Vermont Legislature SmartTranscripts:

[Senator Wendy Harrison (Chair)]: Good luck. Okay, welcome. This is the Senate Committee on Institutions. It is January 13 and we have two items on the agenda today. First, we're going to go over act 33 of last year and as the committee knows that is the capital bill. It's a two year capital bill. But we went over the financial part of the bill on Friday and today we're gonna focus on policy. And then at 2PM we have a joint information technology oversight committee meeting which will be held in Room 32 which is the room of our house partner in this part of our jurisdiction. And so that'll be it too. So those of you who want to watch both, you'll need to switch on to a different YouTube account at that point. Let us actually, So, we have a person, so let's all introduce ourselves. I'm Wendy Harrison. I represent the Windham District and I'm Chair of this committee.

[Senator Robert Plunkett (Vice Chair)]: And Rob Plunkett, represent Bennington District and Vice Chair. Joe Major, Windsor.

[Senator Russ Ingalls (Member)]: Russ Ingalls, Essex, Orleans. John Benson, Orange District. Welcome.

[Senator Wendy Harrison (Chair)]: Okay, so John Gray, Alleged Counsels, will be presenting the policy overview of Act 33.

[John Brady (Office of Legislative Counsel)]: Sounds good.

[Senator Wendy Harrison (Chair)]: Hello. Thank you very much for being here.

[John Brady (Office of Legislative Counsel)]: Sounds good.

[John Brady (Office of Legislative Counsel)]: I'm glad to be here.

[John Brady (Office of Legislative Counsel)]: Afternoon, everyone. John Brady, office of legislative council. So what I'm gonna do is I will screen share at thirty three the capital build, which as the chair stated, is a biennial bill. It's covering two years. I'm gonna do, you know, maybe a little bit more overview than I would typically do, given that we have a new member, so I think it might be helpful just to get some structure for that. I'm sure that Scott previously went over this, but we're dealing with a two year budgeting process, and something that I wanted to flag is the difference in drafting that you're gonna see in the bill this year. It's gonna look like what you see in Acts 33, but unlike last year where we were assembling essentially from scratch or given the capital budget presentation that you received from the administration, right, those sections could have moved around. Now you have the given framework of what the bill is, and essentially this act that you would be doing this year to update the capital budgeting process, the capital budgeting adjustment act. So it will have the form of this act that you see, act 33, but it's gonna involve a lot of striking language and placing an update based on the capital budgeting that you'll receive, I think, next week. So just as an example of what that would look like, many of you will already be familiar with this, but this is a prior second session year capital bill. This is your Capital Budget Adjustment Act for 2024. Just wanted to show, it's in the form of the year prior, but as you see, you're striking through amending the numbers as you have updated figures. In some cases, like what you'll see here, obviously a particular project, the appropriation wasn't necessary, so it was updated to reflect that back. So just wanted to give you a sense of how the drafting is gonna be different this year. We have the structure, and now you are amending the existing Act 33. A high level overview of the three policy sections before I jump into the policy. I know that you received some of this last week, but just super high level. Your first section of the capital bill sets out the intent for both years of the biennial, and it tells you what will be done in the first year and what will remain in the second year. Your sections two through 16 set out the appropriations that are backed by bonding for each of the programs, so a lot of that is near section two, you're dealing with state buildings, BGS, and as you recall in last year, you have different programs in which you're authorizing spending backed by bonding for particular projects, and then there's some ability within those sections, there's authority for BGS and the like, to move some of those funds around within particular provisions. So section one and ten, sections two through 16 are appropriations, section 17 is what we call reallocations. I'm actually gonna stop sharing just because I'll flip it back on in a second, but just because I'm doing the high level overview. Sections 17 is your reallocations. So as you know, when you authorize spending in between those sections, there is a clawback that eventually happens if a certain period of time passes. So for general geo bonding, is most of what the capital bill is like, your authorization to may reallocate after, I guess, a three year period, and then you shall reallocate after a five year period. For the cash fund, you may recall, and I'll talk about this when we get to the policy sections, there's a different clawback period for cash, and that was extended last year to be three years. So your section 17 steps out, what's happening with old, unexpended funds? What are you gonna do with that money? And, if you tallied up all of the funds that you see in the capital bill, you would see that the bonding authorization is lower than the total amount of spending authorization set up in the act. So where is that extra money accounted for? You have reallocations, and you may have cash bond pieces as well, but your reallocations pull back money for prior authorizations and appropriate them for particular purposes. Section 18 actually sets out your bonding authorizations, so up to that point in the act you've just had the intent, and you have the sense of appropriation, but no backing for the appropriations. Section 18 actually conducts and actually authorizes that general obligation forms for the total amount that you have. And then finally, section 19 of the act talks about your cash spending authorization. So after that one, Bill, we've been talking about appropriations backed by bonding, and then section 19 sets out specific authorizations that rely on the cash fund as against your bonding authorizations. With that, I will jump to the policy question, but let me know if you had any questions on just kind of high level how the bill works.

