Vermont Legislature SmartTranscripts:

[Robin Scheu (Chair)]: Have you put in and you posted it? Okay, it'll be there in a moment. Good morning, this is the House Appropriations Committee, Friday, 01/23/2026. It is almost 11AM, and we are here with Brady from GFO to talk about some of the language that is proposed to go with the budget adjustment.

[Grady (Joint Fiscal Office analyst)]: Thank you, Madam Chair. Greeting Nixon joint fiscal. So what the committee has in front of you or online is just a small packet of language on some decisions related to decisions that the committee has already made. As the chair noted. There are other things floating out there that I think the committee will touch on later this afternoon. On the first page here, this would be adding a one time appropriation of $3,000,000 of general funds to address the potential issue with ADEC that was mentioned in the treasurer's memo. So this uses language that was also used in prior budget bills to address the same substantive issue and would ensure that there are sufficient funds to meet 100% of the Vermont State Teachers Retirement System's actuarially determined employment contribution.

[Robin Scheu (Chair)]: So this is your language. We'll talk about where the money comes from this afternoon. That's part of that larger conversation. But we had said that I'd have

[David Yacovone (Member)]: to do this thing. The federal TPA.

[Robin Scheu (Chair)]: Yes, the FGA thing.

[Grady (Joint Fiscal Office analyst)]: Page two, so this is just a few tweaks to governor recommended language regarding that capital care reserve language that, Emily is just presenting on. On the second line of this page, you'll see just a highlight there, that is just to indicate that this section of recommended statute was sent over without a section title. So that would just, that's placeholder language for whatever the committee would like to call this section of statute. And then in sub D and sub E, the committee will see the same, a very similar sentiment in sub D where it clarifies the 50 amount on reserves for that estimate is greater than actual receipts due to the funds, then the excess shall be reserved in accordance with section three zero eight, which is the, balance reserve and pension fund split. And the remainder shall be transferred to the child care contribution fund. So the highlight in yellow just clarifies in statute, that once those funds are unreserved, they need to be transferred from the general fund to the child care contribution special fund. The same thing is done in sub E, again, that section addresses if that estimate were to be less than actual receipts, then an amount equivalent to that gap will be unreserved from the balance reserve. And then that combined total would be transferred to the child care contribution special fund.

[Robin Scheu (Chair)]: That's our new three zero eight D is our new session.

[Grady (Joint Fiscal Office analyst)]: On page four, this would be an amendment to the current child care contribution special fund that would be added as a new section to the budget adjustment. You'll see in sub B sub two beginning on line 17. What this would do is strike the words for appropriated and by the general assembly. This just would align statute with actual practice For one, just on a technical matter, funds cannot be appropriated to a fund, can only be transferred. So you'll see that statutory cleanup in other instances in the governor's recommended budget, where instances of appropriated to fund are being struck by statute. And then striking by the general assembly just aligns statute with practice that, these funds would not be directly transferred in an act by the general assembly, but be done by the administration.

[Wayne Laroche (Member)]: Makes sense, that's what set us all up for the child care tax money. So this special fund set up does not require that we appropriate money from that fund for the purposes of any given year.

[Robin Scheu (Chair)]: This is not taking money out.

[Wayne Laroche (Member)]: I understand. This is a separate question. So are they able to, those that access this fund, are they able to just access that money, or do we have to appropriate each year a certain amount from that fund?

[Robin Scheu (Chair)]: Oh, you mean transfer money out of the fund to whatever they use the money?

[Wayne Laroche (Member)]: We have all kinds of general fund. Have to appropriate that money for an agency to use. So do we have to appropriate this special fund money for them? Because even the Fish and Wildlife special funds had to be appropriate before we could use it. Is that going to be the same process?

