHCD on program eligibility and subsidy caps; Human Resources on classification modernization history and prior RFRs; and DEC/ACCD on how wastewater permitting and Clean Water Act delegation issues affect proposed transfers and spending.

No formal committee votes on the FY2026 language were recorded during the presentation; staff said members will reconvene later in the week for additional testimony and to receive department briefings.

The committee recessed the language review after covering the transfers and the majority of one‑time appropriations; staff said more departmental witnesses (Agency of Human Services/DCF) were scheduled for the afternoon session.