[Senator Wendy Harrison (Chair)]: I just have a comment. I was surprised that the bonding authorization in section 18 wasn't relatively, it doesn't happen necessarily in the next year or so. It can happen multiple years after this is approved. Because that means to municipal where when you say you're going go bond, you go bond. Here it's just in the state it's more complicated. It has authorizations for. Yeah, so it could happen in three or four years or five years. Just a fun

[John Brady (Office of Legislative Counsel)]: if you look at that figure that you see in section 18, what you'll see is the point I was noting earlier, it's lower than the total spending authorizations that you would see in section one because there's additional funding which would have been covered last week, cash block reallocations and the like that fill in that gap between the attempt to total appropriations and the ethical bonds. So Section 20 is when the bill changes course. The first nineteen secondtions deal with your spending authorizations, they deal with money, they deal with bonding, tax fund, and the like, and at the back end of the capital bill is a set of policy decisions. So theoretically, could have a capital bill that does not have this back end. You're always gonna have a capital budgeting process, but the policy sets up decisions each year that happen to shift the course of something within a capital process. So section 20 is the start of your policy sections, you're switching gear from money. We start with section 20. This is an amendment to the section seven zero one A, is your capital construction bill, and basically this is trying to align, you're gonna see at the bottom of the page, this section amended the date at which the report on unexpended funds. So this is not the full capital budget report, but basically, in solicitation goes out to see for each agency, where do your projects stand, how much money have you spent on this, how much money do you have left standing out there, are you going to be spending this, What are your project phases? So this is a way of checking in on projects and seeing what money remains. And the amendment that you have is is not touching anything substantively about the kind of report that has to be done. It's just changing the date in which that happens. As you can see, moves to the third Tuesday of every annual session. The reason for this is that is the date, that's next week for us, I believe, that is the day on which you receive all of your It's the big budget, it's when you receive the capital budget, and so this is aligning receipt of that report to that date. So not a substantive amendment to anything about the content of those unexpended fund reports, but just aligning the dates.

[Senator Wendy Harrison (Chair)]: And that makes sense because they won't know it. It would be very difficult to know it December 15. Mhmm.

[John Brady (Office of Legislative Counsel)]: Section 21 is I would call this a presentation update to the form of the capital budget that you receive. So 32 BSA section three ten sets out the whole big, you know, these are the sets of information that are required within the capital budget that you receive. One of the identified problems, or potential areas for improvement that was talked about last year, and what you'll see here was that years and years ago, when VTS or folks came in, they often included a chart with their capital budget requests that would show kind of the duration of funding over time, the stages of particular projects pursued, and then relevant more now, because the cash fund is a relatively recent structure, where the actual sources of those funds are, is it bonding, is it cash, and you may have the sense to ensure that half is done quite quickly. So this is an update to the presentation of that capital budget request. And what you see is amounts appropriated and expended for the current fiscal year and for the preceding fiscal year shall be indicated for capital programs and individual projects. Then the new language, this is the new addition, the policy update here, is that for the five fiscal years preceding those, the assessment would include aggregate amounts appropriated and expended for individual projects, so the total, and then also the year. So which amounts shall be categorized by funding type and presented in a format that concisely displays the funding streams and the project phases for each individual project over time. So it's meant to give you guys additional information about where things stand with a given project in a readily understandable format. This was the language we came up to try and capture chart, if we just said chart, that doesn't say too much. So this is trying to produce that kind of information that you would naturally have received in a chart, and that's why you see the reference to format that concisely displays, because it doesn't have to be in any particular given form, but as long as it is getting that information to you in a concise manner, that's the goal here. So, again, just touching on the capital budget that you're going to receive and trying to ease the decision making process, trying to accelerate things like into you.