[Robin Scheu (Chair)]: Right, so I'm just going to back up for a second. So what we've talked about in all of this so far has been how we get the money into that fund and you're asking about how the money gets out of the fund and is used. I don't have an answer to that. I don't know if Emily does or Brady does. Once the money's in there, how does it get out and be utilized? I apologize. I know, you weren't paying attention because you didn't have to, you had already done all this for now. Let's say we have $88,000,000 in the child care special fund, and it needs to get transferred or sent to people so they can use the money that we put in there. How does that happen? Okay that's what I clear with the

[David Yacovone (Member)]: fund, general fund, either way it has

[Robin Scheu (Chair)]: to be transferred it can't be that's right it's not an appropriation it's a transfer. Just wanted to make

[Wayne Laroche (Member)]: sure they didn't have a blank check.

[Robin Scheu (Chair)]: Yeah no blank checks. No, no, if somebody wants to give me a blank check, they have to give me a story. Continue gravy.

[Grady (Joint Fiscal Office analyst)]: On page six, so this would be the final technical tweak relating to all of this CCC fund stuff. This would be in that sub D, you'll see highlighted the statutory reference to this new reserve language. So that language and 32 VSA three zero eight would be cut to clarify, that the order of things that the general assembly intends is for the child care contribution fund reserve, mechanism to be executed prior to 75,000,000, being reserved. Okay. And I believe the committee has, discussed further language changes it might wish to make to language regarding that 75,000,000 reserve?

[Robin Scheu (Chair)]: Sorry, there. Oh. Yes. All right. So sorry, I was just focused on the 30 three-eighty and not looking at the rest of the So, that's a question. Is this the question of which is step two and which is step three? And then we have the question of the whole $74,900,000 And so what I'm thinking about the 74,900,000.0 is that you've already talked about not actually using it in budget adjustment, but making that decision about using it in the context of the whole education thing in the big bill. But we need to reserve the money so that it doesn't get spent out in March or whatever. And we do that every year. Have if we have extra money, we say we're gonna hold it for but I I don't want to say that it's just for education property taxes, because we don't know what that number is going to be. And what if it's $72,000,000 and we don't need 74,900,000.0? Or what if it you know what I mean? So I'd rather say property taxes and other good things that you can write in some language. Do you know what I mean? So that it could still all be used for education if that's what we decide. But if we don't need it, haven't boxed ourselves in. But we're still reserving it.

[David Yacovone (Member)]: Lynn? Yeah, that's different language.

[Robin Scheu (Chair)]: There's two parts of this, right. Along with that, I think these ought to be flipped. You're talking about why we do the flip? Right. Right. Southern Montello. Yes. Exactly. I don't think it's very much, but I also think it's really important that if taxpayers are paying it for that, that we don't want to find ourselves in a situation, even if it's unlikely, where the money is going to something that isn't? So

[Grady (Joint Fiscal Office analyst)]: the highlighted bit that you'll see there, that would be struck, which would have the effect of changing that order of things for that closeout procedure. So that would ensure that the child care contribution fund reserve language is executed prior to that seventy four point nine. So you would say to yell all out? Correct. And then for the chair's discussion, language would be added following the phrase property tax relief, to explain the other allowable uses for essential needs of Vermont's.

[Robin Scheu (Chair)]: Right. You'll find some good language that says something.

[Grady (Joint Fiscal Office analyst)]: Yes, and there's been language in past Washington.

[Robin Scheu (Chair)]: So let's just use that, but we'll include property, but we just don't know what that is.

[Martha “Marty” Feltus (Vice Chair)]: So is this closing off in this whole concept of saying that the child care, the money that's intended for the child care fund is only going to go for child care fund, that's what we're paying the taxes for. Property transfer tax also has the same attitude that if you buy a house or property that 1.5% is going to the property transfer And since it's in since its creation, it has carried notwithstanding. And that fund has only recently been regularly funded a full amount of what it's statutorily written in because we had the power of the purse of available cash. So these are similar collections to be used for special things. It's but it sounds like we're creating deeper walls for this so that we can't not withstand this money. Is that accurate?

