SmartTranscript of HCI-2025-01-28-2:20 PM

[Chair Alice Emmons ]: This is House Corrections and Institutions. It is Tuesday, January twenty eighth. We're meeting this afternoon right after the governor proposed his FY twenty six budget. We have before us his proposed capital budget for FY twenty six and twenty seven. We do do a two year capital budget. This is a new budget for the new biennium, but that's not to say some of these projects have not a continuation of previous capital budgets that we have worked. So today, we've got Nick Kramer from the agency of administration that's going to give us some background in terms of how the budget was put together and go over the how the spreadsheet is designed and go over some of the moving dollars. So, Nick, welcome. [Witness Nicholas Kramer ]: Madam Chair, moving dollars. You can go. Reading officer right here. So for the record, Nick Kramer, chief operating officer, Agencies Administration. Thank you to the committee for your time. Always a pleasure to be here. Spent a lot of time in this committee last year. A lot of familiar faces. Well [Chair Alice Emmons ]: in the hot seat, though. [Witness Nicholas Kramer ]: Not as much. Kind of fair on a couple of things. So all the more pleasure to be with you today. I will start, I think, per the chair's request with kind of a high level summary of the capital bill process. I understand this committee has been active. There are certainly veteran members on here who will not be a stranger to how everything comes together. But I think to start, it's important to have a really solid grasp of how the capital bill is funded, which historically has been through the issuance of general obligation bonds. There's a sort of strong historical argument there that if you're investing in a tangible capital asset that's going to benefit future generations, it's only fair for those future generations to pay some share of that. Right? These are appropriate costs to go at for going forward. And that's true as a member of, you know, somewhat the younger side of the generation. I think there's plenty of stuff younger generations will be paying for. We don't have to saddle them with everything. Mhmm. But that that intergenerational argument, I think, is is strong. We in Vermont have funded the capital bill that way for the last twenty, thirty years. I'll I'll look to madam chair for her her tenure on that. Moving forward and and of course, the the debt the amount of debt that we go out to bond for, which drives capital spending, follows the recommendations of the Capital Debt Affordability Advisory Committee or CDAC, which I believe this committee has already gotten primary. And that's a third party technical advisory group consists of the treasurer's office, representatives from the agency of administration, some public appointees. And their job is in a very nonpartisan way to get together and look from an analytical lens only. How much debt can the state afford? What can we take on, without and then that's the question. Without what? Their primary focus is maintaining our credit rating our credit rating as established by the three major credit rating agencies. That's important for a variety of factors. The cost of borrowing goes down the higher your credit rating is. If you start to slip in your credit rating, which we did in twenty nineteen, Vermont was downgraded. It was a trip. We had a AAA rating for many, many years citing workforce and demographic issues and our significant pension liabilities. The two out of the three rating agencies downgraded us at that point, and that impacts the cost of borrowing. So CDAC gets together every year. They look, at a variety of metrics, debt per capita, debt as a percentage of our total appropriations, and can't and benchmark us against our pure state pure states to determine how much basically we can bond for the capital bill. That recommendation peaked at around two thousand I think it was FY thirteen, FY fourteen, maybe fourteen, fifteen. About ten years ago, the biannual recommendation from CDAC was about one hundred and sixty million dollars Compare that to this year, we are sitting in front of a capital bill that has one hundred million dollars authorization for two years. That in inflation adjusted terms is almost half of where we were. So we have been on a declining trajectory with our our recommendations. That's for good reason as our and our demographic issues are something we're working strongly on. There continue to be a challenge for the state and our pension liabilities is another area where we've made a lot of progress, but we have, you know, on the orders of four point seven billions in terms of outstanding pension liabilities. So those major drivers of our rating position really continue to be enforced. And as we look ahead to the capital bill and sort of the debt capital bill matrix, it's pretty unlikely we're going to be returning to times higher bonding authorizations moving forward. We're kind of on this trajectory. We need to stay the course or maintain at least sort of level, authorizations. The CDAC recommendations reflect that. I think the administration, shares that belief, the treasurer's office. We're all kind of committed to this path. So this, of course, coincides with historic inflation, rising capital bulk costs. I mean, nothing new to anybody in this committee. But if you have declining authorizations and skyrocketing costs, something has to give. Right? And so a major component of our proposal for the last several years has been an alternative funding source for the capital bill or the cash fund for capital investments, which was proposed jointly by the administration and the treasurer at the time, state treasurer Pierce, a couple of years ago. And the concept behind the cash fund is fairly simple. It's at a high level, if we take if we continue on this course of declining or stable bond authorizations, our debt service payments, which are around seventy to eighty million dollars a year in the FY twenty six budget, I think it's eighty one million dollars in the general fund. That's a nondiscretionary cost to our general fund budget. We have to pay our debt obligations. As those continue to decline, if we benchmark a certain percentage of the overall general fund budget, which historically has been between four and six percent, so we chose four percent. We say we're going to commit four percent of our general fund budget to our capital bill. That's what we've always done. We'll keep it at that level. We'll lock in at four percent. Any savings that we have from declining authorizations over time, declining debt issuance over time, Let's reinvest those directly in our capital bill as cash funding for capital projects upfront that won't bear any interest. I think it's important to highlight that at this point in time, and this varies a lot, dear, if you go out to if we go out to bond for one dollar, it could can cost us at current market rates up to a dollar fifty over the life of life of a twenty year bond. So it's an expensive proposition, this bonding business. So I don't want to we've got a lot to cover and I know this committee's time is precious. I think we really, as an administration, can't understate the importance we feel of this commitment to a diversified portfolio in terms of the funding for the capital bill. You will see reflected in this proposal, and I'll direct members to maybe flip over your your spreadsheets to the very back. So it's fine up. It's the final page, but at the bottom should end with a line one eighty eight that says balance deficit. And just these last couple sections, I think, give a pretty good overview of the of where we stand from a revenue construct. So if you look at section eighteen, general obligation bonding capacity, CDAC's recommendation for this biennium was a hundred million dollars over the course of two years. [Chair Alice Emmons ]: So for the committee, we're on lines one seventy two. [Witness Nicholas Kramer ]: Starting at This is brand new for a lot [Chair Alice Emmons ]: of folks here. So lines one seventy two. And I think too if you go for the columns, let's explain a little bit what the columns are [Witness Nicholas Kramer ]: Sure. First. So column a gives the titles of each section. And, yes, I think the chair highlighted earlier, bill is broken down by agency, by by entity, really. Column b gives the bonded