Treasury reiterates cautious capital plan, CDAC recommends $50M per year for biennium
Loading...
Summary
The state treasury briefed the committee on debt metrics and the Capital Debt Affordability Committee's recommendation: $50 million for FY26 and $50 million for FY27. Treasury staff emphasized pension and OPEB liabilities and warned against issuing more debt than the state can deploy given contractor and federal funding timing.
Jeremiah Breer, chief financial officer at the state treasury, briefed the House Corrections & Institutions Committee on the Capital Debt Affordability Committee's (CDAC) fall recommendation and Vermont's debt profile.
Breer said CDAC recommends $50 million for fiscal 2026 and $50 million for fiscal 2027, a cautious level based on the state's debt‑per‑capita and debt‑to‑personal‑income benchmarks against AAA‑rated states. He noted Vermont's AA rating and that the state's long‑term pension and OPEB liabilities remain a material factor for credit agencies.
Treasury staff explained a practical reason CDAC did not recommend a higher authorization: the state has limited contractor capacity and a backlog of authorized but unissued projects. Breer said roughly $192 million of previously authorized debt remains unissued because projects have not progressed to spending. The treasury also described how bond premiums can sometimes be sizable and that use of any premium in the capital bill depends on policy and the governor's budget.
Committee members questioned the composition of debt, the definition of "moral obligation" bonds issued by state instrumentalities, and whether projected premiums will be available for the capital bill. Treasury staff said market conditions drive premium size and that premium use is determined when the governor's budget is prepared.
What's next: Treasury staff offered to provide follow‑up detail at the committee's request, including the age of unissued authorizations and additional benchmarking data.