[Senator Wendy Harrison (Chair)]: And I just wanna comment on this one too, because appropriated and expended, you might think that again, expended would happen right after appropriated, but sometimes there's a pretty long lag. Like with the women's prison, for example, we didn't have appropriations, I think for two years. So it looked like we weren't doing something if you looked only at those two years. But this having it be a five year period, it'll be more evident. It would take in this case a ten year period to actually show expenditures and revenues for the same project.

[John Brady (Office of Legislative Counsel)]: And that's a nice way to work around also what you can reasonably expect the process of building out this Capital Budget Adjustment Act will be like. Unlike other bills that may circulate through the committee and have a relatively short cycle depending on the process, you know, this is gonna take months to do this, and so you're gonna just have different agencies, particularly VGS coming in and updating on where projects stand, and this kind of informational presentation is to help facilitate that kind of presentation so that you can assemble over the course of the session this full, accurate, accurate demand for the capital budget across the session. Session 22, we're switching gears a little bit, we've been talking about the capital budget that you received in the form of presentation. Here we're talking about the actual cash fund that's established. Again, that's a relatively recent structure within the last five years that was established, and can be used for similar purposes to the kinds of projects that are pursued in the capital itself, and typically backed by bonding, but this would provide cash. Within act 33, if you're looking for the section that has your spending authorizations for cash, that's section 19. So just know that that has a different revenue stream backing it, basically, has cash backing it rather than bonding, but this is an amendment to the creation of the cash fund and the clawback mechanism that exists for the cash fund. So prior to this amendment, any entity authorized to make expenditures from the capital infrastructure subaccount shall have not more than two years from the legislative session in which the act authorizing the expenditure was enacted to uncover the funds, and your remaining unencumbered funds would remain part of that fund account. The basic issue that folks found themselves with last session was that you were hitting that two year account, and this was a way of bumping it out another year basically to get some time to come back and see what's happening with those expenditures from the cash fund. We call it a punting, don't necessarily have to call it punting, but it extended that clawback by a year, because I think last year would be the first year that you were actually confronting the clawback of memorandum from the cash fund, how that will be deservedly. Next piece, section 22a, is directives to JFO to report on the cash fund, just giving some background. I have not seen this report, but it may be out there, and that report would provide historical context for the creation of the cash fund, compare the financial management practices for bonds against cash, distinguish between the intended uses of the subaccounts. As you'll recall, the cash bond has two subaccounts. One is one you can think of as almost directly mirrored typical capital appropriations,

[Scott (Joint Fiscal Office staff)]: and then

[John Brady (Office of Legislative Counsel)]: you have another subaccount called the other infrastructure, essential investments and reserves subaccount, into which spending authorization, if that happens in the appropriations act, may pool funds. So this report would also talk about what are the intended uses of those different subaccounts. We describe for each year since its inception the source of funds and the annual expenditures from those subaccounts, and outline the current legislative process by which appropriations are made in the CAD fund. Just a little reminder here, there's some oddity in the ways that we both talk about and pursue the spending authorizations that happen from the CADD fund, unlike the general capital build structure that you see in sections one through 18, which set out the spending authorizations that are backed by bonding, and actually make outright the appropriations for those particular pieces. The way that the legislature has kind of over the years since the catch fund was created, set up this process is this committee indicates its intent for capital bill like projects to be appropriated out of the cash fund, and then kind of sends that message to the appropriations committee to conduct the actual outright appropriations themselves. It's almost like a double spending authorization that happens, but that's kind of a negotiated process that has happened since the cash fund's inception, and so this report would speak to that piece as well. It will make more sense than we're going through it, but it's different than the bonding process where the capital bill is outright making those appropriations technically adding. This is requiring some additional effort from the appropriations committee to back up the committee's decisions and discuss.

[Senator Wendy Harrison (Chair)]: Just a question for Is that approval of the Appropriations Committee, is that set? That's just our practice? Hasn't been our practice. That's something we'll talk about.

[John Brady (Office of Legislative Counsel)]: I tried this stress last year and I don't know if it was always received. A lot of traditions happen in this space is what I was saying. Technically, under law, the committee could say We're authorizing these, that's what we're doing, but I think politically you face consequences from the natural holders of cash appropriations rights. I say it's negotiated, it's also a fact of politically the sensitivities that folks have.

[Senator Wendy Harrison (Chair)]: Right, but we'll talk about it this

[John Brady (Office of Legislative Counsel)]: year. Yep.

