Vermont Legislature SmartTranscripts:

[Rep. Matt Walker (Chair)]: There we are. Good afternoon. Goodness. What is it? Wednesday, January 21? Never know. We had quite a bit of activity this morning down in the Senate joint Committee hearing and heard from the Secretary. And now, we can get to hear from the CFO of the agency to explain to us how we came up to the budget numbers that we are today. I appreciate everybody coming in a little bit early just in case there's lots of questions before we move into the real budget discussion. So Candice, thank you very much for joining us. And if you can help us understand where we started with the gap and how we closed it in addition to what was mentioned in the governor's speech and what we heard this morning, guess she'll help us fill in the rest of the

[Rep. Kate Lalley]: Absolutely. Okay.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: For the record, Candice Tomlinson is Chief Financial Officer of the Agency of Transportation. I do have a slide deck, so I'm going to share my screen here.

[Rep. Kate Lalley]: Second.

[Rep. Matt Walker (Chair)]: Candice, they must have complete faith in you because everyone else that presented had a huge bench of supporters. And you, you're here all by yourself to face. They have total confidence in your handling this.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: The executive team always turns out for the secretary.

[Rep. Matt Walker (Chair)]: I think

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: how interesting this is. Maybe I'll need other members of the executive committee to supplement later in the meeting.

[Rep. Matt Walker (Chair)]: I'd just like to stir up trouble if I can. Okay.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: So I had a hunch that we would want to know where we started from back in September 2025, the $33,000,000 that has received a lot of attention and has been talked about in a number of committees to how we got where we are. So just as an overview, the $33,000,000 poll that we talk about in transportation funds, that is from a five year outlook that the agency, myself, creates for the legislative committees. I did a September 25 update when we were presenting the expenditure reduction plan to the Joint Transportation Oversight Committee and the Joint Fiscal Office. We knew a couple components of that $33,000,000 last session and then two new components that I'd like to talk about now. So the components we knew last session are the $12,500,000 which was a transfer from the cash fund to the transportation fund that was in the 'twenty six as passed budget. I think we discussed that at length last session. That was a one time transfer back from 2025 legislative session or sorry, 2024 legislative session, 2025 budget. The other thing we knew about last session, which was talked about, was reversions, which were to be found at this fiscal 'twenty five closeout to balance the 'twenty six budget. When I was in this chair last session, that number started out at 4,500,000 worth of reversions. But by the time the session concluded, the numbers had flipped to 5.4. And that was really because of legislative adjustments throughout the session. So we can see this $5,400,000 here in pink. That's the carry forward balance from FY '25. And then the 12.5 that I talked about earlier is in the bottom in pink. It's part of the 12.3. The reason why that sell on the operating statement doesn't exactly equal 12.5 is because there are a couple other transfers to and from happening from other funds. One fund is the motorboat regulatory fund, and another fund is the debt service fund. Just so you know, I wanted to flag where these two items that we already knew about live on our operating statement. The other two components of the $33,000,000 gap in transportation funds from September, of course, the $7,800,000 revenue downgrade in July '5. There was both a revenue downgrade in 'twenty six, which caused the expense expenditure reduction plan. And there was an equivalent and even a little bit greater revenue downgrade for fiscal 'twenty seven. The remainder of $7,500,000 was my estimate at the time of what we would need in payroll, benefit, internal service fund, and central garage transfer increases. And that was net against the position proposal that was a part of the September rescission plan, in addition to the statutory increases for town highway programs and backfilling the town highway non federal disasters appropriation with transportation funds rather than pirate funds. So that's what we knew in September. Questions on what the $33,000,000 was comprised of? I know that was a lot. I'm going to move on.

[Rep. Kate Lalley]: We're are you going to show us what are the variables?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: The 12.5 plus 5.4 plus 7.8.

[Rep. Kate Lalley]: I'm confused because it said revenue sources. I was adding that up, but then I wondered when you said revenue sources, I didn't understand that that was part of the yeah. This

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Yeah. So those were revenue sources from the oh, you know what? This should be f y 2026 as past budget rather than '27 as past budget. My apologies. I'm sorry, representative. So those revenue sources in the '26 as past budget become deposits in the twenty seventh budget, because they're one time in each other.

