Senate panel hears how Vermont handles carry forward and reversions in FY25 budget adjustment act

Deputy Commissioner of Finance and Management told the Senate Appropriations Committee on Feb. 4 that “when we use the term, reversion in, in law and in practice, what we are referring to are is dollars left in an appropriation at the end of a fiscal year that that is unspent.” The deputy commissioner said the default in statute is that appropriations revert at fiscal year end, but the annual Budget Adjustment Act (BAA) often includes session‑law language allowing specified funds and appropriations to be carried forward into the next fiscal year subject to approval by the secretary of administration.

The deputy commissioner said the carry‑forward process is operationalized by first automatically carrying remaining spending authority forward on July 1, then requiring departments to submit carry‑forward expenditure plans. “We review their plan and then say, yes, we'll recommend the the secretary approve that or no, we won't,” the deputy commissioner said, explaining that the secretary of administration gives final approval and that Finance and Management provides recommendations after reviewing department plans.

Why it matters: carry forward and reversion decisions determine whether unspent balances remain available for a department to finish multiyear projects or are reclaimed and reallocated by the legislature. The deputy commissioner said carry forward is commonly used for one‑time appropriations and multiyear projects, while reversion is applied when programs have ended or funds are no longer needed.

Key details and examples cited to the committee: • Vermont Department of Labor: Finance and Management is recommending an $8,000,000 reversion tied primarily to the availability of prior federal ARPA funding that had offset general fund spending on UI administration. The deputy commissioner said DOL’s large unspent general fund balance reflected previous years’ federal funds and delays in reconciling DOL’s legacy financial system: “we were able to find out how much money they had definitively, you know, through their system.”

• Office of Health Equity: an earlier one‑time appropriation for community grants remained unspent in the secretary of administration’s office because the Health Equity Advisory Commission had not yet completed required steps. The deputy commissioner said the administration is recommending that the unspent general fund balance be reverted and then re‑appropriated to the Vermont Department of Health (VDH), which has been identified as the program’s long‑term home.

• Vermont Housing Finance Agency (VHFA) grant: the BAA initially included carry forward of $8,431,000 for a VHFA grant, but Finance and Management later identified a $3,000,000 payment from the state’s self‑insurance liability fund (a July 1 payment related to the ED5 settlement) that required an offsetting general fund transfer; Finance and Management reverted $3,000,000 from the VHFA appropriation to fund that transfer.

The deputy commissioner gave aggregate figures: about $514,000,000 in general‑fund appropriations have been recommended for carry forward to continue planned expenditures, while the administration recommended roughly $18,900,000 in reversions, of which more than $13,000,000 are from base appropriations and about $5,600,000 are from one‑time appropriations.

Committee members asked procedural questions about where reverted dollars go, and the deputy commissioner clarified that reversions drop back to the balance of the fund in which the appropriation was made rather than automatically becoming general fund revenue unless a statutory transfer to the general fund is triggered for obsolete special funds. The deputy commissioner also described safeguards meant to prevent routine base budget reductions by carrying forward base appropriations: if an unspent base appropriation appears to reflect staff vacancies rather than a one‑time need, Finance and Management will typically not approve carry forward for base uses unless a specific one‑time purpose is documented.

The deputy commissioner emphasized that legislative action is required to reappropriate reverted funds for a different purpose than the original appropriation, which is why reversions and recommended appropriations are presented together in the BAA. The presentation to the committee was intended to explain statutory defaults, the session‑law carry‑forward authorizations that operate annually in the BAA, and several large, specific items that warranted committee attention.

Committee follow‑up: senators asked for locations of the BAA carry‑forward language (the deputy commissioner referenced FY24 BAA language and noted a section 80 citation was on the materials presented) and for additional detail where the administration was recommending reversions or carry forward. The committee did not take formal votes during the presentation.

The deputy commissioner concluded by offering to answer additional questions and noting Finance and Management will continue to work with departments on reconciliation and carry‑forward plans ahead of final BAA action.