appropriation total for f y twenty six. So the amount of either an appropriation or in the case of the segment we're looking at, these are revenues that we are looking at specific to bonding in f y twenty six. The red column are cash fund appropriations or cash fund sources as the case may be in this end section. And then FY twenty seven or the bonded appropriations in FY twenty seven. Because the cash fund is funded by this annual statutory mechanism, we're not proposing any FY twenty seven cash fund projects. You can expect those next year when we come back to do the capital BAA, the Capital Adjustment Act. Column E gives the total of all the bonded appropriations, and I apologize, there's a header that got cut off. It's supposed to say sort of bonded underneath that. So column E gives the sums of columns B and D and then column F is the sum total including cash from appropriations. But so if we look at lines one seventy two, the CDAC authorization this year was a hundred million dollars or fifty million in each biennium. On line one seventy three, we got an additional eight six point eight million dollars in bond premium for committee members who may be new to this construct and a lot of these words. What that means is when we go out to sell bonds, when the treasurer's office issues bonds for a variety of reasons that they would be very well equipped to speak to, Often, we get based on market conditions and, interest in our our bonds based on all kinds of factors. Sometimes investors are willing to pay a premium for Vermont bonds. In that case, if we're going out to issue, to fund, let's say, a hundred million dollars of capital projects and we get a bond premium of five million dollars they actually we don't get one hundred and five million dollars of revenues. We get we go out and we issue one hundred million dollars of bonds. That five million dollars premium, which is just extra money that investors paid to have our bonds, It's able to be used to fund capital projects, but it doesn't count against the amount of bonding authorized by this this body. So there were one hundred million dollars of authorizations. We only effectively issued ninety five of them because of bond premium. So that five million dollars difference is available then for reinvestment in future projects. So that's exactly what this line captures is in our latest issuance. The treasurer's office can come back if he hasn't already and speak to that. It was a really successful issuance this year. There was a lot of interest in Vermont bonds. We had six point eight million dollars that we can now reinvest. So you add that to the fifty million dollars above, combined with three point one million dollars even further above online one sixty nine. That's the total amount of reallocations of prior year capital appropriations. And this committee will be spending, I'm sure, a lot of time looking for more of those. There's the repo process and, certainly a lot of scrutiny that we apply internally and that the legislature traditionally applies to prior year capital appropriations, making sure everything that we have designated for Project X is either spent on Project X or planned to be spent on Project X and what those plans are. So that three point one million dollars constitutes the list of projects when we went through at the time of capital build budget development, which kicks off in August of last year. Those were projects largely thanks to Commissioner Manoli and her team that we identified as either for various reasons the project was not had been completed under budget or there were timing issues. There can be a variety of reasons why a prior year appropriation is available. But in those cases, we always do our best to scoop those and reinvest them. So if you add the three point one and the six point nine, basically, and the fifty, you get and you sort of have to jump jump through sections here. But there's on line one hundred and eighty six, the total capital funding available in f y twenty six is a little bit over sixty million dollars. There's the fifty million dollars bonded appropriation or authorization in FY twenty seven. That's on line one hundred and eighty six as well. For a total, and this is column E on line one hundred and eighty six, of a hundred and ten million dollars in just bonded appropriations. I [Chair Alice Emmons ]: wanna stop I wanna stop there because I wanna make sure the committee understands this because this is fundamental to our work. Fundamental. So questions? [Speaker 2 ]: Yes. But [Chair Alice Emmons ]: So what you wanna do is look at section seventeen. Those are your reallocations. These are projects that are have gone forward, and there's a balance. Project has completed. There's a balance. Or the project has not gone forward. Okay. Or there's extra money in that line item that they know they're not gonna get out in the next fiscal year or so. That comes up on lines one hundred and sixty nine, the three point one million. These are previous capital bills that we've already authorized that bonding capacity that is now available that hasn't been used. That gets added to the fifty million that were authorized going forward, and then you add the bond premium at six point eight nine million. That gives us a total of line one eighty six of sixty million dollars to work with for f y twenty six. K? Questions? [Speaker 2 ]: Yep. So for the reallocations, that's money that was appropriated in the past by any of them for projects that was not maximized to its full potential, and it's basically, like, carrying over or what? [Chair Alice Emmons ]: Could be five years ago. [Speaker 3 ]: Okay. It could be so any past It's just unused. [Speaker 2 ]: I mean, it's been unused. Okay. And then you add that to the bond premium, which we went over. Okay. That makes sense. [Chair Alice Emmons ]: Because we've authorized that bonding to occur. In some cases, it did occur. But if you look at lines one sixty seven, the Memorial Valley Rail Trail [Speaker 3 ]: Mhmm. [Chair Alice Emmons ]: That project is done. And of the bonded amount that we put aside for that work, a hundred and twelve dollars is left. So we'll get back. Right. If you look at [Joe Luneau ]: Yep. [Chair Alice Emmons ]: Say Williston Yep. Police station, that's the new one. For some reason, there's we did add more money to that at the end because of cost overrun. But, obviously, there's two point two million. That project is completed. [Speaker 2 ]: Well, that's the public field station. [Scott Moore ]: So is that the same thing as a Yeah. [Chair Alice Emmons ]: That's that's the new barracks. Okay. So that So that project has been completed. Everything all the bills have been paid. It's been signed off, and there's still two point two million left. So that's gonna be reallocated. [Witness Nicholas Kramer ]: Yes. So if it works for you, madam chair, for the purposes of today, because I know we have very limited time and lots to overview, I probably won't get into much detail on specific line items. I know the BGS team is happy to come back and speak to those at a high level to to speak to that one. I think there was some contingency added, at one point for that project based on some uncertainty and cost estimates and basic and it was definitely the right thing to do at the time. We were facing potential big increases, and it ultimately wasn't needed to the fullest extent. So here it is showing up back in the bill. [Chair Alice Emmons ]: So that's a big piece of how we get to our bottom line. You have the reallocations. You have the bonding capacity that has been recommended by CDAC. And then this year, we happen to have a bond premium. We we don't usually have a bond premium year after year. It's usually once every couple three years. So we end up with almost sixty million dollars for our budget. For FY twenty six, FY twenty seven, we're still looking at the fifty for that. [Witness Nicholas Kramer ]: So if it works for you, madam chair, I'll just to finish out the revenue section, unless anybody has any other questions on the capital, the bonded dollar side of things, I'll talk quickly about the cash fund and the mechanisms there. So as I mentioned, at a high level, the concept behind the cash fund is, okay, if we're on this course of stable authorizations and declining debt service payments, hypothetically, at least, respective to our overall, with respect to our