[Rep. Matt Walker (Chair)]: So I can just If you're all set, yes.

[Rep. Kate Lalley]: What Mollie's saying is the 12, it looks like when we're looking at this, that the $12,500,000 was a transfer from the Capital and Essential Investments Fund to the Transportation Fund. Right. And because that was included in the FY '26 as past budget as a one time revenue source. This year, it's a down. Yes. So that's, I think, the question with the top two. So the

[Rep. Matt Walker (Chair)]: purpose of the slide here is we're in a $33,000,000 hole. Where did the $33,000,000 number come from? The number came from these four main areas is why we don't have that. Can't if it was a one time transfer, that's not in the building of the twenty seventh. So we did a one time transfer in twenty sixth. That puts us part of the whole. A big chunk of the whole is there. We did these reversions, which we can't do again. Or we could potentially say we're done, but that's not part of how you start building the budget. And then you have the other last two pieces. The budgets are built on estimated revenue. And if the revenue gets dropped, then we're down that money. We've got to find another way to deal with it. So that's the third one. And then all of the additional expenses and pieces would get you why we're $33,000,000 behind when you started. Right. Did it made any sense to everybody, but that's what I think I understand. This is what the whole came from.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Of these four numbers that equal $33,000,000 the most squishy is the 7,500,000.0 because that's me really trying to project where we are going to be with health benefit increases, position movements, internal service fund costs, which don't come to us from the Department of Finance and Management until the December. So I was really trying to project a couple months into the future with the 7.5.

[Rep. Matt Walker (Chair)]: And squishy is an industry term?

[Rep. Kate Lalley]: Absolutely. All

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: right, so how did we fare against where I thought we would be? Pretty good. This is a very number heavy slide. I'm just going to rearrange what I'm seeing. Okay. We found $21,000,000 of reductions in appropriations, in the ups and downs of the AOT budget. And that number is represented right here in green. Logan has a copy of our our ups and downs, which are, changes against the 26 as passed by, basically, by account code and by debt ID. This is a rolled up summary of those ups and downs. If we count by debt ID, we can see that we had $21,000,000 of reductions in budget reduction proposals, primarily in a modification to highway projects and position management savings. We can see that here, that program development and rest areas, the highways divisions, that's 5.3. Again, this is T fund only. And position management savings is 7.4. Beyond the $21,000,000 in appropriation reduction, the governor's proposal also has a number of 12,000,000, which equates to an indirect cost rate that we will turn on for FHWA projects effective July 1. We have turned on an indirect cost rate in the past in tight budget years. It is a one for one swap of transportation funds for federal FHWA dollars. So basically, what we're saying is we're going to give up $12,250,000 of transportation fund dollars or sorry, we're going to give up 12,250,000.00 of federal FHWA dollars and get that amount in transportation dollars. But our federal apportionment doesn't stay or stays the same. So we're not increasing the amount of federal dollars we get. We are taking federal dollars that could have gone towards something else, like an FHWA eligible project, and putting it towards our transportation fund, effective July 1.

[Rep. Matt Walker (Chair)]: So you can take federal highway money that would otherwise go to construction projects and turn them into T Fund money in a generally rare case. That then gives you the flexibility to put it across multiple programs to make a budget balance.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Yes. There's a highly intensive operating procedure that goes along with that. So my finance staff would want me to say that it's not as easy as flipping a switch. They are aware that we are going to be turning on the indirect cost rate on July 1, and we are going to actively be preparing over the next five months in order to make

[Rep. Kate Lalley]: that happen.

[Rep. Matt Walker (Chair)]: When you say they, your finance department in this case? Absolutely. What would the Federal Highway Administration think when this happens? Does this happen commonly across the country? Or is this a signal that there's a financial shortage in Vermont? What are our federal highway people? And maybe you're not the person to answer that question. I'm not sure. But what does it send for a signal?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I can give my opinion of what HWA thinks. I think it varies by state. It depends on the federal apportionment to that state and also the state dollars that they have available to match federal revenue. But for the state of Vermont specifically, am told I'm also only in this role for a year and a half, going on two years now. But I am told that we have only turned it on in the past when we have been in a very tight state, fiscally constrained environment. And typically, FHWA has given us, AOT, more flexibility on projects that they approve because we do not turn on the indirect cost rate that often.