[Grady (Joint Fiscal Office analyst)]: This this would not this would just not in this particular instance include explicit notwithstanding language. This would only refer to the actual process of how the close-up occurs. So it would just have the reserve language be executed before that 75,000,000 is reserved, but it speaks to nothing other

[Martha “Marty” Feltus (Vice Chair)]: than that. So so the question is, I mean, one of the when we have fought for the property transfer tax to be actually used for housing and conservation, we've been told by you know that well I can take the notwithstanding way but you can't, it won't stay there because every legislature is there and they can put that in. So I'm just curious

[Robin Scheu (Chair)]: This could happen again next year. We are making a decision right now for this particular specific item that we are going to flip those. And this

[Martha “Marty” Feltus (Vice Chair)]: is more geared towards I'm just trying

[Wayne Laroche (Member)]: to get this straight.

[Martha “Marty” Feltus (Vice Chair)]: So this is getting more geared towards how we rather than waiting for the fall, this is to help not just the childcare fund. That's almost irrelevant to this. It's almost just about the accounting that's needed to be done to close out. This

[Grady (Joint Fiscal Office analyst)]: is purely technical in that personal income tax and payroll tax receipts are received and deposited into a general fund at the same time. And those, that payroll tax revenue is statutory must go to the child care contribution fund. So it's just making sure that that occurs in the way that it is supposed to, but it's not speaking to anything broader about the use of funds or anything.

[Martha “Marty” Feltus (Vice Chair)]: Right. And it's to get it there sooner so that you can close so that we, the big we can close out for fiscal year closer to June 30, perhaps then October or whatever. Correct?

[Wayne Laroche (Member)]: Essentially dot and I crossing the t.

[Robin Scheu (Chair)]: Yeah, yeah and being as clear as we can. Okay, so you understand what we're kind of looking for in this one from marching orders on

[Grady (Joint Fiscal Office analyst)]: that? Yes.

[Robin Scheu (Chair)]: Okay, it looks like you have another one. Yes,

[Grady (Joint Fiscal Office analyst)]: on page seven, this is a very silly one. I just slipped up last year and called Act 100 thirteen-twenty 23 acts of resolves and that act is twenty twenty four. So it's just fixing that.

[Robin Scheu (Chair)]: And

[Grady (Joint Fiscal Office analyst)]: then on page eight, I won't speak to this language. It doesn't have an explanation in the way that the others do. But this is language, that the Joint Fiscal Office received that I think has been negotiated relating to, the DAs and SSAs, and payment reform. So, the committee can discuss that or, discuss it offline, but I just wanted to provide it for their review.

[Robin Scheu (Chair)]: And we can tell, we can update people on what's happening. No one is not here. No one is here hiding. We're looking at the payment reform language, draft language. Do you mind just chatting about that with us for a minute? You may recall that we had some issues about payment reform, and there were discussions about that with Dale and also with the designated agencies. The designated agencies, right, and SSAs. All right. Hi, Nolan. Thank you.

[Martha “Marty” Feltus (Vice Chair)]: For the

[Nolan Langweil (Joint Fiscal Office)]: record, Noel Langwell, the Joint Fiscal Office. What this is here is placeholder language. We had heard legislators and myself had heard from the designated agencies that related to payment, the new payment reform, if you remember, that went into effect this past year on how agencies are paid. It was tied to the conflict free case management payment reform. Ultimately, what they're experiencing were two things. They had concerns around risk because they didn't feel they had all the tools they needed to implement it and to put them at risk for penalties. That might not be articulating that well. And then the other issue they were running into was cash flow in terms of the timing of when payments were going be made. And so we tried to work with the DAs and Dale to try to reconcile the difference to get to a place where the DAs say this will work, and Dale says we can legally do this. And so we haven't gotten to that place yet. So what this is, this is really meant to be placeholder language to keep the conversation going so that we can hopefully get to a resolution between all the parties by the time this bill passes. Did I articulate that well?

