Vermont Legislature SmartTranscripts:

[Emily Burns (Joint Fiscal Office)]: Oh, three. Stop on the website. We are live. This

[Sen. Andrew Perchlik (Chair)]: is senate appropriations, January 9. We're gonna finish our VA testimony today. Just excited. And we're gonna just talk to JFO about the budget process. So this is kind of reminding the committee where we ended up last year and kind of how that sets up what we have to do for this year. I've asked JFO to kind walk us through the process again so we can just reset ourselves as we pass the Budget Adjustment Act and they have kindly prepared Very exciting presentation. It's very exciting.

[Emily Burns (Joint Fiscal Office)]: I'm gonna make sure I can get the Zoom. So, yeah, I'm gonna start. For the record, Emily Burns, joint fiscal office. Kinda gonna

[Unidentified JFO staff (likely one of Amy/Brady/James)]: go through a little, like, it's

[Emily Burns (Joint Fiscal Office)]: gonna be a miscellaneous set of things, which is good context and background for you all before we dive into the meat of everything. Obviously, I know Amy, Brady, and James to also help. They have a full I hope they interrupt me if I forget something or get something wrong about what happened. Yeah. That's the we're the buddy team. Right?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Just so you gotta let me in.

[Emily Burns (Joint Fiscal Office)]: Hopefully, I went into the right game.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Oh, no. I'm in the meeting. I'm I'm not.

[Emily Burns (Joint Fiscal Office)]: See, it didn't work. I tried to join a week's meeting from this morning. It's okay. It's right out. So in

[Unidentified JFO staff (likely one of Amy/Brady/James)]: what are

[Emily Burns (Joint Fiscal Office)]: we gonna talk about? We'll talk about, right, the, you know, the budget generally, where things go, which should look very I did do a presentation yesterday for health corporations on the contingency that was part of last year's budget construct. So I feel like this is a good time to sort of walk you through that, what that was, what got spent from that contingency, and sort of how you access the money that was set aside last year, if you don't mind its time. And then we're building these social gears and talking about the revenue forecast process, what that looks like, what's coming, what changed from January to July, and we have to let Corey and I another emergency board in a week. So we'll have a new forecast for the budget and the budget adjustment.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: It's at this

[Sen. Andrew Perchlik (Chair)]: So for today.

[Emily Burns (Joint Fiscal Office)]: Week for today.

[Sen. Andrew Perchlik (Chair)]: I should know that soon.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: This is you.

[Emily Burns (Joint Fiscal Office)]: Yes. I I will see you in the ceremonial on Friday. Okay. Just.

[Sen. Andrew Perchlik (Chair)]: Regardless of the. I know. It's.

[Emily Burns (Joint Fiscal Office)]: We'll see what happens. Okay, so legislative budget review for today. This is our little who we are, you know, who we are.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: We're not

[Emily Burns (Joint Fiscal Office)]: giving you policy recommendations, which is things to consider. So, we'll talk about Act 27 a little bit. It's a high level overview of What?

[Sen. Andrew Perchlik (Chair)]: Which was the budget.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Which was the budget.

[Emily Burns (Joint Fiscal Office)]: Things are, you know, it's a pretty low number Mhmm. It's usually a slab. On roofs. But You got it out for sure.

[Sen. Andrew Perchlik (Chair)]: Yeah. Now we're gonna add several other.

[Emily Burns (Joint Fiscal Office)]: Yeah. We'll go through the website a little bit just to remind you of where to find resources as you are working through budgets. Go through an example calendar. Right? It is not meant to be, like, when things are actually gonna happen, but just sort of a general cadence of events related to the appropriations process. Go through the contingency appropriation, as I touched on earlier,

[Unidentified JFO staff (likely one of Amy/Brady/James)]: and then severance. So,

[Emily Burns (Joint Fiscal Office)]: this is just a reminder of when we're building the budget, how quickly the resources right, start to disappear. We've presented this in a different way, but last year we appropriated out of the general fund about $2,500,000,000, right? When you account for what went to the teacher's retirement, right? This is sort of one of the first things that we had to pay before. We got to pay those debts. We used about $225,000,000

[Sen. Andrew Perchlik (Chair)]: That was just teachers or teachers in state of library?

[Emily Burns (Joint Fiscal Office)]: Teachers and teachers offense. The state employees, it's a little more complicated because it's embedded in everybody's individual budget.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Right.

[Emily Burns (Joint Fiscal Office)]: And it can hit the funding streams of those that goes. I

[Sen. Andrew Perchlik (Chair)]: guess I was thinking of the ADAT. Mhmm. The or the catch up statement again. Yeah.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Oh, yeah. Just what's that? I mean, it's anybody.

