Senate panel updates county-regional governance study and reviews bond-bank proposals to bolster municipal resiliency

The Senate Government Operations Committee on Feb. 4, 2025 received an update on the county and regional governance study and heard municipal-resiliency financing proposals from Michael Gaughn, executive director of the Vermont Bond Bank, and Nicole Lee, senior financial analyst.

Senator Hardy, who helped create the county/regional governance study committee last session, said the study grew out of recurring testimony that many Vermont municipalities lack capacity to manage complex functions such as FEMA grant administration, dispatch and EMS, public-safety coordination and certain infrastructure projects. “We passed a bill unanimously last session to create the county regional governance study committee,” Hardy said. She told the committee that stakeholders reported widespread capacity constraints after the 2023–24 flooding and that a technical advisory group — convened alongside legislators — began meeting in late summer to inventory options.

Michael Gaughn told members the technical advisory group included roughly 18 organizations and that meetings focused first on identifying capacity gaps and then on potential governance models. “What we spend our time doing the first meeting…was to organize the themes,” Gaughn said, describing workforce, disaster response, infrastructure, housing and public safety as recurring themes.

Gaughn and Nicole Lee described three specific legislative proposals aimed at improving municipal financial resilience:

- Expand flexibility for unassigned fund balances so municipalities can retain higher reserves for emergencies rather than automatically applying them to reduce the next year’s property-tax rate.

- Create emergency-borrowing authority or a clearer medium-term borrowing mechanism so towns can access programs such as FEMA’s Community Disaster Loan Program without having to put a financing question to voters at the height of an emergency; Gaughn said current short-term “current expense note” rules expose communities to market risk when they later refinance.

- Authorize level debt service (level principal plus interest payments that remain constant over the amortization period) as an option for general-purpose municipal borrowing. Nicole Lee said the change would smooth near-term budget impacts for capital projects and is common practice in other states. “That’s the request that we’re advocating for is the ability to have level debt, as a repayment option,” Lee said.

Committee members asked technical and fiscal questions about market rates, tax impacts and implementation. Gaughn said the bond bank’s pooled, credit-enhanced structure produces tax-exempt borrowing rates near the upper 3% to low 4% range depending on term and market conditions; he noted the bond bank’s double-A-plus rating helps lower borrowing costs. The presenters said a $50,000 appropriation accompanies the study committee to pay stipends and to support a consultant contract; the committee had tentatively engaged the Laide Center for Rural Studies at UVM and a faculty member (Tricia Coates) to conduct surveys and student-supported research.

Hardy told the committee the study’s report is due Nov. 1, 2025 and that, given transitions in committee membership and a pause after last fall’s elections, the panel should consider extending that deadline. Members signaled interest in continuing the technical advisory process and in drafting enabling language for the bond-bank proposals if stakeholders endorse them.

Ending: The committee paused the governance portion to proceed to a scheduled vote on H.78 and scheduled further briefings with VLCT, UVM researchers and NCSL staff as next steps.