House Appropriations reviews ARPA spending; administration reverts $26.4 million to reduce risk

Montpelier — State officials told the Vermont House Appropriations Committee on Jan. 14, 2025, that the bulk of the state's American Rescue Plan Act (ARPA) award has been obligated and that the administration has reversed some ARPA appropriations and “cured” other awards into general funds to reduce the risk of federal recapture.

Emily Byrne, senior staff at the Joint Fiscal Office, opened the committee's ARPA briefing with an overview of the program and its deadlines and said Vermont received roughly $1.04 billion under the state fiscal recovery fund, while noting earlier characterizations of “a little more than $1 billion.” Byrne said, “We got a lot of money, thanks to Senator Leahy and the small state minimum.”

Why it matters: the U.S. Treasury required ARPA obligations to be made by Dec. 31, 2024, and expenditures to be completed by Dec. 31, 2026. State presenters said meeting the obligation deadline — committing funds by contract or grant — avoided immediate federal recapture, and the administration’s December actions aimed to reduce the amount at risk before the 2026 expenditure deadline.

Chief recovery officer Douglas Farnham, who leads the state's ARPA implementation, told the committee the administration reviewed appropriations and reverted about $26.4 million that it judged unlikely to be liquidated in time. “Everything Emily said is accurate,” Farnham said, and he described a mix of steps the administration used to protect the original legislative intent while meeting federal timing rules.

Topline numbers and deadlines - Obligation deadline: funds had to be obligated by Dec. 31, 2024 (committed by contract or grant). - Expenditure deadline: funds must be expended (checks issued to contractors/subgrantees) by Dec. 31, 2026. - Total ARPA state fiscal recovery appropriation (per the administration’s accounting spreadsheet): about $1.04 billion. - Reverted in December (administrative reversion to reduce recapture risk): about $26.4 million.

How the administration responded Byrne and Farnham said the Legislature appropriated ARPA funds primarily through the FY2022 and FY2023 budgets, and agencies then had to obligate those appropriations. Farnham explained the administration used two principal tools to manage risk: (1) reverting unobligated or low-probability appropriations back to a central pool for higher-priority uses (the administration reported $26.4 million in reversions), and (2) “curing” certain ARPA awards to general fund in a one-for-one swap so projects could continue without being subject to the stricter timing or reporting rules tied directly to ARPA.

Byrne described the rationale: some programs (for example, climate programs and portions of weatherization) faced difficulty fitting clearly within Treasury guidance and were slow to spend. Where appropriate, the administration converted (cured) federal ARPA awards to general fund to preserve program activity and reduce the risk that Treasury would recapture funds if projects could not be liquidated by the 2026 deadline.

Distribution and municipal reporting Farnham said the state acted largely as a payment processor for local fiscal recovery funds that Treasury awarded directly to municipalities. He said most Vermont municipalities used Treasury’s revenue-loss category, which Treasury allowed municipalities to apply broadly. Farnham told the committee that the Vermont League of Cities and Towns provided technical assistance to towns; he said most towns appeared to be in a sound reporting position but that final reconciliations and federal reporting would continue into April 2025.

Hazard mitigation and flood recovery Committee members asked about hazard mitigation tied to the 2023–24 floods. Farnham said the administration prioritized buyouts and floodplain restoration where possible. He reported that more than $300 million in project applications were received against a $100 million hazard mitigation appropriation and that, among projects approved to move forward, more than half are buyouts. Farnham also described uncertainty around the state capital complex damages and the matching funds needed for certain FEMA programs.

Other numbers discussed - The administration said it expected to report over $880 million expended on ARPA in its Dec. 31, 2024, filing, a jump from an earlier reported $544 million (an increase that reflected concentrated spending and obligation activity in the final quarter of 2024). - Byrne and Farnham described previous budget provisions that allowed the administration to reallocate or revert appropriations if obligations were unlikely to be liquidated.

What the committee asked and next steps Committee members pressed for clarity on municipal obligations, the composition of the reversions, and how the state prioritized hazard mitigation. Farnham said the administration will file the required Treasury report at the end of January and would continue to update the committee. Byrne and Farnham both cautioned that federal guidance evolved during program implementation (interim and final Treasury rules, and many FAQs) and that periodic federal actions could change compliance risk.

Ending note State officials told the committee they met the Treasury obligation deadline and carried out administrative adjustments in December 2024 to lower recapture risk. The administration plans to submit the Dec. 31, 2024, report to Treasury at the end of January and to continue monitoring expenditures through the final 2026 liquidation period.