[Emily Burns (Joint Fiscal Office)]: Yeah. Yeah. Yeah. And then we've got, you know, the general fund component that goes to Medicaid and for federal match for local commitment, dollars $220,000,000 for the Department of Corrections, the other human services things from the agency, what Department of Children's Example does, almost $500,000,000 So that leaves 847,000,000 or about a third of the budget of general fund that's unallocated out of the account for those things. Right? And you've seen something similar to this before. You've come to the all member briefings. Right? But that remaining is covering things like debt service and salaries and benefits, just sort of base operating budget. Any changes in caseload in certain programs, new needs or expectations around just the world is ever changing and programs have to evolve and our unanticipated issues, right? How is federal funding coming in?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: How are

[Emily Burns (Joint Fiscal Office)]: we to manage out of the state? Other one time investments that you have to consider. This is not meant to be an exhaustive list of one time investments, but here are some of the big issues that often you're faced to make decisions around. So, when we think about the budget, there's a lot of things on the JFO website that's really helpful for you in doing your work. That's where we post everything. Know a lot of you are familiar. But where you go, when you go to the JFO website under this subjects section is where you'll find, there's a dropdown menu, one of them is appropriations and budget. One of them is Budget by Department. Budgets by department is organized by government function, general government protection, human services, etcetera. You click on those, you'll get the individual department and agencies specific budget submissions. And then, under this FY twenty six secondtion is where you'll find the budget document. In FY '26, you'll find all those big spreadsheets, the final ones that we walked through much last year, the bill itself. But then if you go to conference documents, that's where we see all those. And then as the budget adjustment moves, we're gonna add to this list is where we'll find budget adjustment changes, and it's organized the same way for '27. So right now, there's nothing there because there is no help. There's the governor's proposal. We don't have the governor's post documents. In two weeks, sort of less than two weeks, that's where we'll post governor's

[Sen. Andrew Perchlik (Chair)]: The DEA will be, I'm seeing that by twenty sixth. Correct.

[Emily Burns (Joint Fiscal Office)]: So yeah, those conference documents, in terms of details, are all right there. And so, this is the list of those conference documents. I can click on the website and show them to you specifically if you wanna go through, like, the specific things in the budget, but I know it's Friday afternoon, so this is how you get there. But sort of the per- one thing- I

[Sen. Andrew Perchlik (Chair)]: mean, is there something that you think would be helpful to look at? Just tell me if we had a question like, what did we do? Yeah. And we'd wanna go find it.

[Emily Burns (Joint Fiscal Office)]: Yeah. But I think for now, one of the things that, a thing to, that we are looking at trying to change on our website is when these documents get posted, they get listed in the order in which we post them, and we have no control over how we order them. So, are not in a, like, priority order necessarily. We're working on a website update for couple years, I don't know, maybe about for soon, and that will hopefully change. But so, these arrows will call out, right? So, the report of the committee of conference, that's the final bill. You can also find that on the General Assembly website, but this will link you to that. The one at the very bottom, that's the web report that we walk through every time that we bill, right? That's a good reminder of sort of what happened at each stage, what changed.

[Sen. Andrew Perchlik (Chair)]: We need statutory language to change. Oh, I get the web report. No?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: You have a

[Sen. Andrew Perchlik (Chair)]: I don't need

[Emily Burns (Joint Fiscal Office)]: Well, I we'll take

[Unidentified JFO staff (likely one of Amy/Brady/James)]: feedback. It

[Emily Burns (Joint Fiscal Office)]: is not listed anywhere specifically, statue.

[Sen. Andrew Perchlik (Chair)]: It has nothing to do with the worldwide web.

[Emily Burns (Joint Fiscal Office)]: Okay. Has nothing to do with the spiders.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: It has

[Sen. Andrew Perchlik (Chair)]: nothing to do with spiders.

[Emily Burns (Joint Fiscal Office)]: Nothing to do with spiders. No. The highlights, so the document that gets

[Unidentified JFO staff (likely one of Amy/Brady/James)]: passed on on

[Emily Burns (Joint Fiscal Office)]: the floor a lot that sort of goes through,

[Unidentified JFO staff (likely one of Amy/Brady/James)]: you know, a

[Emily Burns (Joint Fiscal Office)]: quick refresher on, did we give money to that thing? How much did we spend on this? The highlight document's a good place to start. There's also the, the base, the big, there were two big spreadsheets that you'll see again this year, right? There's one that was base changes and one that was one time changes. You've got the, it's a, the base increase is those changes,

[Unidentified JFO staff (likely one of Amy/Brady/James)]: and then the one time overview, it's

[Emily Burns (Joint Fiscal Office)]: the overview of those.

[Sen. Andrew Perchlik (Chair)]: Do links to those Excel spreadsheets? Are they PDFs?

[Emily Burns (Joint Fiscal Office)]: They are PDFs. The Excel spreadsheet, yeah. So, yeah, if you wanna jot your memory on that, where it might now change to where it landed, those spreadsheets are helpful. We'll have new budget adjustment spreadsheets soon. So, is there anything else on the budget before I jump into hypothetical session calendar for illustrative purposes only? Great. Working time. Working

[Unidentified JFO staff (likely one of Amy/Brady/James)]: time. Yeah. This is

[Emily Burns (Joint Fiscal Office)]: like, for those at home who are watching, this is not meant to be like, and this is when things will move through the body. All subject to change. But generally, Amy put this together, if you have hard copies, we'll get you hard copies, And there's one on the wall. This is just like

[Sen. Andrew Perchlik (Chair)]: Good time.

[Emily Burns (Joint Fiscal Office)]: To remind everybody of how things move and where, when it becomes. When the bill will likely hit this committee, right? So the first couple of weeks, we have budget adjustment act. Next Friday, as we talked about, the emergency board will meet and officially adopt the new revenue forecast. Depending on what happens with the FY twenty twenty six revenues, as part of They're gonna adopt new revenue numbers for FY twenty six and FY twenty seven. Depending on what direction the FY twenty six revenue forecast goes, that will impact the budget, the revenue available for the Budget Adjustment Act. And we'll talk a little bit more about that later. And then the governor is gonna give his budget address leave on the Tuesday after Martin Luther King Day holidays to the General Assembly in January, and then the House Appropriations Committee will start their work on the budget. Hopefully around that time, hopefully around the end of the month, house approves will be done with the VA, and then it will come to here for you to deliberate and figure out what to do next with.