[Rep. Matt Walker (Chair)]: Representative Casey, that something that we have to put back sometime? We

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: could theoretically leave the indirect cost rate on forever. There is there is an approval process. So right now, our indirect cost rate only goes through the end of fiscal twenty seven. We always negotiate with FHWA to ensure that we have the option of continuing the indirect cost rate. So when we're here for fiscal twenty eight, I'd say, regardless of the budget that's proposed, I would come here and say, we have the option to do it. We had the option to do it last year as well.

[Rep. Matt Walker (Chair)]: But it doesn't need to be so that doesn't necessarily need to be paid back, though?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: It does not need to be

[Rep. Kate Lalley]: paid back. Yeah.

[Rep. Matt Walker (Chair)]: Thanks. Representative Lalley, then Representative Burton.

[Rep. Phil Pouech (Ranking Member)]: I'm trying

[Rep. Kate Lalley]: to understand more fully the implications of the indirect cost rate. So normally monies that come from FHWA, we use this for match, right? So does this preclude can we still use these for match? How do they get translated into meeting our needs versus their source and what they're allowed to do,

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: if that makes sense? So the $12,200,000 of FHWA dollars that we'd be taking and using for our transportation fund operating statement would not be able to be used for match upon a project. There's big cost to this potentially. We are giving up Opportunity cost. Yes. We are giving up the federal match rate, yes.

[Rep. Matt Walker (Chair)]: This is a provision that allows the federal government's helping the state, in effect, fill other areas of their operating budget because they don't have enough to match them, or for whatever reason that might be.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: The federal government's paying for administrative expenses for projects, eligible expenses. So we need to justify that every dollar is an eligible administrative expense like, conforting with the indirect cost proposal that we have on file with FHWA.

[Rep. Matt Walker (Chair)]: So to make the statement that it is under tight financial, rare and only done under tight financial punish, would say that means on top of a reduction in force and on top of a major change in fund shifting, that would pretty well amplify for the third or fourth level of amplification that we have a pretty tough financial budget situation. In fact, we've said it, and then we've done a major fund change, and we're pushing another button that we don't normally push unless things are pretty bad. Is that fair? Absolutely,

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: this was a very difficult budget year that everyone took seriously.

[Rep. Matt Walker (Chair)]: I guess at some point I all learned a little slower than others and I apologize for that, I'll catch on at some point, but this certainly, I'm not sure that I came away from this morning quite as clearly of how many levels of serious that it is. Because I haven't heard this type of a statement before in terms of we're using something we almost never do. And we already did a reduction in force earlier this year, we did another one. Okay, well I have to say it takes a little longer than others to learn, but Representative Burton, you had a question, I'm sorry.

[Rep. Kate Lalley]: Yeah, couple. One is, if you're using that money, does that mean that that money would have had to have a match to use? So are we sort of spending money that way too or not? Is that correct?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: In the absence of using the federal dollars for administrative expenses in implementing the indirect cost rate, it would have matched a project somewhere in AOT's budget. So

[Rep. Kate Lalley]: you get to use the money, but it's there's a cost to it too.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Opportunity cost, I'll use the same word, same phrase that you did.

[Rep. Kate Lalley]: And can you use that money for town programs, for maintenance, for any of those things that are usually paid for just with T Fund dollars?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Not not for maintenance because maintenance does not have FHWA eligible projects. I believe some town highway bridge projects do have FHWA eligible projects.

[Rep. Matt Walker (Chair)]: So, Representative Pouech, then back to Representative Mollie. Yeah,

[Rep. Phil Pouech (Ranking Member)]: so this is the first item I've ever heard of this, which doesn't mean anything. So just by doing this, and think we're catching on that saving money that could be applied somewhere else. But it doesn't sound like there's any real penalty by FWA. FHW, sorry. So there's no like, oh, you're doing this, so you're gonna be reduced to you or any of that?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: No. This is an allowable cost by FHWA. Historically, I hear again that FHWA has given us more leniency on projects because we have not implemented, but also they have not verified that.