overall general fund appropriations. Let's recapture those savings. So it's thirty two BSA one thousand and one b is the cash fund statute. Spent a lot of time in that statute. Statutorily, there is a funding mechanism for this fund that is is codified in law equal to four percent of the prior, the last completed fiscal year's general fund appropriations less the estimate for current debt service. And it's a little bit of a mouthful. This is also there's a sort of a primer on this in your capital bill booklets. I think in the agents the administration forward or something, there's quite a bit more detail on the cash fund. I'd, strongly encourage any interested committee members to consult with that because I think a lot of the history and a lot of the context is spelled out there. But that formula achieves exactly what I described, which is we're sort of looking as the general fund budget marches through time and presumably gets bigger as our economy grows. We're looking at, okay, what's four percent of that, which is historically what we've committed to the capital bill. And we're looking at, okay, how much are we actually paying in debt service? And any difference between those two numbers we're putting into the cash flow. And so that transfer, that statutory calculation this year comes out to be fourteen point eight million dollars. That's on line one seventy eight of your spreadsheet. If you add to that prior year earned interest on the fund, so the cash fund is one of several special funds in the state where any interest on the fund balance stays in the fund. In this space, there was eight hundred thousand dollars earned, on the fund balance in, f y twenty four. So we're adding that into the to the and then the the amount on line one eighty is a result basically of a lot of activity during last legislative session. There was money transferred into the fund per the statutory recommendation. The governor proposed one thing. There was modification made by the general assembly on the amounts. Some of that was redirected to support the general appropriations budget. And in those comings and goings, there was about one point two million dollars that was left on the bottom line in the cash fund. So we're proposing to reinvest that in capital projects this year. [Chair Alice Emmons ]: Sure. [Commissioner Wanda Manoli ]: Have you done any work in in on what [Speaker 7 ]: we can anticipate that fund to be? Because it's different. It's significantly different than last year's. [Witness Nicholas Kramer ]: Yeah. So over time, I mean, it's it depends a little bit to be Mercurial based on general fund appropriations going up. I mean, I did a lot of forecasting when I was originally proposing the fund. If we and it all depends on do we start borrowing more or do we borrow less? But if we sort of stay the course and lock in some assumptions, I mean, in under ten years, we could be looking at fifty, sixty million dollars cash fund thanks to, like, every year. So we're [Commissioner Wanda Manoli ]: Every year or every by any Every year. [Witness Nicholas Kramer ]: So we're anticipating that this could become a very non non trivial piece of the capital. Why is it so [Speaker 7 ]: much less this year than last year? So last FY twenty twenty five totaled almost fifty million. Right. [Witness Nicholas Kramer ]: So there's a couple things going on there. [Speaker 7 ]: And we gave some back. [Witness Nicholas Kramer ]: The the fifty million figure actually doesn't reflect the statutory transfer amount. So there we had proposed the the administration and the treasurer proposed originally this concept that I'm describing, and we'll primarily be talking about that concept. There was an additional component to the cash fund established two fiscal years ago There were two sub accounts. One is like the capital sub account, which is everything we're talking about here. And there was this other investments and essential reserves sub account. And that was basically like one time funding that was available that doesn't have anything to do with this mechanism. So a big chunk, I think, that's a trillion dollars for that. There is the cash fund B, as we call it. We call them cash fund A and cash fund B. Cash fund B, which is that other piece, which you won't see being the focus of this year's proposal. There's one component of that I'll speak to later has to do we set aside some money for, ANR and AOT for future year state match to draw down federal funds that we knew were coming in IIJA. There's one final unreservation of the ANR pieces in the capital go this year, but that's [Joe Luneau ]: the only, fly that's at [Chair Alice Emmons ]: So what we had and this is something I was thinking might be helpful for the committee to know the history of this. Of this. I know John John Gray, legal counsel, is gonna be coming in towards the end of the week to go over the current statute, how the cash fund is structured by law so people can understand that. One thing too, I don't know if it will be John or Scott, if you could put together, when we started actually appropriating from cash cash funds, how much we did. Maybe it it might be helpful to know at the time how much was being requested by the administration to be used in cash, where we ended up in the final capital bill for cash, and for those same capital bill years, how much we also bonded for. Just so folks can get a history in terms of this is the third year or fourth year we've done bond it's it's three or four years we've been using cash. [Joe Luneau ]: Madam chair, thanks for Nick. Scott Moore, Dreyfus Law Offices. Nick has provided us with a nice operating statement for how the cash fund has operated and been funded in the past. So between John and I, we can pull things together to do that. [Chair Alice Emmons ]: Yeah. Just to [Joe Luneau ]: share to share with [Chair Alice Emmons ]: you. Just real simple. Yep. Not a lot of words. Just simple. Numbers, madam chair. Just numbers so people can see four years ago, three years ago, two years ago. Get some history here just so you can see the interplay. [Witness Nicholas Kramer ]: I think, madam chair, unfortunately, the cash fund in recent years has been the subject of a lot of discussion in this building. I think to your point about simplicity, it had it became complex. There are a lot of moving pieces. It's hard to follow. I mean, I don't pity, Scott and John that task you just gave them because it is it is challenging between the two different bills. I think the administration's goal with the cash fund is to demystify and simplify as much as possible. I mean, there's the unavoidable mouth salad of the the statutory transfer, but that's really it. Right. There's four percent minus debt service. And we think that should be in the capital bill every year per its statutory description. It's for capital projects. We believe those should therefore fall in the capital bill, be the fall under the jurisdiction of this committee and your senate counterparts. The transfer will always have to occur in the big bill. That's true because it's a general fund transfer. But as far as the appropriations and where they live, the administration feels very strongly those should be in the capital bill, and that will likely continue to be recognized. [Chair Alice Emmons ]: We don't appropriate. We went through this last year because that was the same proposal that the administration put out [Commissioner Wanda Manoli ]: last year. [Chair Alice Emmons ]: Capital bill does not appropriate. It allocates. It's the appropriations bill that appropriates. [Witness Nicholas Kramer ]: There is a precedent, madam chair, if I might, for bills other than the appropriations bill, making appropriations. That happens with some regularity. You can pull last year, there's a number of the Flood Safety Act. And so it's not a legal impossibility. There are certainly a variety of conversations and sort of a shared commitment to this construct that I think will be necessary for this concept to thrive moving forward. And you're, you know, no stranger to those nuances. But it's it's possible. [Chair Alice Emmons ]: So when a policy bill comes out and it has a line at the bottom, half a million is being appropriate to this program, the bill goes to appropriations. Appropriations looks to see if they have the money in the appropriations world, the state budget, and they incorporate