[Sen. Andrew Perchlik (Chair)]: So they'll have it for two weeks after the emergency portion?

[Emily Burns (Joint Fiscal Office)]: Maybe. So, I think what like is, gotta get it out of committee and then they gotta get it through the floor, right? So, we have to sort of reserve a week through the floor. Does

[Sen. Andrew Perchlik (Chair)]: it go to other committees? Sometimes. An emergency board only has to vote on the projections or the revenue forecast for '27, and then if there's a change to '26, most often, if not

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Yeah. It's it's tense.

[Emily Burns (Joint Fiscal Office)]: It always changes. It's the magnitude and the direction that it's always

[Sen. Andrew Perchlik (Chair)]: They always tweak it a little bit.

[Emily Burns (Joint Fiscal Office)]: Yeah. There's always something going on somewhere and some part of something. Right, and it's both The motion itself adopts the total number, but underlying that are sort of all of the, what's purchase, what do we think purchase and use is gonna do, what's sales tax gonna do, all of those components.

[Sen. Andrew Perchlik (Chair)]: Because you have two resolutions. One could have been for twenty six month, by '27. So, have an option. To rule them all.

[Emily Burns (Joint Fiscal Office)]: The so, yeah, in theory, the house waits on the emergency board to move the budget adjustment act. They'll have to react to that and then send it over to the senate. Then you'll have time to take out the Budget Adjustment Act. The, then you'll have budget information, so you can start taking testimony from each of these departments on the budget as well, depending on sort of how things are going

[Unidentified JFO staff (likely one of Amy/Brady/James)]: to budget adjustment and how complicated it is, how much

[Emily Burns (Joint Fiscal Office)]: movement there needs to be. That, so through February, gonna be continuing to move the Budget Adjustment Act and starting to take up the budget. First would be March, right? That's the town meeting day. That's when we're all to take a rest. But then right after town meeting day, that's typically when, and I know as the official crossover dates have not been established yet. History is indication of what is likely to happen. The policy crossover will be right after town meeting week, and then the money crossover will be the week after that. So theory, the House, two weeks after town meeting, will pass the budget. And then you'll have the March through April to work on the budget, to take it to the floor of the Senate. And again, I don't know, Senator Westman, you may know if there has ever been a situation where there is no conference committee on the Appropriations Act, but I think it's fair to assume that there will be a conference committee on the appropriations act.

[Sen. Andrew Perchlik (Chair)]: Senator Baruth, when is it normally around when committees, policy committees have to give money committees bills. Is that April? I think it varies. Basically, you set that deadline. You can commit and and to the, you know, the whole senate. But there's no hard and fast rule. But Just as we get closer and we wanna, like, we we figure out how much more time we need in budget, so if you wanna be in, but definitely.

[Emily Burns (Joint Fiscal Office)]: So I've seen a

[Unidentified JFO staff (likely one of Amy/Brady/James)]: lot of get money to spend it.

[Sen. Andrew Perchlik (Chair)]: Yeah, but is that kind of what this balloon was like, it was like somewhere around your time is it done?

[Emily Burns (Joint Fiscal Office)]: So then Senate passes bill, community conference this morning. Budgets negotiated through, like, first week ish in May, and the general assembly is budgeted for eighteen weeks. So if we leave based on what the budget says, that would be around, which is May 15. So

[Sen. Andrew Perchlik (Chair)]: I heard the pro tem guarantee you can be made out by Mother's Day. Absolutely. I

[Emily Burns (Joint Fiscal Office)]: don't know what day Mother's Day is, so. Yeah. Again, for those watching at home, this is a hypothetical scenario that may people likely

[Sen. Andrew Perchlik (Chair)]: Not happened.

[Emily Burns (Joint Fiscal Office)]: Not happened. But generally for, you know, in your head about what the cadence might be, this is a pretty good, you know?

[Sen. Andrew Perchlik (Chair)]: Yeah. That's helpful. Just for the record, I wouldn't be surprised if it's like last year where we're done with our work. Right? Like, the education work continues beyond the next. We made it marked over the time. Maybe. Right?

[Emily Burns (Joint Fiscal Office)]: Right. I think, yeah, I think it's helpful too for the, like all of those steps will need to happen. Right? So, like, if they as things move, below it, still

[Unidentified JFO staff (likely one of Amy/Brady/James)]: hasn't Any

[Emily Burns (Joint Fiscal Office)]: questions on that? Any or jump to a completely different topic. Okay, great. So, we'll talk about the contingent appropriations that were in the budget bill last year. This, I'm not gonna talk, so this was the presentation I gave you yesterday, but right, where does the money for the budget come from? We build the budget off of the anticipated revenues, mostly from that January adopted consensus revenue forecast, and then you account for if you're gonna raise taxes or lower taxes or change things. We account for those things, but that's where the anticipated revenue comes from. And that's the sort of like the north star of what budget That's how we balance expenses and revenues. Now, as you are all aware of, have been through this last April, sometimes we get through closer to the end of the fiscal year and it's apparent that revenues are going to come in higher than the adopted forecast. But we don't budget them because it's not a guarantee. That's when the contingency list gets developed. Then it's developed right in priority order and the directions, effectively, that are given to finance management, if and not if. When you go to close the general fund and if the revenues aren't higher than what's appropriated, here's what you do with those revenues, you know, until you run out of revenue. Or if you get through the whole list, then you follow the next steps.