[Rep. Phil Pouech (Ranking Member)]: So you're able to take some of that, I'll call it project money, and apply it to some of the administration that helps put those projects together. Yes. And I would have assumed that that was part of when you say, here's a project, it's getting eightytwenty, that's some of that. Are you saying that there was never any administration costs in that 80%? Absolutely. Okay. So now we're applying some of that administration costs to the projects and not using state dollars which I is it's

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: will clarify that it's like indirect administrative costs. The payroll of an engineer, for example, who's working directly on a project was being attributed to to the project itself. Indirect administrative expenses might be, like some of my time that I spend helping a project engineer reconcile. Yeah,

[Rep. Phil Pouech (Ranking Member)]: okay, thank you.

[Rep. Kate Lalley]: Yeah, so I guess in my mind, I'm sort of thinking of this as almost like a short term loan that we're taking out against ourselves to sort of make ends meet it. The credit card of us, because we're in a fix. Just the opportunity costs are significant. So I'm glad to know that this is something we do as seldomly as possible. How often, like maybe in the last five years or so, have we had to do this? Or maybe that's not a good time frame because we've sort of had a lot of money coming in. But just in normal times, stuff comes up. Mean, how often do we need to resort to this?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I am not sure whether we've turned it on in the last five years, but I can follow-up with the committee. Yeah.

[Rep. Kate Lalley]: Representative McCoy? Defer that question to representative Okay.

[Rep. Matt Walker (Chair)]: What do you want? I'm just

[Rep. Kate Lalley]: gonna recall the last year we did something similar to this. Oh, reversion? Yeah. You

[Rep. Matt Walker (Chair)]: haven't been here for this part. Well, think it's couple years,

[Rep. Kate Lalley]: and I don't remember ever doing it

[Rep. Matt Walker (Chair)]: in eight years. Well, had a drawdown. I don't if it's similar, but I would say, when he was

[Rep. Phil Pouech (Ranking Member)]: last here, they just

[Rep. Matt Walker (Chair)]: draw down federal funding. It's a maneuver. I don't remember doing it. Rob Peter to pay Paul

[Rep. Kate Lalley]: or something like that, so to say. That

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: sounds like a Lenny expression.

[Rep. Matt Walker (Chair)]: So whatever that time frame. But you haven't done it since I've been up.

[Rep. Kate Lalley]: It might have been presented differently.

[Rep. Matt Walker (Chair)]: Yeah, exactly.

[Rep. Kate Lalley]: You're presenting it as this is a very unusual image.

[Rep. Matt Walker (Chair)]: Well it is, he's pretending it's rare. And

[Rep. Kate Lalley]: I was not in here for that. No. I've been here eight years.

[Rep. Matt Walker (Chair)]: Yeah. So in the second half of this piece, so the position management savings, 7.4, is that from what we heard this morning? Or is that last fall's is that last fall's changes plus some

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Yes. The 7.4 is inclusive of the September changes plus what we just heard

[Rep. Kate Lalley]: this morning.

[Rep. Matt Walker (Chair)]: With both of those put together. Yes.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: So the secretary testified to four point one this morning. So you could say seven point four minuteus 4.1 is the effect of September.

[Rep. Matt Walker (Chair)]: Okay. And we heard about the credit card piece. Rail and aviation, I know that we're going hear about rail a little bit here next. I guess the big question is $1,100,000 and whatnot. We heard a lot from aviation last year and a lot of enthusiasm around aviation. What are we going to not do that we had heard that we were going to do? Are we going to hear that later in the budget presentations? Or are we going to hear that to a certain describe now? Or how is that going to work? Same with the rail and same with defer

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: all of these individual line items to the division presentations to give more details on their budget.

[Rep. Matt Walker (Chair)]: When you have that level of money, then there would be noticeable specific things that we are just not going to be able to do now. Is that fair to say? Or that No,

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I would defer.

