Joint Fiscal Office explains purpose and mechanics of FY2025 Budget Adjustment Act

Emily Byrne, of the Joint Fiscal Office, told the House Appropriations Committee on Jan. 14 that the Budget Adjustment Act (BAA) is the Legislature’s mid‑fiscal‑year mechanism for updating FY2025 appropriations to reflect changed revenue forecasts and unanticipated expenditures.

The BAA “is your mid fiscal year opportunity to make updates to the current fiscal year budget,” Byrne said, adding the bill can both appropriate unforeseen revenue and address unplanned expenses. She told the committee the adjustment is intended to be largely technical rather than a vehicle for new policy.

Why it matters: Byrne said revenue forecasts adopted by the Emergency Board have significantly changed the picture since the FY2025 budget was passed. She cited a most‑recent revenue forecast that added about $172,000,000 to FY2025 general fund resources and noted the Emergency Board was scheduled to adopt another forecast on Jan. 22. Those changes affect how much the Legislature can authorize to spend this fiscal year.

How the BAA works: Byrne outlined common reasons the adjustment is needed: new revenue estimates (for example, lower than expected sports‑betting transfers), higher or lower caseloads and per‑case costs (Medicaid was cited), delayed or accelerated projects that change timing of spending, unanticipated contract costs or billing timing (including service‑level agreements with the Agency of Digital Services), and unrealized vacancy savings. She said the adjustment corrects those technical mismatches between the enacted budget’s assumptions and real experience.

Committee questions and examples: Representative Stevens asked whether the Joint Fiscal Office looks back after the year to check prior estimates; Byrne said analysts examine prior years and monthly trends (Medicaid was singled out) to refine projections going forward. A member asked whether agencies sometimes spend before the Legislature approves an adjustment; Byrne said it depends on the program. She used human services as an example, saying entitlements and caseload‑driven requests — including roughly $52,000,000 described in committee discussion for caseload growth and nursing‑home pressures — can result in payments before the General Assembly enacts supplemental authority, though the Legislature could later require offsets.

Letter of intent and technical fixes: Byrne reviewed a short letter of intent from the appropriations chairs to the administration that lists technical items to be corrected in the BAA. Key items she described include:

- A contingency list in the FY2025 budget totaling about $114,000,000; Byrne said the General Assembly intended to fund items from that list in order until funds were exhausted and that the available revenue exceeded the list, so remaining funds followed statutory allocations (general fund balance, pension/OPEB reserves).

- A $2,500,000 appropriation described for the Vermont State Housing Authority was clarified to flow through the Department of Housing and Community Development so the expenditure is made via a state grant agreement in compliance with state policy and law. Byrne emphasized appropriations must pass through an entity of the state.

- A reversion of approximately $3,000,000 of unobligated general fund that had been appropriated to the Agency of Human Services for the comprehensive child care/welfare information system; the intent was to revert those dollars and then return them to the Division for Children and Families in the next fiscal year for the program.

- Clarification that a 3% rate increase in the FY2025 budget should apply to designated agencies and specialized services agencies, and that the increase was intended to support those agencies’ operations broadly rather than be limited to a single cost category.

- Corrections to timing and effective dates so provisions enacted in separate bills (for example, language tied to Act 181/H.687 concerning property transfer tax changes) align correctly in practice.

- Restatement of an appropriation that had been erroneously struck in the enacted bill to keep that funding available, and correction of an overpayment to the Kanan School District (described as in the Northeast Kingdom Choice School District) that the BAA would remedy.

Byrne also described an addendum to the letter of intent addressing a conference‑committee drafting error that affected where certain substance‑use funding should be directed. She said the addendum fixed the intended number and locations of community sites outside Burlington that were to receive funds.

Process notes and timing: Byrne said the BAA is typically one of the first bills of the legislative session because it affects the current fiscal year and that additional adjustments can still occur later (for example, via the next year’s appropriations act C‑section). She reminded members that the Joint Fiscal Office and administration work through a letter of intent and, sometimes, an addendum to identify and correct technical issues promptly.

Committee logistics: Byrne invited members to follow up with questions, noting materials (the letter of intent and an addendum) were posted on the committee page under her name. Chair remarks closed the discussion and noted staff (including Maria and Erin) would be available for follow‑up at the committee’s next meeting.

No formal votes or motions on the BAA were recorded in the portion of the transcript provided.