[Sen. Andrew Perchlik (Chair)]: Why aren't we allowed to talk? That was kitchen. I think we could go back to it if we want. We could go out of Gresham called it a long call later then.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Think it's Because it says priority. No. It's okay. I guess it says priorities rather than looking at bottom line. Yeah. But not still a lurk ball.

[Sen. Andrew Perchlik (Chair)]: Yeah. It's Chittenden. Yeah. Don't go chasing those.

[Emily Burns (Joint Fiscal Office)]: Yeah. I'm not I don't

[Sen. Andrew Perchlik (Chair)]: don't know. Feel free to call it a little more. Or just maybe that's

[Unidentified JFO staff (likely one of Amy/Brady/James)]: not because know. I'm gonna say it's not I'm gonna say it's I'm

[Emily Burns (Joint Fiscal Office)]: be the size of the contingency list until April, right?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Which is not personal. Taxes I'm are due to

[Emily Burns (Joint Fiscal Office)]: the state, and that's when you really get the signal, right? Couple days after April 15, once all of the people who have mailed their checks to the tax department have actually traveled through the postal service and made it to the department, and then they cashed them, did we know where that that may land? Right? And it's it's an estimate until the books are actually closed.

[Sen. Andrew Perchlik (Chair)]: So is that meeting next week? You're get a a forecast on revenues? That's what that could

[Unidentified JFO staff (likely one of Amy/Brady/James)]: be. Yeah.

[Sen. Andrew Perchlik (Chair)]: Yeah. No. But then but then we get an Then we get another one in July. The July panel.

[Emily Burns (Joint Fiscal Office)]: Alright, so we're going go back in time to this committee in April and sort of the end of the legislative session. So in April, we learned that or it was apparent that the revenues were likely going to be over $100,000,000 more than the consensus revenue forecast. And at the same time that happened, there were starting to be some uncertainties in the economy. Recall the, there were tariffs, there weren't tariffs, there were maybe tariffs, there were, like, was a sort of, and the markets were reacting accordingly because there's lot of uncertainty going At the same time, the President had released a budget that had proposed to Congress to make significant changes to programs run by states. There was a lot of uncertainty as to what Congress was going to do with that document. So, that was sort of, at the time, we knew we were going to have more money and there was a lot of just general uncertainty. So, this committee, so one of the the House Appropriations Committee really doesn't know does generally have a contingent list because they don't have the same revenue information that this committee does. So in your budget, you added a contingent list for the big bill, and then the conference committee amended that contingent list, and it was in the final version of the bill. So it was in section B11001 subpart A, and I know this is a lot of words, but for what this section is doing is telling finance management how to close the books specifically and what we're to do in it. Right? So first, you're gonna bill about the stabilization fund. Then we had said $138,000,000 almost $139,000,000 needed to be carried forward into fiscal twenty six to be spent. We had a whole bunch of prior year revenue we anticipated in '26 to spend. So let's carry that forward so we can spend it. Then if there was anything else left after that, the contingent list fund this list of contingent appropriations accordingly. And if there's anything left after that, then follow the standard statutory designations on designated revenue. We'll talk about what those are in a second. But so that sort of first part is putting funds into the stabilization reserve. And we budget for that. Right? We The stabilization reserve is supposed to be 5% prior year appropriations. When we're building a budget, we're always carrying a line that says, based on prior year appropriations, you need to assume you gotta set aside x amount to get the stabilization reserve to

[Unidentified JFO staff (likely one of Amy/Brady/James)]: that 5% level.

[Emily Burns (Joint Fiscal Office)]: That's the first thing that happens when they go to close the book.

[Sen. Andrew Perchlik (Chair)]: And that can change with the VA?

[Emily Burns (Joint Fiscal Office)]: Yes, yes, it will change once the final appropriations are set. And that month, that number, that act we're making an estimate based on prior year appropriations. Right? Like last year, we would have assumed or no. Yeah. It depends on stuff. It's me too, right? There's sort of things that can

[Sen. Andrew Perchlik (Chair)]: Last year, the administration had something where they took out some spending Correct. End of the day, you think of that, the 5% was a lower number. Means Yes. Freed up some money.

[Emily Burns (Joint Fiscal Office)]: Yeah. Yes. That can happen. And then, like, because of there was, like, so much general fund for a couple years, one time money,

[Unidentified JFO staff (likely one of Amy/Brady/James)]: that can reset.

[Sen. Andrew Perchlik (Chair)]: So,

[Emily Burns (Joint Fiscal Office)]: 5% is of the budget that you are working on, or is it up to the prior year's budget?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Of the

[Emily Burns (Joint Fiscal Office)]: prior year's budget. So,

[Sen. Andrew Perchlik (Chair)]: in FY '26, it's 5% of FY '25 appropriations. Right. So, if you change that point, the prior year's appropriations in the year you're in, also change that. Which it gets, that's when it gets kind of

[Emily Burns (Joint Fiscal Office)]: So, and where it really gets weird, so for the PAA, right, we know what '25 was, that's closed, it's done, That's the number that it is. But '27, because you're still messing with '26, we have to keep moving '27 until '26 sort of. And because, times the big bill, in section C where we do prior year changes, you may change it again, right? Like, the sweat adjustment again, so then we have to make sure. It's one of those, like, at the end where it was like, did we move that? Did we fix that number? Is that So anyway, first, fill the stabilization reserve. And then, per statue, we do, if there's anything left after the stabilization reserve, then there is 308C. And this is the section that says, if there's anything left, it goes into the balance reserve, which is also known as the rainy day fund. And that there's no minimum to that. It's just like anything extra that's left goes to the rainy day fund, and this is up to 10% of prior year appropriations. We're not anywhere close to 10% of prior year appropriations. So to the extent there's ever extra money, it would go here.