[Rep. Matt Walker (Chair)]: Defer that entirely to them? Okay. But that's a significant amount of money out of each maybe not. It's more to some and more to others. Reduction in state match available for projects within the program development division.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: So those are highways projects. And I wanted this chart specifically to show you the 33,000,000. Right? So we have the 21 in green plus the 12 in purple. So you could see as part of the green, we took a reduction to highways projects. But we heard in the governor's budget address yesterday and also from Secretary Flynn today that we're actually investing a great deal of the $10,000,000 from the administration's proposal into highways projects.

[Rep. Matt Walker (Chair)]: Which has federally leveraged money. Which is interesting since we're taking federally leveraged money to make it work. And again, I get a little bit confused on that. We're cashing in, in effect, some federal money to T fund money. So what would have been a three or four to one is now a one to one. But yet, we're going take the $10,000,000 and turn it into, I think that number would have been only $55,000,000 in the numbers I saw earlier today. So we're going leverage that pretty substantially. But before we can do that, we got to cash in and take some that would have been four to one or five to one or six to one and do it at one to one.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Right. So again, agency's approach to the FY twenty seven budget was to recognize where we were, the whole, the $33,000,000. In the absence of a new revenue source, this is what we have to do. And that's what the divisions built their budgets on. When the administration informed us that there would be additional dollars available, it was invested in my next slide. Oh, hold on. Two slides. These projects. So if I go back one slide for a second, Chair, sorry.

[Rep. Matt Walker (Chair)]: You're quite all right. I'm just trying to catch up and figure it out.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Okay. So the administration's budget proposal language is right here on the slide, but it's also in the documents that can be found on the Department of Finance and Management's website. So basically, they are putting a cap on purchase and use tax deposits into the Education Fund, dollars 10,000,000 less each year until at year five, the amount is zero. So the full amount of the purchase and use tax is going towards the transportation fund. So the effect to transportation fund over here, 10,000,000 this year, then 21.6, 33.3. You can read the rest all the way up to 58. So the effect of this for only fiscal twenty seven are these projects. We identified seven bridge projects, nine paving projects, and maintenance tree cutting in two districts. Those bridge projects and paving projects do gather us $52,000,000 in FHWA funds. And these are these projects are in the white book.

[Rep. Matt Walker (Chair)]: Are they notated anyway in there, or just that we would notice?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Are not notated.

[Rep. Matt Walker (Chair)]: I'm sorry. No, that's quite all right. Wish that we can find them.

[Rep. Kate Lalley]: My last slide, oh sorry.

[Rep. Matt Walker (Chair)]: No, I'm sorry. In some ways you could look at it, yes, with the changes, we are going to have more work out in the field, but changes within the administration, some changes for some folks in some spots, and a significant fund change, but the work that needs to get done out on the entire, I guess, roadway and infrastructure is going to increase with these changes. Is that fair to say?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I I would say I'm going back a couple of slides now, but I I would say reduction to highways projects that we saw originally, this 5,300,000.0 in T Fund, is offset by the amount that we're investing as part of the new $10,000,000. The exact amount of the new $10,000,000 for highways projects is 9.3. So we have more than made up for the reduction in the highways projects.

[Rep. Phil Pouech (Ranking Member)]: So are these projects ones that, as know, were off the board and now they've come on the board, or are these just identified to equally model?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Chief engineer Jeremy Reed will be able to speak to this, but these projects were not previously identified.

[Rep. Matt Walker (Chair)]: They were already in the book, in the whiteboard.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: They're in, but the

[Rep. Matt Walker (Chair)]: book

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: They

[Rep. Matt Walker (Chair)]: just got got elevated?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: No. They were not previously in the book when we did not know about the administration's proposal. But because we became aware of the administration's proposal before the governor's speech, we included these projects in the book.

[Rep. Matt Walker (Chair)]: They were already on a planning site somewhere.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Were a part of a schedule, but not for '27.

[Rep. Matt Walker (Chair)]: It had to be already in the works, something for another under our inventory and management control and how we decide and score projects.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Jeremy would say that all of these projects were pushed up from out years.