[Robin Scheu (Chair)]: Yeah, we just It's bigger than a simple fix and requires more work. There's not any money involved in this at this point. But if we, if this does keep the conversation going, the Senate will have more information when they take it up, and any changes they make will therefore come to the committee of conference, so we'll have a chance to weigh back in on it. But if we don't put it in, we can't address it going forward. Does that make sense? So, don't know if Dave had something first and then you're good, you're good. Then Wayne and Marty,

[Wayne Laroche (Member)]: did you

[David Yacovone (Member)]: have deal with the rate increase that was done that some people didn't know?

[Robin Scheu (Chair)]: That's just your fault.

[Nolan Langweil (Joint Fiscal Office)]: Different, different. I'm sitting in his chair a little while about that. It's a different issue.

[Wayne Laroche (Member)]: I was just wondering if we should get the report too.

[Robin Scheu (Chair)]: Oh, we'll get the report. Does it say that?

[Nolan Langweil (Joint Fiscal Office)]: The language should say Legislative. Board five. Yeah.

[Robin Scheu (Chair)]: Good catch. Thank you, Marty. Don't we want to say 04/15/2026? Yes. Probably. Thank you, Marty.

[David Yacovone (Member)]: I can get used to that.

[Robin Scheu (Chair)]: I know. Well, I know. I do really well on writing 2026 for the first few months, and about the March, I start to go back to 2025. And recall

[Nolan Langweil (Joint Fiscal Office)]: In the section Y or X section of the budget, do appropriate for a time

[Wayne Laroche (Member)]: machine. That's a joke.

[David Yacovone (Member)]: One last question. There was also here in the stuff, this relates to the stuff we got from health of our human services. There's one about community partners request about 2% COLA. Is this related to that?

[Robin Scheu (Chair)]: Is that the AAAs, the HC-nine 80? I think it was the AAA.

[Nolan Langweil (Joint Fiscal Office)]: And that's different. This

[Robin Scheu (Chair)]: did not show up in any of the

[Wayne Laroche (Member)]: public.

[Robin Scheu (Chair)]: We've been trying to work on this, and we thought we

[David Yacovone (Member)]: could come to a

[Robin Scheu (Chair)]: resolution without great difficulty, and it's not that easy.

[Nolan Langweil (Joint Fiscal Office)]: What this is related to is the language on the last page of the human service.

[Robin Scheu (Chair)]: Yes, right in the middle.

[Nolan Langweil (Joint Fiscal Office)]: They had some language, and the sense was the language needed more embedding. And so that is related to, that was one attempt at a solution, we're continuing

[David Yacovone (Member)]: to work on trying to find So refers to this. Okay.

[Nolan Langweil (Joint Fiscal Office)]: It refers to that. Yeah. So you're you're close. It's in there.

[Robin Scheu (Chair)]: It's tangential. Yes. Yes. Wayne?

[Wayne Laroche (Member)]: So, yeah, we're consulting in front of it but my my question is down in the where the progress report is supposed to be presented doesn't present it to the appropriations get the other committees. I was wondering if we should get a report

[Grady (Joint Fiscal Office analyst)]: That language could just be updated to say progress reports to the House committees on appropriations and on human services and the Senate committees on appropriations. Yeah,

[Robin Scheu (Chair)]: why don't we add appropriations?

[Nolan Langweil (Joint Fiscal Office)]: We

[Robin Scheu (Chair)]: just We just deleted all these reports that we're giving to Marty, and so now we're going get some back.

[Nolan Langweil (Joint Fiscal Office)]: That's helpful too, because this language, that's placeholder language, could still be incorporated in the bigger language that we ultimately get to. So, are all really good catches.