that within the state budget. It's appropriated through the appropriations bill. The policy committee, the policy bill does not do the actual appropriation. May say appropriate so much, but does not do the actual appropriation. It still is through the Appropriations Committee and is through the state budget, not that policy bill. So we got a couple questions here. Will and then Joe? [Joe Luneau ]: Are you gonna go for [Speaker 2 ]: the ten year plan that's on columns g through k? [Commissioner Wanda Manoli ]: Okay. Speech at the federal center. Yeah. Joe? [Witness Nicholas Kramer ]: Just going back to the annual cash transfer is out it's expressed on line one seventy eight. What what is that formula hold one more time? It's four percent of the last completed fiscal year's general fund appropriations. So all of the general fund budget for that past completed fiscal year [Commissioner Wanda Manoli ]: General fund. Yeah. [Speaker 8 ]: I understand. The four percent [Witness Nicholas Kramer ]: of that, and then you subtract from that the current estimated debt service payments on outstanding. [Speaker 8 ]: And that's the debt service, for FY twenty five? [Witness Nicholas Kramer ]: For that's we pay annually a debt there's a debt service appropriation in the general fund budget that services all of our outstanding bonds. So all of the bonds that have been issued to fund capital projects. [Chair Alice Emmons ]: So is it the eighty one million that's being proposed for FY twenty six, or is it the seventy seven million that was in FY twenty six? [Witness Nicholas Kramer ]: The eighty one for FY twenty six. So it's actually four percent of the FY twenty four appropriations minus the eighty one million projected for FY twenty six. The reason not to dive too much into the weeds, but that it's FY twenty four is that fiscal year at this point has been completed, closed. There's no pending budget adjustments. We have audited financial statements or soon to be audited. So it's sort of a closed book, and we can get a really good snapshot. [Speaker 8 ]: Now are there any exceptions from that four percent aggregate with federal pass through monies? [Witness Nicholas Kramer ]: So this is just the general fund. [Chair Alice Emmons ]: It's the general [Joe Luneau ]: fund. Would not [Chair Alice Emmons ]: So how much is just for our state budget, which is, like, two point eight million billion? How much of that is just general fund? [Witness Nicholas Kramer ]: So I I couldn't say off the top of my head, madam chair. I looked to my finance management colleagues, and you just presented a bug, but I think it's two but, yeah, if if the general fund, say, is on the order of two point [Chair Alice Emmons ]: Two point one, two point eight billion? [Witness Nicholas Kramer ]: Yeah. Then you take four percent of that total figure for whatever f, like, twenty four weeks. [Chair Alice Emmons ]: I don't think it's the full budget like that. It's it's the general fund piece of the budget. [Witness Nicholas Kramer ]: Right. So the sorry, if the general fund budget is, say, two point something billion dollars, just the general thing. So our total budget is nine billion dollars. [Chair Alice Emmons ]: That includes a t fund. That includes a [Witness Nicholas Kramer ]: r fund. Everything. But whatever the number is for the general fund, the total budget for that year, we take four percent of that. And it's not [Chair Alice Emmons ]: So you're not arbitrary. Federal dollars in those general [Speaker 8 ]: I understand. [Chair Alice Emmons ]: State taxpayer dollars. [Speaker 8 ]: And I and I just wanna understand. So the concept is the idea is that, we use that four percent aggregate less the debt service, and that's in statute so that that would always be there. It's the difference between what portion of that is a cash transfer and what portion is bonded indebtedness. So so the idea is that potentially some point in the in the future, it's just all cash transfer, and there is no bonded indebtedness. [Witness Nicholas Kramer ]: I think for the reasons I sort of started off by saying representative in terms of the multigenerational equity argument, there's likely always going to be some portion of of capital borrowing to fund the capital bill. I think that's a larger conversation for sort of what that ideal matrix is. But but yes, our hope is, like I started by saying, as we see the the bonded dollar trajectory continuing to go down and we know that we have significant capital needs moving forward. We need to come up with a robust funding source. And the reason the four percent number was not chosen arbitrarily, like I said, that's that was about how much we were actually spending more of our general fund budget on debt service historically than four percent. So we looked at kind of over the years, okay, how how much were those debt service appropriations as a percentage of the overall general fund budget? And it was like between four and six percent. So we said, okay, let's continue on our sort of path of fiscal discipline here, lock in that amount at four percent and then any savings as we continue to bond less or a low amount when we invest those in the capital the capital policy. [Speaker 3 ]: Which, if I might, may lead to less bonding, but it also because we have so many projects, it's just as we're doing it, you add it to the top. And so we bond plus this money. Right? [Chair Alice Emmons ]: Mhmm. [Speaker 3 ]: Right. So it doesn't necessarily mean there may be a day we [Joe Luneau ]: no. I would like to probably not bond. [Speaker 3 ]: But the real goal is to get more money into the overall process to hopefully catch up on projects, I would say. That'd be my take. So I'm gonna give [Chair Alice Emmons ]: a little pushback on this too because Hello? Uh-huh. Well, you know, our debt affordability committee looks at our infrastructure needs, and they look at how to pay for it. So with cash coming in, since cash has been coming in, our bonding capacity has been decreased every year. And at the beginning, everyone said, no, no, no. That's not gonna happen. Bonding capacity will stay the same. And I said, well, we'll wait and see, won't we? Because I kept saying, our bonding capacity will be decreasing because our, that affordability committee will see there's cash. And that's exactly what's been happening over the last three years. [Witness Nicholas Kramer ]: So if I may So [Chair Alice Emmons ]: there is there is a, you know, a push back and forth, not to say that we shouldn't pay cash for projects where we can, but the flip side of that is the bonding capacity did decrease. [Witness Nicholas Kramer ]: So for the committee's record, madam chair, and I appreciate you bringing that point up, there is a full version of the two thousand twenty four CDAC report included at the end of this capital booklet. Under what section? Under the CDAC report section. And that very point came up and was discussed at length in CDAC. And that is It's not only So it's share his point is there a question about does this should should the cash fund impact the authorization? And in fact, in their statutory charge, they are charged not to factor in the annual transfer of the cash fund. [Chair Alice Emmons ]: We said that. Right. To put that [Witness Nicholas Kramer ]: And so and I can confirm, as somebody who participated in all of those committee meetings this year, that topic of conversation came up. And in fact, the recommendation, the one hundred thousand dollars that was presented this year by the committee, was not based on available cash. It was based primarily on the considerations I laid out before, namely the sort of continued commitment to fiscal discipline in light of our credit rating headwinds. And also not insignificantly, an awareness of the fact and this is, again, apologies to folks. This is a little in the weeds, but we are carrying a pretty significant amount authorized but unissued debt or unauthorized but unissued, bonds, bonding capacity. And what that basically means is those are capital bills that have passed for projects and we haven't gone out yet and issued those bonds. And I think, again, just since this is all sort of foundational to how the capital bill works, it's worth taking a second to describe the mechanics of how we bond and when we bond. And because it's it's not it's not straightforward. So if there's a a project in the capital