[Rep. Matt Walker (Chair)]: Well, that's a rarity. You might have limited time here. I'm just trying to get a clarification on the indirect cost of the federal change out to state dollars. When will we feel that in the out years as far as an impact of funding? Does that have any ramifications down the road of, all right, now we gotta own up to this act we did.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I think it really depends on the reauthorization of the IIJA, which we will know about in the coming months. Intend to do an update of the five year outlook again with the administration's proposal, but just have not had time to delve into it to have it available today. But I assume that once I plug the administration's proposal into the outlook, it's going to show us that we really should only have the indirect cost rate on for two fiscal years, fiscal 'twenty seven and 'twenty eight. And that would be my recommendation.

[Rep. Matt Walker (Chair)]: But those two years, does that affect our spending ability, year three and four, as we're moving money around? Does it limit us to less federal dollars? I'm just saying, there's got to be a ramification of what we're doing, because we just, we don't. I'm trying to understand the money outside of them in the out years.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: We're taking money that would have otherwise gone towards projects. Yeah. And I could maybe throughout this session do multiple versions of the outlook. But I think what administration has proposed with this amount of federal dollars over the next five years, it's going to show us that really we're going to value federal dollars in the future more than our our state dollars now. Right now, we're very state constrained. If this proposal comes to pass, then we're going to value the federal dollar more more than the state in a couple years.

[Rep. Kate Lalley]: Guess so over the next five years, it'll be, each year it increases. This year's 10, next year's 21. So did I hear you say that you're thinking this year and next year we're going to be doing this The efficient, whatever you're calling indirect. The indirect cost rate. Yes. That would be my Okay, just so we're aware of that, and what you're saying is this new $10,000,000 that we're getting this year, 9,100,000.0 of that is going to those new projects that you just had up on the board. It's 9.3 representing. Yes. I'm just trying to figure that out. And with that 10,000,000, it leverages about 52? 52. 52,000,000.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: And the remainder between that 9.3 and 10,000,000 is for these maintenance tree cutting projects in District 5 And 6, which are not able to have an FHWA match. So it is the full $10,000,000 It's just we're only matching 9.3 of it. And these projects here,

[Rep. Kate Lalley]: up here, are the town is responsible. Is this eightytwenty, ninetyten?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: I'm going to have Jeremy speak to the Thank slides on the

[Rep. Kate Lalley]: you. Think I got it in the pen. So one more question. So if this 10,000,000 this year leverages 52, it stands to reason that we're going to get a whole heck of a lot more next year and the following year because we're doubling next year. Absolutely. Thank you. And in

[Rep. Matt Walker (Chair)]: your shop, must be these hoops that you'll have to go through to document all of the indirect costs that are associated with every highway project, that is what you're saying, that there'll be a substantial more administrative burden to show everywhere possible that work could be paid by these federal dollars about these indirect costs there? Yes. Is that an administrative burden that's going involve additional staff or additional hours or additional?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Additional hours, not additional staff. We're relying on knowledge that is documented, but also knowledge of folks that were there the last time we turned it on. We need folks that have been around the agency that remember the last time that this was turned on.

[Rep. Kate Lalley]: Yes. So can I just ask, is indirect costs kind of like having a homeowner's line of credit or something? I mean, you can use it or not use it? It's just available to

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: No. I'll talk about the Agency of Human Services for a moment, representative, and see if that works. So the Agency of Human Services draws or claims federal dollars for indirects on on a majority of their grants. The Agency of Transportation historically does not because we have a federal apportionment. Think of it as a limit. That number is not changing regardless of what we spend money on. For the Agency of Human Services, they have grants that are not apportioned, like Medicaid. So if they have eligible expenses in indirects, they get more federal dollars for both indirects and direct. I have one more slide. I'm sorry. I wanted to make sure Say again, Chery, sorry.

[Rep. Matt Walker (Chair)]: Sorry. Think I feel like I understand it better now than where you started.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Okay. Good. This last slide is just about how we responded to the January 26 consensus revenue forecast. There was a bit of a downgrade in both the transportation fund and the TIB. In the transportation fund, the effect in '26 was $1.5 We are going to temporarily borrow from the stabilization reserve, but our FY '27 governor's recommended budget has a transfer back to the stabilization reserve to get it back up to its 5% maximum. That's that's shown here, that we are temporarily dipping into the budget stabilization reserve in '26. That is also primarily because we were instructed by the administration and the Department of Finance and Management that we really should be we should be handling the year end reversions that we have done for many, many years in the BAA process, similar to every other agency and department. So that's transportation fund. In TIB, there is a 200,000 TIB impact in 'twenty six and $100,000 TIB impact in 'twenty seven. And I was able to confirm that both of these dollar amounts can be absorbed by the existing unallocated fund balance, which at the '7, after those two impacts, would be $2,200,000

[Rep. Kate Lalley]: Is there a percentage to reserve it and keep it to?