[Robin Scheu (Chair)]: Yeah. Do you want to just read what this says, somebody, just so we all hear it out loud? The

[Grady (Joint Fiscal Office analyst)]: Department of Disabilities, Aging and Independent Living shall consult with the chairs of the House and Senate Committees on Appropriations, the House Committee on Human Services, and the Senate Committee on Health and Welfare, and the designated and specialized service agencies for the purpose of identifying solutions that address short term financial challenges to the designated and specialized agencies related to developmental services payment reform. All clear, super clear.

[David Yacovone (Member)]: Which is the conflict free case management.

[Robin Scheu (Chair)]: Well, that's the other part of it. There's two parts. There's payment reform and conflict free. Conflict free has already started. Right.

[Grady (Joint Fiscal Office analyst)]: On or before 04/15/2026, the department shall provide a progress report to the House Committees on Appropriations and on Human Services and to the Senate Committees on Appropriations and on Health and Welfare regarding the identified solutions that ensure uninterrupted services for individuals receiving supports during the first year of payment reform implementation. And if I

[Nolan Langweil (Joint Fiscal Office)]: could just throw a plug in for anyone who wants to get a better grasp on what this is underlying. I did write an issue brief in the fall about the DS payment reform and conflict free case management and I'll send it to Autumn.

[Robin Scheu (Chair)]: Would be great.

[Nolan Langweil (Joint Fiscal Office)]: I think it would be helpful. It's good background to kind of help people understand what is happening and what is related to.

[Wayne Laroche (Member)]: So,

[Robin Scheu (Chair)]: this was a, I think, a good solution because we couldn't get all the information we needed to include in our version of the budget adjustment. There's also issues with new Medicaid rules, and we don't want to create something that then harms the designated agencies or harms the day So there's a lot of pieces that made it much more complex than a simple here's some money kind of thing. So we don't want unintended consequences that hurt people. So thank you. Thank you for doing this one and you'll hear more about that.

[Wayne Laroche (Member)]: So

[Robin Scheu (Chair)]: that's what we have for language. Just think about this. What else do we have James? We'll have to talk

[David Yacovone (Member)]: about the money piece at some point but I want to check that out with you.

[Robin Scheu (Chair)]: So this afternoon, we

[Wayne Laroche (Member)]: have a

[Robin Scheu (Chair)]: budget workshop at noon. This afternoon, it sounds like we might get more language from Grady this afternoon once we make some decisions. We have to make decisions and then Grady can write some language. So we started to make some decisions on the budget ask, like the Meals on Wheels and some other things. So we'll need to make some more decisions about that. I tried to put a little spreadsheet together in my head to say, well, there's some things we want to do. Where are we going to get the money? And then I gave that to JFO, who noodled on it and have some suggestions. And so that's what we're going to talk about after lunch. I don't want to start that right now. So we'll take a look at that, and we'll need to make some decisions on, sort of like what I did with the budget last year, I just put some stuff down, some we've agreed to, some we haven't talked about yet. They're for discussion purposes, But then we'll have to decide how we want

[Unidentified Member]: to go about doing that. And once we've

[Robin Scheu (Chair)]: made those decisions, then Grady can finish the language, and we can get whatever final spreadsheets we need. And then we'll be ready to do a straw poll, I think. So am I missing anything? Does anybody else need are you waiting for language from anybody else? So if you've got what you need from Katie? Yep, we have what we need from Katie. Katie went over those two things, started a friend. We have confirmation. I'm waiting Tom and I are waiting for a letter from a lawyer for the Section eight. Vermont Housing It's actually state housing authority. Right. And then we'll go over that. So we aren't ready to go over that at this point. And that's another one that we want to be sure we have the language right, so we're not hurting people because the federal government says you can't do things and we don't want to So we want to be really careful about that. The agency administration will be involved in helping to determine that we're doing the right thing.

[David Yacovone (Member)]: That's part of the language that's being proposed.

[Thomas Stevens (Member)]: It's on the Section eight.

[Robin Scheu (Chair)]: On the Section eight. Yeah. And I think, so last night, remember I a little worried about the budget passing in Congress yesterday with Senator Welch. The House last night passed the four, there's four separate appropriations bills, and they passed them last night.

