Legislative counsel Tucker Anderson and representatives from the Vermont League of Cities and Towns (VLCT) told the Senate Government Operations Committee that Section 6 of Act 57 grants municipal legislative bodies the authority to place unexpended, voter‑approved budget money into an unassigned fund balance and to carry it forward, invest it and expend it for public purposes established by that body.

Anderson summarized the change as an addition to Title 24 that places unexpended funds under the control of the municipal legislative body. "This section allows monies from a budget approved by the voters ... that are not expended by the end of the municipality's fiscal year shall be under the control and direction of the legislative body of the municipality," he said, explaining the legislative body must act—by vote—to carry funds forward or to allocate them.

Samantha Sheehan, municipal policy and advocacy specialist at VLCT, described the policy rationale. Sheehan said unassigned fund balances stabilize tax rates, reduce the need for short‑term borrowing such as tax anticipation notes, and provide liquidity during emergencies. "Act 57 ... grants the municipal legislative body control over these unassigned funds," she said, adding that municipalities should adopt written policies to guide use, replenishment and reporting.

VLCT presenters defined fund balance categories—restricted, committed, assigned and unassigned—and emphasized differences between an appropriation (authority to spend) and a fund balance (the difference between assets and liabilities). They recommended municipalities adopt fund balance policies that set a target balance and rules for use and replenishment; VLCT advised a target of about 15%–17% of the general fund as a commonly recommended range.

Committee members pressed on limits and safeguards. Members asked whether legislative bodies can transfer unassigned funds into existing reserve or enterprise funds and whether voter approval is required. Counsel and VLCT answered these depend on how a reserve or enterprise fund was established and whether bond covenants or statutory restrictions apply. Counsel also noted that transfers and expenditures remain subject to other applicable law and local rules, including open meeting law and any municipal ordinances or voting thresholds.

VLCT said the Act 57 authority became effective in July; towns not currently using the authority could consider action at their next town meeting to move unassigned funds into the FY27 budget. VLCT also said it will issue a model fund balance policy and provide technical assistance to municipal officials.

The committee discussed audit practice and fiscal metrics for water, wastewater and electric enterprise funds and the value of auditors' reports in assessing municipal fiscal health. No formal motions or votes occurred during the briefing. The chair scheduled further hearings and invited VLCT to return for additional detail at a forthcoming meeting.

Next steps: VLCT will release a model fund balance policy; municipal legislative bodies may consider adopting or amending policies and will remain subject to open meeting and public records laws when they act on unassigned funds.