House Appropriations hears overview of Budget Adjustment Act as revenue forecast adds roughly $172 million to FY25

Members of the Vermont House Appropriations Committee received an overview of the Budget Adjustment Act on Dec. 10, 2024, from Emily Burns of the Joint Fiscal Office and staff, who outlined why mid‑year budget adjustments are required and what the administration will present to the legislature later in the week.

Burns said the BAA is “an adjustment to the current year budget,” and described it as the mid‑fiscal‑year opportunity to appropriate unforeseen revenues and address unplanned expenses. She told the committee that the Emergency Board adopted a new revenue forecast in July that added about $172,000,000 to FY25 general fund receipts and that the Emergency Board will adopt another forecast on Jan. 22 that could change available revenue again.

The nut of the presentation was how the administration proposes to use the extra revenue and how the BAA fixes technical and timing problems that arose as the FY25 budget was finalized. Burns said the administration’s BAA proposal contains roughly $110,000,000 of current‑year adjustments and that some of the additional revenue is being held to carry forward into FY26; she identified approximately $87,000,000 that the administration is proposing to reserve in FY25 for use in the next fiscal year.

Committee members heard examples of typical BAA items: revenue receipts that missed projections (Burns cited sports wagering receipts coming in lower than expected), stronger‑than‑anticipated receipts from cannabis sales, and expense‑side changes such as higher employee health care costs and other Medicaid cost pressures. Burns told the committee that the Medicaid adjustments for FY25 reflect cost‑per‑case increases more than enrollment growth, and she cited particular strain on nursing homes in Franklin County and the recent bankruptcy of a long‑running home‑health provider.

The JFO presentation also summarized technical fixes and letter‑of‑intent clarifications that the chairs of the appropriations committees send to the administration to explain legislative intent. Examples Burns discussed included: - A $3,000,000 reversion from agency accounts that the administration proposes to re‑appropriate to the Department for Children and Families for the child welfare information system (often called CCWIS). - Clarifying that a 3% rate increase in the FY25 budget for designated agencies was intended to recognize rising overall costs at those agencies and not to specify that the full amount must be spent on employee salaries. - Changes tied to the property transfer tax and the timing/effective‑date interaction with last year’s Act 81 (H.687), which the BAA will align with legislative intent. - Routing a $2,500,000 appropriation so that the funds flow through the Agency of Commerce and Community Development rather than being directly appropriated to the Vermont State Housing Authority, which is not a state entity that receives direct appropriations. - Fixes to opioid settlement grant language so that the initial $1.5 million is divided among the intended recipients and an additional $3.5 million is directed to the satellite Howard Center program in Chittenden County, clarifying ambiguous original language.

Burns also described common technical transactions in BAAs: net‑neutral transfers to correct mis‑lined appropriations between line items, adjustments for unfilled positions (vacancy savings), late‑starting projects, higher or lower bid results on procurements, reversions of prior‑year appropriations (she cited roughly $19,000,000 of general‑fund reversions), and reimbursements due to service level agreements with the Agency of Digital Services (ADS) where agencies must reimburse ADS for IT purchases made on their behalf.

On statutory limits and reserves, Burns reminded the committee that, by statute, 50% of any excess fiscal‑year revenue is directed to the general fund balance reserve and the remaining 50% is split toward the state and teachers’ pension systems. She cited the FY24 final numbers shown in JFO materials — roughly $17,000,000 to the balance reserve and about $8,800,000 to the pensions as that statutory split — while noting that the administration’s BAA proposal includes a separate one‑time carryforward reserve of roughly $87,000,000 to be used in FY26.

Committee members asked procedural questions about the letter of intent process and whether letters carry legal weight; Burns said letters of intent guide administrative execution of appropriations and can serve as evidence of legislative intent in legal or oversight contexts but are not themselves law. The committee scheduled the administration’s presentation for Friday, when Commissioner Gresham and Finance and Management staff will present the administration’s BAA proposal in greater detail.

No formal votes occurred during the briefing; the committee will hear the administration’s full proposal and have additional opportunities for questions and line‑by‑line review before any legislative action.

The committee chair directed members to the JFO and committee websites for the BAA documents — operating statements, worksheets, narratives and bill language — and encouraged members to review the materials before Friday’s presentation.