bill, say, fifty million dollars for project x, project x is moved forward, and that money is spent to pay contractors, to pay staff based on the the sort of project management needs of Project X. That project moves forward according to when that project is ready to go. The funding piece is a little bit more complicated. Say that this is a radical oversimplification, but say that fifty million dollar project, all the money went out the door July first. Right? The the I see. That is actually used to pay contractors or staff salaries or whatever just comes out of the general cash balance of the state. The reimbursement of those funds by bonded dollars happens generally after the fact. In some rare cases, it will happen prospectively a little bit. But because we have projects moving forward all throughout the year at many different times and we can't go out and issue a bond every time we started to aggregate the bonds into generally a yearly cycle where we go out and issue a bond every year. And those proceeds from that issuance will either reimburse or prospectively fund the project. I think that's that's an important nuance to share. And, honestly, I forget why why I But I think it's It was it [Speaker 7 ]: was having an impact on [Speaker 3 ]: our topic. [Chair Alice Emmons ]: It was [Witness Nicholas Kramer ]: from Yes. Because oh, because of thank you, representative. Because the authorized but unissued means we this body authorized projects in aggregate totaling such and such in prior year capitals capital bills, and we have not yet gone out to issue those bonds. And that historically, that number is not wildly significant. You know, based on the timing of the issuance, we'll have a little bit that we haven't issued. But in recent years, with the pandemic, supply chain issues and demographic and workforce challenge, labor force challenges in the construction sector, That amount has really there's been this sort of significant buildup in backlog. I think what that really evidences and this was talked about at some length in CDAC committee was that we've kind of encountered a speed limit to construction projects in the state. And that's there's a variety of things at play. There's been this huge influx of federal funding, as everybody in this room knows, over the past four or five years, all municipalities, private entities, all of this massive infusion in infrastructure and other capital projects has been funneled through the state. There's only so many people to do the actual work. So we're encountering that a little bit. There are in other words, are other capacity constraints to how we move money through the capital bill that don't just have to do with our bonding capacity. And so that was that was, I would say, another piece that featured heavily in the committee's discussions. But the cash fund ostensibly was not was not part of the discussion. Certainly, they're aware that it exists, but they they, in fact, were referencing back to that statute that says our charge is to disregard the cash fund and [Chair Alice Emmons ]: we're going [Witness Nicholas Kramer ]: to look at everything else. [Chair Alice Emmons ]: Why we put the statute? [Commissioner Wanda Manoli ]: Question, madam chair. Joe? [Speaker 8 ]: If if, you they're unauthorized or unissued bonds, like, how long may they live as authorized? [Witness Nicholas Kramer ]: Capital appropriations exist generally until they are reallocated. So an appropriation that's authorized by this body in two thousand twenty four will carry out. That's what what this committee is doing is authorizing spending authority for those projects, technically, for those projects to move forward. That spending authority authorization exists until an action is taken to convert it. There are several mechanisms that trigger that. Those are good. These reallocations being one of them. We took up those tasks and saying, what's outstanding? Do we really need all the spending authority? The repo committee and this committee does that work. And then there are statutory thresholds after a certain period of time where funds are supposed to automatically. [Speaker 8 ]: So that's it. It happens. So I think either last year or the year before, part of the reallocations were expenses associated with bond issuance for bonds that that that just weren't issued? [Witness Nicholas Kramer ]: That was a one off representative, and I'm happy to that's a very sort of technical piece having to do with we we switched the methodology through which we pay for bond issuance costs or the cost of counsel and not the underwriter, but but everything else that goes into the preparation and issuance of bonds. Traditionally, historically, those costs were incorporated in the total amount of issuance. Then every capital appropriation was given what they called a small haircut. So a little tiny bit came off the top of that appropriation to help pay for those bond issuance costs. The general, GASB, the government accounting standards board, and others throughout that the period we were doing that sort of changed their best practice guidance. That's not something anybody really does anymore. So a couple years ago, I think in f y twenty four, the state moved to directly funding bond issuance costs as just a general fund line item. There's six hundred and seventy five thousand dollars in the general fund budget just to pay for those up front. [Speaker 8 ]: That doesn't look here at all. [Witness Nicholas Kramer ]: So those you should not expect to see. Again, it was a onetime thing having to do with balances from there. [Joe Luneau ]: Thank you. [Witness Nicholas Kramer ]: But good good eye. So I I recognize we're only in the revenue section. I'm happy to transition to some of what we're actually proposing to fund if that works for [Chair Alice Emmons ]: That would be good. Okay. [Witness Nicholas Kramer ]: But I think I really appreciate the committee's time and patience on that. I mean, these are all kind of foundational context for how how this bill came together. So if you flip, I'm just gonna mostly refer to the spreadsheet for the purposes of time. Every line item in this spreadsheet should have a narrative description in the capital booklet in the relevant tab, all of the tabs. It's to the diligence of commissioner Manoli's team and Nicole who's been a superstar in this. These line up perfectly or should. So if you're curious, oh, what what is, the Rutland multimodal garage renovation? Well, you can flip to that tab in this in the booklet and find out some more information. I'm not gonna go into great detail, on any one item. This committee will be hearing from all of the impacted departments individually with much more detail. But at a high level, I'll kind of breeze through the sections. So section two, as the chair indicated at the beginning, agency of administration, that's primarily BGS appropriations. The first several appropriations are kind of annual recurring ones for major maintenance, planning, reuse, and contingency, physical security enhancements. These are kind of ongoing workflows that are critical to the smooth operation of state government. Three acre stormwater compliance is is a big one on the horizon. There are some regulations coming through from DEC having to do with three acre storm water permitting. Many of our state buildings need to come into compliance with that rule. Arden State Buildings is a statutorily codified program. In Rutland, there are two line items in here for one for the Asa Bloomer building. There are some sewage system upgrades that are pretty mission critical down there or ongoing discussions about that building. I'm sure this committee will look forward to more testimony on that. Attached to the building is a parking garage. There are some structural and sort of life safety investments that need to be made in that parking garage. Pittsford Academy, that's the police and fire safety and sort of law enforcement training academy in Pittsford. They had a request to extend and cover with a roof the part of their firing range. They're firing permanently exposed to the elements, and there's some life safety issues there. Two state house appropriations, the replacement of historic finishes, that's, affectionately the David Sheets appropriation that he uses to maintain all of the beautiful decor in here that we all appreciate so much. The on line ten, state house