House Appropriations Committee reviews $514 million in carryforwards, $18.9 million proposed for reversion

Hardy Merrill, Deputy Commissioner at the Vermont Department of Finance and Management, told the House Appropriations Committee on Jan. 23 that $514,000,000 in general‑fund appropriations remained available to carry forward from fiscal 2024 into fiscal 2025 and that the administration proposed $18,900,000 in reversions in its Budget Adjustment Act (BAA) recommendation.

Merrill said the bulk of the carryforward—about $455,000,000—consists of one‑time appropriations narrowly designated for specific purposes, while roughly $58,000,000 came from base appropriations that also carried forward. “If not for the carry forward provision, all of the programs would have ground to a halt immediately,” Merrill told the committee, adding that, by statute, appropriations “would revert at the close of the fiscal year” without session‑law authority.

Why it matters: Carryforwards preserve authority to pay legitimate obligations that cross fiscal years—payments that often arrive after the fiscal year closes—while reversions free up unused authority that the administration can propose to reallocate in a future BAA. Merrill said the Department of Finance and Management (F&M) reviews departmental carryforward plans and recommends approval to the Secretary of Administration or proposes reversion language for the BAA.

Merrill described the statutory and procedural basis for the practice. He cited 2024 Act 87, Section 103 (the FY24 Budget Adjustment Act) as the session‑law mechanism that, by convention, allows executive‑branch appropriations to be carried forward subject to Secretary approval; he also cited 32 V.S.A. §703 as the general statute under which appropriations would otherwise revert at fiscal year end. Merrill said F&M issued a June 28, 2024, memo to agencies instructing them how to calculate year‑end remaining balances and requiring carryforward plans roughly 10 days after year‑end closeout, with F&M typically spending about a month reviewing submissions.

Merrill highlighted several specific items in the report the committee received. He said approximately $1,400,000 of carried‑forward general‑fund Pay Act appropriations were set aside to meet anticipated spring Pay Act requests across agencies, an internal carve‑out intended to limit draws on the Executive Pay Act appropriation. Merrill also pointed to a $13,000,000 appropriation labeled a “high risk FEMA denial reserve” whose current language narrowly limits use to that FEMA purpose; the administration’s BAA includes proposed language to broaden that appropriation only if the legislature enacts the change.

Other examples discussed: Merrill described a $500,000 appropriation originally placed in the Agency of Administration for an Office of Health Equity purpose that was not spent there; because the Office is now housed in the Vermont Department of Health, F&M cannot simply move the appropriation between agencies. “The only way we can move the appropriation … is to propose it for reversion and then propose it in the BAA for reappropriation to the Vermont Department of Health,” Merrill said.

Merrill also explained an $8,000,000 reversion tied to the Department of Labor. He said that relatively large amount reflected prior ARPA fiscal recovery funding that had covered pandemic‑era unemployment‑insurance costs; as those costs declined, the general fund need diminished and the ARPA‑supported balance became available to revert and be redeployed elsewhere.

The committee probed timing and oversight. Members asked whether carryforward encourages end‑of‑year “use it or lose it” spending; Merrill said F&M’s written carryforward plans and the Secretary’s approval process are intended to dissuade frivolous purchases and to ensure funds are carried forward for legitimate, documented purposes. Merrill noted that the carryforward snapshot in the report reflected balances as of July 1, 2024, and that amounts can change during the subsequent months as departments continue to draw down funds.

Committee members raised specific agency examples. Merrill said the Vermont Veterans’ Home expended its FY24 appropriation and therefore had no carryforward balance; subsequent FY25 needs are being handled through the FY25 budget and the ongoing BAA process. Merrill also identified the multi‑year ERP modernization (Vantage) appropriation that has carried forward since FY22, and he said contract payment timing drives some carryforwards when invoices arrive after June 30.

Merrill summarized the administration’s approach: departments must submit carryforward plans after year‑end close; F&M reviews the justifications; funds deemed justified for the original purpose are approved for carryforward or set aside for Pay Act needs; otherwise, F&M recommends reversion and inclusion of reappropriation language in the BAA for the legislature to consider.

Committee members said they will follow up with agency‑specific questions and that staff would check current balances where large carryforwards appeared in the July 1 report. Merrill said F&M tracks carryforwards across funds but provided the committee a detailed line‑level report for every general‑fund appropriation, noting that the report lists whether an appropriation is one‑time or base and shows the department code and appropriation year as recorded in the state financial system.

Ending: The committee thanked Merrill and scheduled continued review; several members said they would dig into specific large balances before the governor’s budget presentation and the committee’s upcoming markups.