[Sen. Andrew Perchlik (Chair)]: Any interest earned in rainy day fund stays in the rainy day, too?

[Emily Burns (Joint Fiscal Office)]: So the rainy day fund is not a fund per se, it's a reserve. So those monies are in the general fund. So the interest earned by having those funds reserved would be

[Sen. Andrew Perchlik (Chair)]: They don't stay in the reserve.

[Emily Burns (Joint Fiscal Office)]: No. They would stay in

[Sen. Andrew Perchlik (Chair)]: general fund. In our usual. Correct. Yep.

[Emily Burns (Joint Fiscal Office)]: Part of the revenue forecast includes a line for anticipated interest Right. Into the general fund.

[Sen. Andrew Perchlik (Chair)]: Is that the same with the stabilization?

[Emily Burns (Joint Fiscal Office)]: Yeah, because it's part of it. So, it says put it in the balance reserve, then subpart three says all of that money that you would put in the rainy day fund, this is where we have to take 25% and put it in the teachers' retirement, post retirement adjustment allowance account and 25% to the state employees' pension fund that we hear a lot about that happens in here. So that's what this is the language that triggers. Anything that's left 50% of the rainy day fund and then the remaining 50 is split half and half to those two funds. So, what that original directions language that I had, in between those two things, put carry forwards some money and fund this contingent list and then do the rainy day funds and the pension funds. So this is a contingent list that was in there. So there was $118,000,000 in the contingent list at the end of last fiscal year. The first $8,000,000 was transferred to the communications and information

[Sen. Andrew Perchlik (Chair)]: Great. Got a lot

[Unidentified JFO staff (likely one of Amy/Brady/James)]: of them.

[Emily Burns (Joint Fiscal Office)]: There's only four. Two years ago, you're

[Sen. Andrew Perchlik (Chair)]: thinking Oh, I was thinking of one time less.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Yes. The time less.

[Sen. Andrew Perchlik (Chair)]: The contingent list was, yeah.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Yeah.

[Emily Burns (Joint Fiscal Office)]: So, and this one is a little funky. ADS had requested they needed they you recall, they had a new billing model. They needed to capitalize the fund that they used to pay for technology services. What ended up happening was in the budget, we funded half of their about half of the requested funds, and then we put funds on a contingent list to free up money in the base operating budget. But this was the first thing that happened with any

[Sen. Andrew Perchlik (Chair)]: And so we should see that that 16,000,000 that we put in should should we shouldn't see those changes in the 80 in all the agency budgets where they were putting their ADS change in their budget request or in their budget request.

[Emily Burns (Joint Fiscal Office)]: Yeah, the BAA one is a little bit different. This was mostly just capitalized, the fund itself, because it had a big deficit, so this was put. They were changing the billing model from a look back to a less of

[Sen. Andrew Perchlik (Chair)]: a look back. Right, so they should know in their budgets what their The ADS fees

[Emily Burns (Joint Fiscal Office)]: next contingent appropriation was $50,000,000 was appropriated to the agency of administration to be transferred by the emergency board, subject to thirty two thousand one thirty three, which I have a slide on what that actually means. While the general assembly is not in session, in the event of a reduction of federal funds. This is the money that the emergency board ends up utilizing later in the fall when the government was shut down and the federal government was not going to issue SNAP benefits to, or didn't initially issue SNAP benefits until the government reopened. And then there was $30,000,000 reserved in the general fund for future appropriation or transfer by the general assembly for addressing federal funding shortfalls, and then another 30,000,000 for federal funding and other stuff. So there was 60,000,000 just reserved in the general fund, and 50 actually appropriated to the agency administration.

[Sen. Andrew Perchlik (Chair)]: And all that was reserved because we met that with the contingent business, and all the 7,000,000, six point something personnel, 7,000,000?

[Emily Burns (Joint Fiscal Office)]: Yeah, I got a little ticker. Okay. So this is all of that in words. This is just a flow chart. So right, first, you fill up the stabilization reserve, then designate the unallocated carry forward to go into '26 to be spent for the budget construct, then fund the contingency list, then anything left over to the rainy day fund, the retirement funds.

[Sen. Andrew Perchlik (Chair)]: Of that 138?

[Emily Burns (Joint Fiscal Office)]: This 138?

[Sen. Andrew Perchlik (Chair)]: Yes.

[Emily Burns (Joint Fiscal Office)]: That was when we built the FY '26 budget, we assumed there would be a $138,000,000 from FY '25 carried over in

[Sen. Andrew Perchlik (Chair)]: that So, like, step four is of the hundred and thirty eight, or No. It's of the closeout?

[Emily Burns (Joint Fiscal Office)]: It's whatever's left over after you designate the 138, after you fund the contingency list.

[Sen. Andrew Perchlik (Chair)]: Right. I guess so. Yeah.