repointing. There's a cash fund appropriation there to do some work needed on the exterior of the building to prevent some water mitigation, some water infiltration. A hundred and twenty State Street directly behind us or across from me, that building is in need. This is serious multi phased project to replace basically all the systems in there. There is some significant need there. [Scott Moore ]: Joe explained that to us last week. Yeah. [Witness Nicholas Kramer ]: So enough said on that, and I'm sure Joe and the team will be back to speak more. In Middlesex, we are in the process of replacing the roof on the state archives building. That's a portion of it is scheduled for replacement this fiscal year. I think this committee's heard some of that. Yeah. This would complete the balance of that project. Also in Middlesex by the way, in case the geography here is befuddling to anyone, this is just the way my brain works. They should be arranged from south to north. So if you're looking to try to figure Really? Yeah. So Middlesex print and postal, uninterrupted power supply upgrade. I figured because the south always gets short shrift. Right? [Commissioner Wanda Manoli ]: Yes. We do. Let's go the other way. [Speaker 7 ]: Right? I don't know. [Witness Nicholas Kramer ]: I was the other than Frankie County here. So Out to Burlington. [Chair Alice Emmons ]: That's You'll get used to it. Representatives. That's true. [Witness Nicholas Kramer ]: So the print and postal shop over there, they have a a variety of pretty sensitive equipment that costs a lot of money, and it's very, susceptible to power failures. So there's a real need there for a constant power source. That's what this would fund. Waterbury State Office Complex following Irene, We did not and folks from BGS can come in and correct me if I'm wrong on any of this. But my understanding is that we left a good chunk of the slate roofs in place after some of the major remediation there. Those roofs have sort of a pre are approaching their the end of their life, and those will need replacement. Thirty two Cherry Street, there's a parking garage there that we've made some investments into in the past, and this is kind of the last tranche of funding to get that project finished. You'll notice the committee members of representative Greer, I think, has left, but he was asked they're asking about the the ten year plan. So columns b through f show the recommendation for the current biennium. Columns g through k show a snapshot of our projected needs. And I'm emphasizing a snapshot because these are always subject to change as anybody who works in the capital sector knows. These these numbers change a lot, but these this gives kind of a a flavor of what's coming down the pike. So when there were projects for which there was no current year recommendation, but we were anticipating a significant need in the out years. We included those statewide replacement of air handlers based on EPA regulations regarding certain refrigerants is one of those and potentially a major renovation project at the Pittsburgh Academy. So I'm moving really quickly. I'm saying a lot of words. I welcome questions. Heard about that both of those last week. I think I'll I'll keep plowing unless somebody stops me in the interest of everybody's time. So Agency of Human Services, this is, as Chair Emmons pointed out, ostensibly the DOC section. The first line here on line twenty four, there are some significant investments, continuing investments we've made in prior years to upgrade all of our correctional facilities to have modern and efficient HVAC systems, air conditioning in particular in the summer. This appropriation would fully fund the construction of, those systems in all facilities except for our facility in St. Albans, the northwest correctional facility, which has a somewhat larger price tag, and there are some ongoing design considerations up there. So that shows up in the ten year plan. Statewide ADA compliance. The Department of Corrections, as most committee members may already know, has been involved with an ongoing settlement with the Department of Justice related to some ADA compliance issues. That settlement agreement, has been extended, I believe, through October thirty first of FY twenty five or of twenty twenty five. So the beginning of FY twenty six. These funds here kind of complete as we understand it, the terms of the agreement and get us up to compliance where we need to be. Correctional facility safety and security upgrades is a line not dissimilar to some of the physical security enhancements on line three in the BGS section above. This is sort of a flexible appropriation to be used for a variety of smaller scale projects within DEC. These are really important critical upgrades to bring like, comply with PUIA codes, the prison rape elimination act, kind of nondiscretionary type upgrades that we need to keep making. Along a similar vein, there are appropriations in here for door control system replacements, both in Marble Valley, which is just getting started in this capital bill, and up in St Johnsbury to finish out what has been an ongoing investment there. These are sort of complete system overhauls that are pretty critical for security and operations there. Northwest State Correctional Facility roof replacement has been an ongoing project. This appropriation would finish out that project. Newport Northern State sprinkler system upgrades, same thing. I believe this is an appropriation we've made some investments in in the past, and these are just cost true ups to finish. So I'll pause there before getting to the ten year plan. [Chair Alice Emmons ]: So we'll work on this a little bit more tomorrow morning. We've got time scheduled for half an hour that I wanna work with the committee in terms of how to really read the spreadsheet and give some prep in terms of what questions would need to be asked when we start taking testimony of each individual line item. You have to understand a lot of the background and the flow of money. So when we get to March up, we'll be moving money around. And you have to remember what was testified, And there's certain questions that need to be asked. Mhmm. So we'll go over that tomorrow. [Witness Nicholas Kramer ]: Continuing down the sheet in the ten year plan, I think this is one of the sort of the points of note of this capital bill. This will not be, a strange item, I believe, to most members of this committee. This capital bill does not include any new appropriations for the women's correctional facility. That has been an ongoing endeavor and a priority of the legislature and the administration jointly. We clearly need a new facility. There is a lot of detail and a lot to discuss on this appropriation, of which I will only barely skim the surface today. I expect you'll hear much more from DOC representatives and commissioner Manoli's team. In short, I think the points to highlight here, we have appropriated all communally, we this bot has appropriated sixteen million dollars already towards this project. The bulk of that is has been unspent. So that's part of that authorized but unissued amount. We feel that that amount is adequate to carry the the process through the current biennium. Negotiations are ongoing in terms of the site selection, and they're you know, this is this is a massive probably the the biggest project this capital bill will see in the next couple years. And this has been a a slow process. I mean, sort of necessarily so. There's a lot of moving pieces here. Based on the sort of timing, we felt like there and the prior year appropriations, we didn't recommend any more funding in the current plan. Should the project radically accelerate in the next couple months, there's certainly a capital bill adjustment to revisit, but this seemed like the appropriate course at the [Chair Alice Emmons ]: moment. [Speaker 7 ]: Hand in hand with that, though, and I understand that. Right? And I certainly understand what's going on with site selection and everything. There's no money you mentioned for current use of the current you know, use or upgrades or temporary fixes at the current facility. [Witness Nicholas Kramer ]: So I believe representative report and I I would stand to be corrected, but I think a portion of some of the HVAC money may may Done. Help serve the current facility. And I think there are general so in some of the more