Senate Institutions hears administration on capital bill, CDAC decline and proposed cash fund

Nick Kramer, chief operating officer of the Agency of Administration, told the Senate Institutions Committee on Jan. 15, 2025, that Vermont’s capital budget has “historically been funded through the issuance of general obligation debt.” He outlined why the administration is proposing to increase the use of a statutory cash fund as an alternative to borrowing for capital projects.

The cash‑fund proposal would set an annual transfer equal to 4% of the most recent total general fund appropriations minus the state’s current debt service obligations and use that amount to pay capital projects rather than issue general obligation bonds. “If we can stay the course with declining authorizations… those aggregate debt service costs will continue to drop and that transfer to the cash fund will continue to grow,” Kramer said.

Why it matters: state technical guidance has recommended lower borrowing levels as Vermont faces shrinking CDAC (Capital Debt Affordability Advisory Committee) authorizations, rising construction costs and large unfunded pension liabilities. Kramer said CDAC’s current recommended borrowing cap is about $100,000,000 and that the committee’s recommendation has…