[Emily Burns (Joint Fiscal Office)]: Which this is what that was. Sort of in that order, right, carried forward the 138, then funded the contingent list. And after all that was done, there was almost $1,000,000 that went to the rainy day fund and almost half $1,000,000 that went to each pension fund at the close of '25. Alright.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: And? And

[Sen. Andrew Perchlik (Chair)]: then there was Mormon.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: That was all the money.

[Emily Burns (Joint Fiscal Office)]: The '25.

[Sen. Andrew Perchlik (Chair)]: Wasn't there additional funds? No, because if there isn't, it all goes to that construct.

[Emily Burns (Joint Fiscal Office)]: It all goes to that construct.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Yes.

[Sen. Andrew Perchlik (Chair)]: So where's the 77,000,000? There's nothing about using it for education, but

[Emily Burns (Joint Fiscal Office)]: We'll get there.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: And that

[Sen. Andrew Perchlik (Chair)]: in FY '25.

[Emily Burns (Joint Fiscal Office)]: FY twenty twenty six, twenty, yeah. We'll get there. Hold on to that one. So we're going to come back to now, like what happened in the interim. So there's $50,000,000 appropriated to the emergency board to be transferred, appropriated to the agency administration to be transferred by the emergency board. The next slide, it's like, why 50,000,000 and what does that mean? So of that 50,000,000, 250,000 was transferred to Vermont Food Bank for a grant to help cover the gap between the normal issuance of SNAP benefits and when the state could issue state funded benefits to SNAP recipients. We also had the, so one of the challenges with that, what happened at the October was that basically, the state had to basically set up a new program to issue the state benefits to staff beneficiaries and the administrative work AHS needed about until the A week into November to do it. The grant to the food bank was to help bridge the gap between when those benefits would be issued and when COVID wouldn't get their- They were They were the past. Yes, it went to the local food shelves. So the one time SNAP payments covered fifteen days worth of individual's benefits. There was also administrative costs associated with setting up the program and also letting people know what was going to happen. That was a big component of administrative costs. They could use about

[Unidentified JFO staff (likely one of Amy/Brady/James)]: up to $100,000 of the 6.3 for that.

[Emily Burns (Joint Fiscal Office)]: So of that, there is $43,450,000 in that appropriation available for allocation, for transfer by the emergency board at this point. I think we'll now have some conversation about what to do with this appropriation because it's subject to session law around reductions in federal funds and making sure that that is language around this appropriation allows for it to for whatever you want to do with it in the next fiscal year. But of that, so there's about 87% of the funds remaining in that appropriation. So why $50,000,000 So the emergency board, and this is under subpart B, has the authority to transfer appropriations made to other agencies and to use the transferred amount to make expenditures necessitated by unforeseen circumstances. Historically, where we've seen this happen were before Maria Blair retired, what we talked about, this happened kind of in the early twenty twelve, fourteen ish area, was with the LIHEAP program, where the purchasing power of the federal grant was not gonna be sufficient enough to get people a benefit that was necessary. What the emergency board did in those instances was transfer money, an appropriation from the Department of Corrections typically, because it's such a big general fund appropriation to DCF and then backfill that appropriation in So, the Budget Adjustment the transfers made by the Emergency Board shall not exceed 2% of the total general funds appropriations for that year, which in almost $2,500,000,000 2% of that is almost $50,000,000 So that's sort of what drove that number. The emergency board wouldn't be able to transfer more than that $49,000,000 around. So that's why it was only 50,000,000 for that purpose. And then there's the $230,000,000 tranches that are reserved in the general fund. The only way you can access a reserve is by the general assembly actively under reserving and appropriating those funds. So, we've gotten a lot of questions about is the governor utilizing these reserves in the Budget Adjustment Act, and the answer is no. There is no language or anything proposed at this point about un reserving those funds. Are there for the initial purpose intended.

[Sen. Andrew Perchlik (Chair)]: Can you just remind me, Emily, the 74 point something million that we saw being transferred to the to the budget in the BAA that they proposed. In my mind, I was thinking that that was the leftover from these funds that you're talking about. Yeah. What's the relationship there?

[Emily Burns (Joint Fiscal Office)]: So we'll get to that. So a lot of that is from the actual revenue forecast change. Okay. But I think

[Sen. Andrew Perchlik (Chair)]: It's none of this.

[Emily Burns (Joint Fiscal Office)]: It's none of this. And I think part of, like, in terms of the, like, why they need why did they get structured this way? Given that the emergency board can only move $50,000,000 and the way that the federal funding reduction language was constructed, right, we had a sheet that was, like, if a department trigger there were triggers, right, that caused JFC any e board involvement, and then if it was over and above a certain amount, it would have resulted in the general assembly needing to come back. Having this money reserved this way, if we had been in a scenario where you all needed to come back into session, you could un reserve these funds to deal with problems as necessary, but that's the best way that we could come up with for But that that never came to fruition, so it's all weird. That's the contingent list. I don't know if you have any questions or hopefully all that makes sense. Absolutely. But that's what we did, and that's most of it, Paul. Still there.

[Sen. Andrew Perchlik (Chair)]: So I've got kind of 110 that was set aside, 130 is what? Yeah. Just kind of curious more to what comes out.