general appropriations, certainly, that's correctional facility safety and security upgrades. I don't know if there are pieces of funds, but [Speaker 7 ]: sort of aside from, I guess, HVAC, which we have to do, nothing that's gonna improve conditions for the women who are languishing there and the workers who are languishing there. [Witness Nicholas Kramer ]: I I think that other than those improvements we just mentioned, potentially, I think there's always a balance in terms of how much money we are putting into a facility if you think that we're not going to be operating. [Chair Alice Emmons ]: We're going to be spending a lot of time talking. [Witness Nicholas Kramer ]: I certainly appreciate the points. And, I mean, it's a real it's [Chair Alice Emmons ]: We may be in a different position and no more in a couple months than we do right now. [Witness Nicholas Kramer ]: Likely so, madam chair. [Chair Alice Emmons ]: We hope. Yeah. One way or the other. [Witness Nicholas Kramer ]: Always the case. Sean? [Scott Moore ]: Yeah. So I'm I I know this is I'm sorry if this sounds dopey. But so you you're saying that there is of that sixteen million that was that hasn't been spent. Where do we see that in here? You don't. [Witness Nicholas Kramer ]: The last four or twenty five. [Chair Alice Emmons ]: The previous it's that's [Speaker 3 ]: why it's not part you don't [Witness Nicholas Kramer ]: see that. That's why it's all zeroed out. This committee will be presented with a list of prior year capital appropriations as part of this [Joe Luneau ]: re Okay. [Witness Nicholas Kramer ]: Appropriation process. Commissioner? So, [Commissioner Wanda Manoli ]: thank you, madam chair, for the record, Wanda Manoli, commissioner. I believe the presentation that Joachim provided you last week had that I think that was in there. [Chair Alice Emmons ]: That's correct. So that was [Commissioner Wanda Manoli ]: a review of all of our projects that we, that projects are just appropriated for for that we have underway so that that exact document served. So it is reflected there. Thank you, miss [Witness Nicholas Kramer ]: Michelle. And then some [Chair Alice Emmons ]: of these projects go back to FYI. I think the years here, twenty four eighteen. Twenty two was Actually, twenty three. Way back to that as well, which we don't [Witness Nicholas Kramer ]: have. That's frankly another issue, madam chair, that we're cognizant of when making this decision was we don't want there is a limit to how long capital funds can sit there authorized but unissued. And so we have to be thinking strategically. I mean, how many times in this committee do the words cash flow and project capacity come up? And so we're really just trying to think strategically on those. [Chair Alice Emmons ]: So this is a point in time in January at the very beginning, the new biennium, the very beginning that we've been here. This is our fourth week, of this legislative session. Come end of February, come March, come April, a lot of this information that we have now will change. So it's a very fluid document. So where we are now, when we do mark up at the end of February or through March, we could have very different information than we have now. So our decisions in the dollar amounts will change. And then once our bill gets done and it goes over to the senate, which will be in April, There's gonna be new information coming up different, and everything we decided on some projects could be out the window for that. Yep. But I think it's really important. That's why we went through the spreadsheet for our current capital budget for FY twenty four and twenty five because it plays into this budget. Also, I have given James, and if people want this, this is just another spreadsheet, was f y twenty two and twenty three. Because there's dollars in f y twenty two, twenty three that we appropriated for some of these projects as well. And if folks want that, we can also get get that for you as well. Because it's one year you know, each year builds on the previous year. Kevin? [Joe Luneau ]: It it it's it's probably assumed, but but I'm looking at line one fifty six. It tells me that it's really just a ten year finance. It is really what we assume we're going to need to do at a minimum because the numbers are Mhmm. Going down. Hundred and eighty five million, hundred and twenty. I mean, inflation basically so there's lots of gaps as a this is just what we know now, and we expect it to increase as we move forward. [Witness Nicholas Kramer ]: Correct, representative. And I appreciate you flagging that because I think, again, can't stress enough. We do our very best to project capital needs moving forward. But even next biennium, f y twenty eight, right, that starts July first two thousand twenty seven. Right? That's a long time from now. And in this space, where as the chair was just highlighting, information can change between now and February, for us to be able to put a really accurate, detailed ten year plan together is a pretty challenging exercise. So indeed, what we have reflected here are projects that are on the radar currently with rough cost estimates. But I think I wouldn't place much more stock in those. Like, certainly, it's not the document to guide future capital. It's just a snapshot in time to try to give a sense of some of the [Chair Alice Emmons ]: big stuff. Highlights where the pressures are long term. Exactly. [Speaker 2 ]: Mhmm. Yeah. [Speaker 3 ]: That's [Speaker 7 ]: Yeah. One of [Speaker 3 ]: those things that take a foot right here just as back back knowledge, not the Yeah. Yeah. Alright. [Joe Luneau ]: We we used to call it a WAG. It's supposed to be a swag. By last guess, there's a scientific problem. [Witness Nicholas Kramer ]: That's why I represent. So I'll keep moving. I know we've got [Chair Alice Emmons ]: major changes. This next one. [Witness Nicholas Kramer ]: Some time. So lastly, in the, TOC section, there's a project, the Newport Northern State boiler replacement for which there were funds appropriated in the prior bill. Those funds outstanding should be adequate to continue the project through the current biennium. We are anticipating the need for some final funding in the next capital bill, but that's all I will say about that. So now moving into this into section four, which is ACCD, ecommerce and community development, there are a number of lines here that are kind of recurring annual type appropriations, major maintenance at statewide historic sites, underwater historic preserves. I think my representative here on my right had flagged what or have been in the past. Roadside historic markers, those are paused yes for the current capital bill. [Chair Alice Emmons ]: And what section I'm sorry? [Witness Nicholas Kramer ]: This is you're in section four. Representative's looking at I'm starting on line thirty nine. And if you flip over to the back page of that sheet, it continues on thirty two. Thank you. But I think what Terry Evans was referring to and what I do wanna highlight for the committee, there are three items in this section this year that are somewhat innovative for the capital bill. They are in [Chair Alice Emmons ]: New to the capital bill. They are a new We'll open up the door long term. [Witness Nicholas Kramer ]: And I the book. And these just to for the record are the appropriations the representatives would have heard mentioned in the governor's speech not an hour or so ago. One for one point one million dollars to Bennington for the high school redevelopment housing infrastructure project down there. One to Berry for prospects height housing development and one to Battleborough for the Winston Frowdy Center. And to the chair's point, these are this is a little bit of a new construct for the Capitol build. These would be appropriations flowing through the agency of commerce and community development. These projects were taken. There's a lot of housing effort across the state. I think as the chair is likely to point out, why these three projects. Right? So to answer that question, ACCD works closely with a variety of partners, public, nonprofit, and federal partners looking at the constellation of housing efforts across the state and they keep a running list of projects and we spend a lot of time thinking closely with them about what are some projects because we everybody in this building says housing, housing, we need to