[Wayne Laroche (Member)]: Passed all of them.

[Robin Scheu (Chair)]: They passed all of them. The three were mostly fine, and the fourth with Homeland Security and ICE was the big rugged move. So now they're going to the Senate, and I don't really know enough about their process, but obviously they'll be back in town next week in Washington to do whatever they need to do. So we'll see. So at least it's moving. But obviously they've had these things. They didn't suddenly say, well, let's go figure out a budget. They've had them. They've been sitting

[Wayne Laroche (Member)]: on it. Yeah. Mean, you sent that bill over back in 2009 for the stuff that went on, it was literally printed out all the stat things.

[Robin Scheu (Chair)]: Yeah, it makes our sixteen fifty six page full budget look like not very much.

[David Yacovone (Member)]: It's just

[Wayne Laroche (Member)]: one bit, just one bit. So

[Robin Scheu (Chair)]: that gives me hope that maybe we won't have to deal with the government shutdown on top of everything else we're trying to deal with here in the state, but they made a mistake. So that's where I have a plan. Dave, do you have anything else?

[Nolan Langweil (Joint Fiscal Office)]: Well, it's

[Thomas Stevens (Member)]: a Section eight question,

[Robin Scheu (Chair)]: and if it's not appropriate,

[Thomas Stevens (Member)]: we'll do it some other time, but given that you were talking about it, have we received clarity that if Vermont was so inclined to put money into section eight, that it would in some way yield more funds the next year from HUD?

[Robin Scheu (Chair)]: In fact, it's disallowed. No, it would be a problem. That doesn't happen. Okay. There are some very specific exclusions in the letter. Do we have to copy that letter electronically? It's directive from 2009.

[David Yacovone (Member)]: Yeah. Yeah.

[Robin Scheu (Chair)]: So why don't we share that so you can read the letter. This is a HUD directive, which surprisingly hasn't been changed since the Obama administration. I guess they missed it, but anyway. There's some very clear, it says, and you may not use state funds. There's stuff like that.

[Thomas Stevens (Member)]: Thank you.

[Robin Scheu (Chair)]: Yeah, that's been part of the challenge is trying to figure out how to interpret the directive and make sure that we're not harming. Right. Right. And making it worse.

[Martha “Marty” Feltus (Vice Chair)]: There's just that idea of, and representative from the state housing authority part of the South, there's that idea of calling it permissible. It's not illegal. It's is it the question is, is it permissible? Exactly. And given the fact that federal language is written in a very tricky way, especially in particular in this issue, they're trying to un tease and not find the right language that makes it permissible.

[Robin Scheu (Chair)]: So it is thorny. We'll just remind everybody that this is not anything that the state government has had to deal with. This has been, you know, so our alleged counsel has not like, don't have a specialist in this alleged counsel. So And James has had to learn about it, because nobody in JFO has had to spend time on it. So it's been a real learning course for everybody. I just would add that VSHA, the director, has been in constant communication with HUD folks about making sure that this is what is allowable, what is not allowable, and has their attorneys looking at the language. And they've signed off on the language, but we should be getting a memo of some kind from an attorney that just explains, you know, how they got there. Right. Yeah, how they got there. Right. So we're thinking about that. Exactly. Yeah. So I think that's everything. We'll look at the money and make those final decisions on that, have that conversation. I will present something, it's for discussion, like we've done in the past. If we need to have other conversations, we will break as we need to to find out more. If you have anything else on any of your parts that you need to find out more on, we can do that. But we'll start, I think we're going to need to start at 01:15 because the budget workshop's going go from twelve to one, and we need a minute to get back here and do that. So hopefully some of you will be there for the bet, maybe you'll get a prize too. But you can't help them. You can't help the other legislators find, do their work. It's going to be fun. And Grady's done a great job putting this all together.