[Senator Wendy Harrison (Chair)]: I suspect that the administration may have suggestions on it.

[John Brady (Office of Legislative Counsel)]: Sure, but you are correct that there is nothing in the statute that says you've got to use this particular committee for purposes. Beyond the staff of subject matter areas for the committee itself. Right. Section 23, something you'll also see in the policy sections is individual decisions made with respect to particular properties, and that's what you see here. Section 23 is transferring the Randall Menno property from the town of Waterbury, and there's a set of conditions that have to be met for the commissioner to make that transfer. Something, we don't have to go into detail about the actual property itself, but just something to note, this may be transferred, if I'm recalling correctly. We have statutory procedures to ensure that transfers of property are subject to particular procedures and that you receive certain amounts, right, that there's a public bid or things of this kind, but notwithstanding what happens here is to allow an outright transfer, so it's notwithstanding some of the procedures and would move that and presuming conditions are met. The Randle Metal property, whichever, if I remember correctly, was subject to flooding and there was, once storm water management needs have been addressed, permits have been obtained and created a plan to align that transfer with the lease that can be used. Section 24 is an update to a notice provision for the Capital Complex Flood Recovery Special Committee. So this is a committee that provides updates on the Capital Complex Recovery and the update that you see here is pretty small. Prior to this amendment, BGS would have to provide quarterly updates to the special committee on the planning process for blood recovery. Additionally, now, BGS would be required to provide timely, not quarterly, but timely notification to Montpelier and the Montpelier Commission for recovery resilience of any alterations to proposals and plans for that flood recovery. An additional notice provision, it's not with the same regularity, but if there are alterations to plans and proposals, City of Montpelier and that commission would receive updates from What

[Senator Wendy Harrison (Chair)]: I'm sorry. Yeah. Go ahead. The

[John Brady (Office of Legislative Counsel)]: the word timely is very vague. Is that no? Yeah. It was so I what I recall is that there had been some thinking about whether you just mirror a similar regularity, so having something like quarterly updates, but the thinking was that the city and the commission don't just have to have an update as of a particular date, they only needed it as of things that might have a meaningful impact. I would connect the timely with the alterations to proposals and plans, it's not timely notice, full stop. It's if there have been alterations to proposals and plans, ensure that you reach out to the city and the commission to update the rest of that fact. But you're correct that PIENAG doesn't say within three months, you could say within two months of alter right? It's just the general phrase that a district grammar says. Did

[Senator Wendy Harrison (Chair)]: you get your question answered? Because I just have a follow-up, is, is the intent to notify them prior to the whatever is happening or? It doesn't even say that, so it could be after. Something that's happened.

[John Brady (Office of Legislative Counsel)]: I take it to be that the commission will have altered the proposal or claims, so that's the action that the commission has taken, and that's what triggers the update. So it's post alteration to the proposal plans is the way that I understand. But, of course, this is just what is statically required. If the commissioner would like to update the city, they're not prohibited from doing so. Right? So if they wanted to give a things notice, there's nothing stopping them, but this is just ensuring that they do in fact let them know on a timely basis of any alterations to those events. And I mean, the other way to think, I know that you're both getting at how much can you rely on this fact. I and I would just point out that this amendment only increases notice professions, right? So this is boosting the amount of notice that goes out. This is not putting anyone in a worse position from another's perspective. Section 25 is a repeal to a provision in a former capital bill. This was a report on the potential reuse of the Chitney Regional Correctional Facility site. Justice involved women were being moved out, there was consideration whether to make this available for justice involved men. There is a report that was intended to be due December 15 past year, but this section repealed that, so this is essentially backing away from that particular plan. And I'm happy to jump over to that active helpful, but that's really what it's doing, it's just saying we don't need this feasibility study anymore for this reuse of the Chippewa 325 Correctional Facility site. Section 26 you can think of as a way of ensuring that funds remain within the capital budgeting process. It's a way of keeping it within the committees of jurisdiction. Coming back to you guys is maybe the simple way to think about this. It says that if the Commissioner of Finance and Management offsets any capital funds, 2023 capital bill, for this particular session, emergency generator and boiler plant replacement, if those are offset with federal funds, there might have been federal funds coming in at that time, then any offset amounts shall be reused for future capital construction projects as part of the capital budget process. So instead of just allowing that money to flow outside the capital budgeting process, this is saying, no, those are really capital budget appropriations, we want that to remain part of the process. The fact that we got federal funds is just a good thing for the state, but we want to keep it for this process. So this is ensuring that, this particular project and the appropriations behind it stay within this committee's decisions.