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: Not to my awareness. No, I don't think so. But there's

[Rep. Kate Lalley]: a healthy amount of human, right? 2.2.

[Candice Tomlinson (Chief Financial Officer, Vermont Agency of Transportation)]: There's a bit, yes. That is all I have for the committee. That's all. I'm also happy to come back at any time.

[Rep. Matt Walker (Chair)]: Well, I appreciate that if you want me to have it. I guess I won't share my thoughts like that already walked through. How we had the whole $33,000,000 and where you plugged it, and then how the overall proposal, what we heard yesterday and this morning puts us in a spot to actually be doing more than we had otherwise expected. But we have a lot of pretty significant adjustments before we get to that. Okay. Represent that. Yeah, I'm

[Rep. Phil Pouech (Ranking Member)]: not sure if this is a good time to make a general comment on the budget it's proposed and where it is.

[Rep. Matt Walker (Chair)]: I guess it's pretty soon. We allow a lot of conversations. So

[Rep. Phil Pouech (Ranking Member)]: I did sign on to the bill that sort of said, hey, we gotta start looking at the transfer to transportation, know, to education on the purchasing use. So while I believe that's a good start at this, I also want to realize it's just a shell game and the money that comes over from the purchasing use for transportation is property taxes that will have to be made up. And it's unfortunate, but I wish that this committee could look at gas tax, making sure the MVUF is, you know, electric vehicles are paying their share, and those are definitely you you're charging people who are using the transportation system for the transportation costs. And by doing just the one thing and not the other, I think is really just a showman. So that's my opinion.

[Rep. Matt Walker (Chair)]: Well, we will certainly have committee discussion at this point. Guess, know, once in a while, we'll let the ranking member have his, you know, spot on in the piece. Were you raising your hand? I'm sorry. Go ahead, Representative.

[Rep. Kate Lalley]: Yeah, just following on that, know, the focus don't sound great, then you said, well, let's see, but, you know, what's have we Obviously, I imagine in the administration now, there have been discussions with the agency with the agency department, if, you know, we don't know what the discussions have been or what is the the actual impact of this on that and the brand? I'd just like to have that conversation.

[Rep. Matt Walker (Chair)]: I think that given where we are in our agenda, what I would want to say as the chair in this spot is that we spent, well, all of last session working with every one of the members and everybody in this room did. We pushed on it very heavily to make sure everybody in the legislature understood the troubles. We also have pushed very hard. Many others have as well. And many others have escalated this to a spot where there is an opportunity here to take action on the structural issues facing the T fund. And that's what we wanted probably the most. How it actually is gonna get settled out and where it'll finish. That's part of what our work here will be. We're only on day two. But we did spend a lot of time and many members of the committee and many other people spent a lot of time to get this to the level of seriousness that would be viewed across the whole building, but also across the administration and now across all Vermonters everywhere. So sometimes be careful what you wish for, but we are now in a spot where the attention is there and coming up with a long term solution to make sure that our roads and bridges are taken care of from now through and that we're maximizing, continue that policy of maximizing federal dollars. So I appreciate all the time to help explain the whole and what the administration has done to propose to solve it. And we're in day of, well, day one of budget presentations, day two of the budget process. We're going to go through every single piece of the entire transportation budget like we always have. And I suspect the conversations will be much more robust or continue to be robust is probably a better way to put that. So I appreciate where you're coming from. And I think that we wanted to get to this spot. Not everybody maybe 100% approves of where we're at. We haven't come to that answer yet. We wanted to get to here. And there's been a lot of work to get to here. So now we'll go from there. So with that, thank you for coming in. We're going to take a five to seven minute break while we move to our next agenda.