Treasurer says holding cash beats small bond buy‑downs; committee considers one‑time uses of $14.19M reversion

Treasurer Mike Pichak told the Joint Fiscal Committee on Jan. 30 that the state has delayed spending a $20 million appropriation intended to buy down outstanding state bonds because, in the current interest‑rate environment, holding cash yields more benefit than executing the buy‑downs now.

"If you took $1,000,000 and bought down the bonds, $1,000,000 worth of bonds, we would save about $47,000 in interest over the life of that bond," Pichak said. "Each year that we've held that million dollars since it's been appropriated to us ... we are earning about $40,000 on that cash. So $50,000 a year on that $1,000,000." Pichak said those returns, and opportunities to refinance larger issues, have led the treasurer's office to defer applying the full $20 million to bond principal.

The treasurer's office told the committee it manages about $600 million in outstanding state bonds and continues to look for refunding and refinancing opportunities that can produce net savings without spending the previously appropriated cash. Pichak cited a recent refinancing in February 2024 that reduced interest costs on older bonds; he described that transaction as an example of how refinancing can be used to produce savings for Vermonters without immediately applying the $20 million fund.

Committee members asked how long the treasurer expected to hold the cash and whether the appropriation would have to be replenished later. Pichak said the $20 million was an extra, one‑time appropriation outside of the regular debt‑service schedule and that it would not necessarily have to be replenished in the budget: the choice to repurpose or restore the money is a policy decision for the administration and Legislature.

The committee then reviewed the House draft of the Budget Adjustment Act and supplemental spreadsheets from the Joint Fiscal Office. Emily Byrne of the Joint Fiscal Office explained the sheet's presentation of revenues, direct applications and transfers and identified the House changes to the governor's proposal, including a zeroed‑out line for the treasurer's bond redemption appropriation. "Line 67 is where we have the ... funds for the bond redemption for the treasurer's office that was just spoken about. This line is zeroed out in the House version," Byrne said.

Members discussed repurposing a reversion of roughly $14.19 million tied to treasurer and attorney savings. Committee members and staff outlined several one‑time uses being proposed, including: an extension of the cold‑weather exemption (general assistance) through June 30, a provider stabilization increase reclassified and moved to the Department of Vermont Health Access, and additional funding to the Vermont Housing and Conservation Board (VHCB) to support pipeline projects. Emily Byrne said the plan would allow VHCB to fund roughly half of its current project pipeline.

Lawmakers asked questions about longer‑term tradeoffs: several members highlighted pension liabilities and the state's unfunded pension obligations as reasons to prioritize debt and pension payments when possible. Dr. Dickinson noted the long‑term savings from aggressive pension payments; Pichak responded that actuarial work and recent pension reforms show significant projected savings over the next decades but that scale matters and different liabilities operate on different horizons.

No formal roll‑call vote on the Budget Adjustment Act or the treasurer reversion occurred during the session. Committee members signaled they expect to finalize language and vote on the package the following day.

Why this matters: The committee's decisions affect one‑time allocations and whether short‑term market returns or direct debt reductions are prioritized. The discussion also frames how a reversion of treasurer funds will be used for immediate housing, provider, and emergency assistance needs versus applied to debt relief or held for future refinancing opportunities.