[Emily Burns (Joint Fiscal Office)]: So, the revenue forecast, yeah, another pivot, and hopefully we'll address some

[Unidentified JFO staff (likely one of Amy/Brady/James)]: of the revenue, but as

[Emily Burns (Joint Fiscal Office)]: a reminder, so the revenue forecast as we talked about will be at the emergency board on Friday next week. And just as a reminder, we've used our consensus revenue forecast for a long time. The purpose is to have two independent economists hired by the executive and the legislative branch to propose an agreed upon number, the amount of revenues, and that those numbers are formally adopted. That way we're not debating what the base revenue picture looks like. There are some states where the House comes up with an assumed revenue number and the Senate comes up with a number and the Governor comes up with a number. And yeah, and then you have to negotiate how much you have to spend as well as how much you're going to spend. Then this simplifies, Yeah. Blocks one side of the And so, so John will, we'll do that again in a week, and then the emergency board is the four money chairs and the governor. It's adopted, per statute, it's adopted in January and July. There is a mechanism in the event that Catherine talks about back in 2009, I believe, is when they had to do additional forecasts because of what was going on in the economy. The revenue was getting close to the forecast. You want if you don't budget to the forecast, you want to make sure that you're You know, if you have to reduce the forecast so that you can budget to that level so that you don't overspend. Hopefully, So, and this is the statute round estimate, right, and that's for the big funds, The general funds, the transportation, and the education funds. They do a big down. And, yeah, so they will, they will forecast for FY '26 and FY '27. And in January we do '26, '27, '28, and then in July it'll just be

[Unidentified JFO staff (likely one of Amy/Brady/James)]: '27 to '28.

[Emily Burns (Joint Fiscal Office)]: And the governor's budget has to be based on the most recently adopted revenue forecast.

[Sen. Andrew Perchlik (Chair)]: So what he finished his budget before the forecast? He could base it on the July forecast?

[Emily Burns (Joint Fiscal Office)]: Yeah. I believe we, Amy and I were in the budget office that it may have passed. That's nice. And that's, you know.

[Sen. Andrew Perchlik (Chair)]: So I think there's gonna be a down bid, they might wanna get it out ahead of them.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Sometimes that happens. We do that. We've done that more, not in January, but more toward the end of the session. You know that the estimate, you aren't making the estimates, and you're today, and you know that by July, it's gonna happen. So that has

[Emily Burns (Joint Fiscal Office)]: Yeah, if the actual revenues don't meet the forecast, there are mechanisms for utilizing balance reserves to bring the dental fund to the balance.

[Sen. Andrew Perchlik (Chair)]: Is it included in the balance reserve first and then stabilization? The stabilization,

[Unidentified JFO staff (likely one of Amy/Brady/James)]: the 5% is an unforeseen ending of the year.

[Sen. Andrew Perchlik (Chair)]: But it seems like you're gonna if there is that, you use the balance reserve first.

[Emily Burns (Joint Fiscal Office)]: I can't remember up top. And there's specific language about when you use balance reserve. We were just talking to JFO about how need to put a presentation together that specified, this is what this one is for, this is when you touch it, and this is what this one's for, and this is when you

[Unidentified JFO staff (likely one of Amy/Brady/James)]: what would trigger those blasting? The the 90% is at its base. If you end the year, it is unforeseen.

[Emily Burns (Joint Fiscal Office)]: Yeah, and I believe the language is sort of like the first thing you do in the next year is refill it by Yeah. Right, so we talked about the consensus processes to make sure that we're not arguing about how much is available. The rating agencies cite this as a thing that's important

[Unidentified JFO staff (likely one of Amy/Brady/James)]: for county fiscal manager. Every state did the 5% because of the rating agencies in the mid-90s. Yep.

[Emily Burns (Joint Fiscal Office)]: Yeah, we already talked about those three major funds. It also includes the forecast for payroll tax that fund is the child care contributions fund. And on the education fund, it's important to note that it's everything but the property taxes. Sales tax, purchase of use, lottery, etcetera. And it doesn't include, so all of the other special funds that I've had, that's not part of the consensus forecast. So, here's the 77,000,000. This is the chart that comes from Tom Covet's presentation. This is a comparison of the changes in revenue from the January 2025 forecast to the July 2020 forecast. And blue bar reflects the increase in the forecast for the general fund. So they anticipated so you built the budget assuming $77,000,000 less in consensus revenue forecast than they anticipate coming in. They anticipated coming in July. So, this chart is always at the beginning of those forecasts to show those changes. They also increased it for 2027, but to the extent the '27 budget hasn't been built yet, it's important to know, it also doesn't impact anything, practically speaking. And then this is where you see this negative 7.5 in the transportation fund, this is what triggered the transportation fund rescission that was adopted by the Joint Fiscal Committee in August. And then the education fund doesn't have a similar rescission process, and it's sort of dealt with in the next budget year.

[Sen. Andrew Perchlik (Chair)]: You're awesome.

[Emily Burns (Joint Fiscal Office)]: I just wanna make sure I'm understanding this graph. So, the blue bar for 2026 is the change from 2025. So this is just like how much better the economy has done over the year, or it's not within the year how much it shifted.

[Sen. Andrew Perchlik (Chair)]: That's what they project.

[Emily Burns (Joint Fiscal Office)]: Or they project to change from the January 25 revenue forecast to the July 25 revenue release. And it's the forecast for fiscal twenty six. Oh, I see. See. Okay. Yep. So then for '27, that is I guess I'm confused also about, like, how this So from July to

[Sen. Andrew Perchlik (Chair)]: January. This was in July, so it was from the

[Unidentified JFO staff (likely one of Amy/Brady/James)]: beginning. From January to July.

