State official outlines FEMA reimbursements, ERAF loans and hazard‑mitigation funding after 2023–24 floods

Douglas Farnham, Vermont’s chief recovery officer, told the House Appropriations Committee on Jan. 17 that state officials continue to manage complex FEMA reimbursements, Emergency Relief Assistance Fund (ERAF) advances and loan requests after major flooding in 2023 and 2024.

"The 2023 floods, of course, caused well over a $1,000,000,000 of damage," Farnham said, summarizing multi-agency damage estimates the state is reconciling with federal programs.

Why it matters: municipal infrastructure damages from the July 2023 floods and recurring 2024 events have created large cash‑flow and long‑term capital needs for small towns. Farnham described a mix of obligated FEMA funds, disbursed payments, state ERAF advances and short-term loans intended to bridge towns until federal reimbursements arrive.

Key numbers Farnham provided: FEMA has obligated roughly $79 million in projects to date for July 2023 flood work; about $40 million has been disbursed to towns where work was completed. The state estimated municipal damages for 2023 at about $200 million (a component of an overall damage estimate exceeding $1 billion). For the July 2023 event the legislature authorized covering 78% of the non-federal share for affected municipalities; Farnham said that results in municipalities bearing roughly 22% of the non-federal share (about 2.2% of total project cost given the 90/10 federal cost share for that event).

To address immediate cash needs, the Agency of Administration used $5 million appropriated in the 2024 Budget Adjustment Act to enable short-term loans through the Vermont Municipal Bond Bank. Farnham said approximately $4.6 million of that $5 million was loaned in December to several towns facing acute cash-flow stress; he expects the remaining amount (about $360,000) to be lent as towns formalize requests.

Farnham said ERAF advances were provided to specific towns (Johnson, Ludlow, Middlesex and Orleans among others) when projects were assessed as likely to proceed and when towns needed immediate liquidity. He cautioned that advances and loans are stopgap measures and that many municipalities still face ongoing financial distress because disaster costs exceed local operating budgets and borrowing capacity.

On program timelines and federal matches: Farnham described differences in federal cost‑share rules across events. The July 2023 floods were a 90/10 federal cost‑share event, prompting the legislature to simplify state treatment of municipal matches. The 2024 floods were lower in scale (a 75/25 federal cost share), producing different municipal match liabilities averaging roughly 12.5% of the non‑federal share statewide depending on local hazard mitigation practices. The chief recovery officer said the final non‑federal share and ERAF eligible totals may shift as FEMA completes project reviews; he estimated the eventual non‑federal total could be in the neighborhood of $20 million with ERAF-eligible reimbursements around $17 million after reconciliation.

Farnham also described other funding sources and match obligations the state is managing: the administration set aside general‑fund match for hazard‑mitigation programs and is coordinating federal resources including Community Development Block Grant–Disaster Recovery (CDBG‑DR) funds allocated in a federal supplemental, Infrastructure Investment and Jobs Act (IIJA/BIL) programs, Inflation Reduction Act (IRA) competitive opportunities, and USDA and EPA programs. He said some federal programs are competitive or regionally structured and that small Vermont towns often lack the staff capacity to pursue every available federal opportunity.

Examples and limits: Farnham explained FEMA alternate-project rules that pay the federal share based on repair‑and‑mitigate‑in‑place costs, rather than full relocation costs, creating funding gaps when relocation or larger mitigation would be preferable. He described cases where federal highway designation changes made particular repairs eligible under federal highway rules and thereby improved the financial treatment for the municipality.

Committee members asked about municipal borrowing constraints, audit risk and timelines for FEMA disbursements. Farnham said the state has obtained deadline extensions from FEMA on some issues, that Department of Public Safety Financial has increased staff to process payments faster, and that close coordination with the Vermont Bond Bank and the treasurer is ongoing to meet towns’ borrowing needs.

Farnham closed by urging patience: recovery is a multi‑year process and the state continues to reconcile obligations, prioritize federal-match needs and support long‑term hazard‑mitigation work.