Finance commissioner outlines technical fixes, reserves and carry‑forwards in governor's budget language

Commissioner Adam Greshen, commissioner of finance and management, told the Senate Appropriations Committee that the governor's revised budget includes a series of technical language changes and policy clarifications intended to implement legislative intent and to provide flexibility for one‑time spending.

Greshen said the package includes a fix to how the property transfer tax is allocated after enactment of Act 181; creation of a temporary reserve to hold unspent general‑fund balances and release them for uses in fiscal 2026; corrective language to provide a $68,000 aggregate credit to Northeast Kingdom Choice School District for a miscalculation of equalized pupils; broader allowable uses for an existing FEMA denial reserve; the repeal and reversion of an unused workforce education and training special fund; changes to the statutes that govern tobacco settlement and trust fund transfers; adjustments to how the state accounts for and transfers debt‑service funding; and expanded carry‑forward authority for the technology modernization special fund.

Why it matters: the changes affect where one‑time and unspent dollars may be held and how they can be used — for example, Greshen said money in the temporary reserve may be applied to property tax relief, permanent housing or “any other uses determined to be in the best interest of the public.” He said the administration is using the mechanism to carry forward roughly part of an available general‑fund balance after identifying about $110 million of immediate uses out of roughly $197 million in available sources.

Property transfer tax and Act 181

Greshen told the committee the language at the start of the package (section D100 in the draft) clarifies the allocation of the property transfer tax after enactment of Act 181 and that the administration worked with the Joint Fiscal Office on a technical fix. “This comports with what we believe legislative intent was,” he said. He described current practice under the existing budget as deducting certain fixed amounts (he cited a $2,500,000 deduction for debt service and a 1.5% deduction for administration of the current‑use program) and then distributing remaining shares to entities including the Vermont Housing and Conservation Board and the general fund.

Temporary reserve and one‑time appropriations

Greshen explained the package creates a temporary reservation mechanism (section D103 amendment) to fence amounts that the administration did not put into the budget adjustment for immediate use. He said the state identified roughly $197 million of general‑fund sources, used about $110 million for immediate items, and placed the remainder into a temporary reserve that can be unreserved and used in fiscal 2026. “This money shall be temporarily reserved and then unreserved in fiscal 26 and used in the best interest of the public,” he said. He added that, when the larger one‑time bill is presented, much of that reserve is proposed to be unreserved and allocated as part of one‑time appropriations totaling a little over $200 million.

School funding correction for Northeast Kingdom

Greshen described language (section 65) prompted by an Agency of Education error in calculating equalized pupils for the Northeast Kingdom Choice School District. The error, he said, produced an overstated per‑pupil spending number and therefore a slightly higher tax rate than intended. The budget language will permit the district to calculate a credit off property taxes in the following year; Greshen said the total amount involved across the affected sections is $68,000.

FEMA denial reserve and administrative costs

The draft broadens the appropriation of an existing FEMA denial reserve, originally created to cover potential denials of federal reimbursements, to also include certain administrative costs tied to disaster recovery work. Greshen said the reserve originally held about $15,000,000 and that “$2–3,000,000” of it had been used; the language does not add new funding but expands allowable uses.

ERP, technology and carry‑forward authority

Greshen said two prior appropriations intended for parts of an enterprise resource planning (ERP) upgrade — for budgeting (Vantage) and for the statewide accounting system (Vision) — are being broadened so that funds can be used across components of the statewide ERP project rather than being restricted to a single system. He also described a separate carry‑forward provision that would add the technology modernization special fund (currently about $80,000,000, by his account) to the list of funds that the administration may carry forward into the next fiscal year for ongoing projects, rather than reverting unspent balances to the general fund at year‑end.

Debt service transfers and reserve calculations

The language also aligns statute with the administration's current practice of transferring debt‑service funding directly to a debt‑service fund rather than first making an appropriation and later transferring it. Greshen said this change follows the practice of many other states and impacts how the stabilization reserve is calculated because statutory reserve calculations historically have excluded transfers. He told senators that removing transfers from the calculation reduces the amount that must be set aside for the stabilization reserve in some years.

Workforce education fund repeal; tobacco settlement language

The package would repeal a long‑idle workforce education and training special fund and revert its roughly $2.5 million balance to the general fund; Greshen said the Department of Labor requested the change and that the programs formerly associated with the fund continue as part of department operations. The drafter also proposed language to remove a statutory automatic sweep from the settlement fund into the Tobacco Trust Fund so appropriations from settlement or trust dollars would be set by the Legislature rather than effected automatically. Senators pressed for clarification about balances; staff (Amy) and Greshen reviewed trust and settlement ledgers and said a multi‑year picture is required to interpret any multi‑year balances.

Procedure and small‑dollar closeout authority

The draft increases some small‑dollar administrative authorities used to close out accounts. Greshen noted the existing DAB‑26 transfer authority — historically a $50,000 within‑agency transfer — and proposed increasing thresholds to reflect inflation and administrative practice. He described other technical clean‑ups intended to align statute with how the administration conducts closeouts and transfers.

Discussion, unanswered questions and next steps

Senators asked questions about the meaning of “permanent housing” in the temporary reserve language, whether tobacco trust balances are actually available for program use, and how carry‑forward authority would interact with spending restrictions on special funds. Senator Rosslyn asked whether “permanent housing” in the draft implies permanently affordable housing; Greshen replied the intent was to exclude emergency hotel‑and‑motel‑style housing and not limit the term to permanently affordable units. Senator Watts asked for a clearer accounting of the Tobacco Trust Fund and settlement‑fund balances; staff said the settlement ledger shows variable balances when projected out to future years.

Greshen said the treasurer will appear before the committee the next day and recommended the treasurer and the Joint Fiscal Office be asked to walk senators through statutory reserve mechanics, settlement and trust fund ledgers, and the carry‑forward provisions. No formal committee votes were recorded during the briefing.

The committee scheduled follow‑up appearances, including the treasurer and other agency staff, to address technical questions and to review the detailed spreadsheets that accompany the budget language.