[Sen. Andrew Perchlik (Chair)]: The economists decided that Mhmm. F y twenty six, which just started in July. Right. We're gonna raise 77 more million than we told you we thought we were you were gonna raise that in January. Right. And 85,000,000 more than the next fiscal year that said you were good.

[Emily Burns (Joint Fiscal Office)]: Okay. So Okay.

[Sen. Andrew Perchlik (Chair)]: So general fund, because, look, tax revenue, I think that was gonna be a lot more. Transportation education

[Unidentified JFO staff (likely one of Amy/Brady/James)]: is And a

[Emily Burns (Joint Fiscal Office)]: so the right, if it goes down, then we there's a rescission process to realign appropriations with an anticipated lower forecasted revenue. If it goes up, then it's money that's available for the budget adjustment act, basically. So, oh, if the governor's the approximately $120,000,000 changes in the budget adjustment act, this is where 77 of that is coming from, is this updated forecast. When it's updated next week, that available revenue will fluctuate accordingly. And then we'll have to move stuff in the budget adjustment to react to that or add to it if it goes up. I wouldn't put my money on it going up, but if it did, we could spend. Yeah. So does that make sense? The remaining the rest of the money that he's utilizing, the budget adjustment, there's, and we're working out some stuff around, there's about $24,000,000 of reversions, the fact that the, H-ninety one was vetoed, that money fell to the bottom line. So, there's some, then there's some other changes related to that, but that's where they, they're sort of sources, the big chunk of that is the updated forecast. This is what is always at the end of the packets that Tom and Jeff put together. It's always the same sheet, but this is just helpful to see, these are all the component units. This is what's changing year over year. This is what the economists are required to present to the emergency board. This is what we do a lot of our analysis on, sort of based on what these are. And this is what whenever the general assembly is proposing to make a change to one of these tax types, JFO like, the baseline is always what is in these tables. Or if you're gonna change the rate of sales and use stacks, for example, the starting place is always here, and then you would add to it accordingly. And so, there's one for And there's one This is in here. So at the very top, it says available. One of the things when, you know, you're if you ever find yourself needing to look at these tables, there's a source and then there's available. And the source is because, right, the per like the purchase and use tax is a good example. It's It goes into the transportation fund, but then statute says allocate part of it to the education fund. You have sources, meaning as it goes in, and then there's the available is like, okay, but what's really available after all of the statutory allocations are. Oh, yeah. So, like, so you see sales views is zero because now it all goes to the education funds. So you've got the same thing, available education fund and available transportation funds. And again, just for, if you're looking for more information on the revenue forecast, you can go over to the website. We're trying make things fancier, but if you go to the, on the front of the website, there's these little bars at the top. Sorry, I'm

[Unidentified JFO staff (likely one of Amy/Brady/James)]: gonna go ahead

[Emily Burns (Joint Fiscal Office)]: and see my mouse. Good. So, there's this green one for the general fund, the blue one for the education fund, the purple one for the transportation fund. You click on them, that chart below will expand, and then you can see when we get actual revenues for the month. We try to update these charts so that you can see how things are tracking year to date. And then also, like with the Preparation Speedbook, click on subjects, there's a revenue and taxes subject, and it will bring you to this page. It has 148 versions of the consensus revenue forecasts, if you want to go back in time. Then the monthly revenue tracker, if you wanna see more detail on how revenue by component you have is tracking for the fiscal year. I think that's everything. That's all the fun stuff we thought you should be reminded of or know before we really get into.

[Sen. Andrew Perchlik (Chair)]: We don't really know how much is gonna be available for the budget because we haven't finished the budget. We might use budget

[Emily Burns (Joint Fiscal Office)]: adjustment over many times. That was always a light. As you move stuff in the budget adjustment act, it's gonna impact what's available for the current fiscal year. And we had to keep, as things were moving in one, then we'd have

[Unidentified JFO staff (likely one of Amy/Brady/James)]: to move it in, then we'd have to update the other based on this.

[Sen. Andrew Perchlik (Chair)]: And you talked about how that $74,000,000 is not being used in the VA, is any of the 110 of the reserve?

[Emily Burns (Joint Fiscal Office)]: No, none of that 110 is

[Sen. Andrew Perchlik (Chair)]: Is it? Still residual.

[Emily Burns (Joint Fiscal Office)]: Still the 60 of it is reserved, and the remaining 43, whatever, 42.

[Sen. Andrew Perchlik (Chair)]: We'll assume that is gonna be used in the.

[Emily Burns (Joint Fiscal Office)]: Thank you. Or you can use it. You can leave it. Or I don't

[Sen. Andrew Perchlik (Chair)]: I don't know to pronounce it. Like another another staple that you can bring your day. We'd have to come up with another name.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: I can't bring much more.

[Sen. Andrew Perchlik (Chair)]: Snowy day. Got snowy day.

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Ice day. Ice day.

[Sen. Andrew Perchlik (Chair)]: Maybe not. Any other questions for JFO?

[Unidentified JFO staff (likely one of Amy/Brady/James)]: Thank you.

[Sen. Andrew Perchlik (Chair)]: I don't think so much is you're off. We got all the JFO staff here. Nice. All the all the best one. Yeah. Okay. Thank you, everyone. Yeah. Thank you. You're welcome.