[Senator John Benson (Member)]: So just a clarification on that. As I understood what you said earlier, if in fact the funds weren't used, and so in five years, it would automatically come back in anyway, so why the need for a special carve out here, I guess.

[John Brady (Office of Legislative Counsel)]: Two separate things. You're right to identify the clawback mechanisms that exist in statute. It's important to say that sometimes we don't get the full extent of the sentence, I guess, way we say, oh, the money's clawed back, but I'm not specifying that instance to what it is clawed back. So it's important to say the clawback that happens in those sections is part of the capital budget process. Right? But money could go else money could go elsewhere. So it's important just to say the clawback is keeping it within the capital budgeting process. This separate section is unrelated to that, would not be picked up by those triggers because it's 2023, so the years wouldn't be it's still a time limit at this point. But additionally, the real thing that this is getting at is federal funds. That that's what's happening in this case. When we're talking about the clawback mechanisms earlier, that's we've had our standard, you're getting saved dollars for projects, and agency simply haven't spent them on a particular project. Kind of a check-in on unexpended funds and saying, maybe this isn't being put to its best uses, and it can come back and we could reallocate those funds to other kinds of projects. What this is saying is, happily, the state received some federal funds, and as a result, the agency or whoever might be owning that project didn't require all of the bonding authorization that happened in the Capital Bill Act because they received these extra funds. So to the extent that the Commissioner of Finance determines, there's been that offset. We received enough federal funds and essentially supplanted the money that was authorized in the Capital Bill Act. Let's make those a steady part of the capital budgeting process. It's addressing two separate issues. Thank you. Section 27 is an expansion to a prior year authorization to the Sergeant of Arms for an upgrade here at the State House. It was appropriated in FY twenty five, dollars 100,000 for the replacement of State House cafeteria furnishings. What you may recall from last year is that it didn't need that much money to pursue that, so there was a desire to build in additional security measures at the state house, and basically the same authorization, so not increasing the dollar amount, but expanding the scope of the products permissible under the authorization, so that you can purchase and install at the state house an x-ray machine inside the screen package.

[Senator Wendy Harrison (Chair)]: Which has happened. Then lastly,

[John Brady (Office of Legislative Counsel)]: it takes effect on passage. So that's the extent of the policy sections. Have you talked about any particular pieces you may be interested in? I think it's the sort of bill that comes together a bit more slowly than other bills you may see coming through, and it's really dependent on factual updates from those perspective projects. I don't know what is going to come this year, so we will find out.

[Senator Wendy Harrison (Chair)]: It will always be interesting. I think that was a great presentation. It's really helpful for me to rehash. You asked good questions. Anything else? Scott, do you have anything that you wanted to add to this?

[Scott (Joint Fiscal Office staff)]: Just that Senator Benson, I just don't believe I sent the cash report to you because you hadn't been appointed when I sent it out to the rest of the committee, but it is on the reports website and I'm happy to show it for you. The record's Scott of Orange District, fiscal office, kind of beyond that part. Thank you. But yes, if you're interested, I can send you the report itself. Senator Plunkett has pulled up already, so can pull it right out from the website. Thank you.

[John Brady (Office of Legislative Counsel)]: Great. Thank you. Teachers, pet. I

[Scott (Joint Fiscal Office staff)]: thought I was the only one in order to say that.

[Senator Wendy Harrison (Chair)]: Well, next week it'll be you. Okay?

[John Brady (Office of Legislative Counsel)]: Just super basic thing, you likely already know, but just, you know, people pull out different terms, calendar year, fiscal year, the like, just to make sure everyone's on the same page. Your fiscal year is starting July 1, and then it's ending in the year in which you see the numbers. So FY '26, that's the year that we're currently in, starting past July 1, ends this June 30. So just keeping track of your fiscal years and the different ways in which people reference years can be maybe more problematic for me because in the education space there's so many different calendars, but here I think it's a bit more intuitive.

[Senator Wendy Harrison (Chair)]: Yeah, no, thank you. It's important because we assume you have to be clear. Okay, I think we're good. Anybody have any more questions or comments? Alright, then we are adjourned.

[John Brady (Office of Legislative Counsel)]: Thank you, guys.

[Senator Wendy Harrison (Chair)]: Thank you, this is perfect.