build a house. It is a top priority for just about everybody. And yet we have all these housing challenges. So as we got through our capital bill exercise and we're looking for ways, how do we invest in infrastructure that really has the best like bang for its buck, the the maximum return on investment. These three projects rose to the top in terms of their readiness and the amount of non state funding that has already been brought into the capital funding stack for these projects. So like in the case of the Bennington High School redevelopment, I understand that's nearly a forty million dollar public private federal partnership leveraging fifty seven. Right. Representative. So a a massive undertaking and huge effort that's this is a project, by the way, for anybody who's not familiar, that envisions, I think, thirty housing units and a mixed kind of commercial space on the childcare center that would create one hundred and three new slots for childcare and new jobs in the community. So a really massive economic development and revitalization project. They are all of these projects had an identified gap that a little bit of state funding specifically for infrastructure components could help get them across the finish line and make these housing projects reality. So you're seeing them in the capital front. To the chair's point, I expect there will be ongoing discussion about these. I certainly encourage this committee to hear from the Agency of Commerce and Community Development about why we feel these are top priorities. I know they were housing has been a real focus of the governors, and this really felt like a way to move the needle in a couple of critical communities. [Speaker 7 ]: Did I hear you say these will help kind of bring these [Witness Nicholas Kramer ]: to closure, I'm pretty much? That's my understanding. [Chair Alice Emmons ]: So for the committee, these are not state owned buildings. And this I'm gonna they're worthy projects. There's no slam to any committee community. This will open up the door for other projects for housing. This will open up the door for other entities that may have well, this is really, really important to Vermont economy. Whatever it may be. Could it be tourism, could be agriculture, could be education. We just need some money to close the deal. That's what this opens up. [Witness Nicholas Kramer ]: So I appreciate that, madam chair. And I would say I mean, I would highlight that there are appropriations in the current capital bill and in prior year capital bills that fund things other than state buildings. Right? There's been money appropriated for the Lake Champlain Fishing Derby for instance. I'm not gonna [Chair Alice Emmons ]: discuss some of that. [Witness Nicholas Kramer ]: But even more so, some of the section we'll get there in a second in section five, some of these building community grants. I mean, these go to private [Chair Alice Emmons ]: We took care of that because we had a lot of pork that was coming in here from individual members and individual communities, and we were wanted to stop picking and choosing depending who was in power and who was sitting around these chairs. That's why it was done So it was nonpolitical. And there were a lot smaller items. I'm not beating up on these. Specifically, I wanna be very clear about that. This is gonna open up the capital. And I think we have to balance that as a committee when we get into discussions and when we get into markup. Because maybe we'll wanna put some language or parameters around this. Maybe we won't wanna do it, or maybe we will. But I just wanna put a warning shot across the bow that you're opening up the capital bill to other items. [Speaker 7 ]: I think it stole my thunder for section nine. [Commissioner Wanda Manoli ]: Just say ditto. [Joe Luneau ]: I I [Witness Nicholas Kramer ]: think the perspective is appreciated, madam chair. As always, I have a lot of respect for the difficult work ahead of this committee and all the stakeholders who will be hearing from you. So we'll look forward to following your work. Section five, I think, as as we just touched on, this is beginning on lines fifty one through fifty eight. These are somewhat stable annual appropriations for a variety of grant programs. I'm not gonna spend much time dealing with any of them in detail. Suffice it to say, these are all level funded prior year capital bills. So this is not to say these are not important line items and there are narratives for each of them and they fund a variety of really important projects, but I'm just very cognizant of time. In section six, appropriating to the Vermont Veterans Home, two there are two line items in the current capital bill. One is for you. If astute members will remember the R twenty two item on the ten year plan in the BGS section, there is a need at the vet's home to replace a number of their air handlers to come into compliance with the EPA regulations regarding refrigerants. There is also a line here for upgrades to their laundry facilities, as you can imagine, operating an institution of the caliber of the vets home. It's pretty important to maintain top of the line laundry facilities and capacity. They have some issues with the current stock that, necessitate some upgrades. So I'm sure they would be happy to come in and speak more to that. There are three items on the ten year plan for the vets home. Again, just to give a flavor, and as Representative Winter pointed out of things that could be coming down the pike. I won't deal in detail with those right now. The next two sections I'll take together, although they're certainly not the same entity but universe speaking of capital appropriations to outside non state entities, the capital bill has traditionally, has historically included some amount of money for UGM and for the Vermont State Colleges system. As we continue on our trajectory of get of smaller and smaller capital bills, and hopefully that's offset to some degree by the cash fund, you know, that it we have to weigh holistically all of our capacity, and we've got the things like the women's correctional facility, really big things coming down the pike. These represent the amount of money that we we of course, the administration feels strongly. We, continue to work in partnership with these critical institutions. In the case of UVM, one point six million in each of the fiscal years for three point two total over the biennium would be additional capital capacity for ongoing maintenance costs. UVM is, as folks know, a pretty significant, entity from a financial perspective. Their bond portfolio is almost on par with the states in terms of how much they have outgoing. So I joked, well, someday maybe we could ask them for money from Switch, but they that's There's a lot of bricks. You know, both if I [Speaker 3 ]: might for new members, just to remember, like, today is not like a values, like, commerce we're gonna get into the details whether we agree or disagree. This is a presentation the governor has proposed. [Speaker 8 ]: So Oh, I agree. I'll I'll blubiate future hearings. [Witness Nicholas Kramer ]: And and we, so we the administration felt strongly it's important to continue funding these critical partners, with the state colleges. There's also a similar kind of general renovations and major maintenance line. And then we did include some additional funding for a specific project at the Johnson campus. Their central heat plant there is nearing the end of its serviceable life. There would be some pretty catastrophic implications for that to fail. There are a number of moving pieces at that campus that we felt this is this was a worth worthy investment. I'm certainly happy to have the capacity to be able to to help out on that front. But I think representatives from either UVM or the state colleges would be happy to come in and speak to these. ANR, there's a couple things of note here. I mean, for committee members who were here last year, this section will look largely familiar. I mean, the types of projects that we're funding here are, fairly typical. In on both line eighty five, the match for the EPA, the DWSRF stands for drinking water state revolving fund. And then also in the clean water section below resolved? On clean water state revolving fund on line ninety seven, There were there was no f y twenty six appropriation recommended, and that's largely because ANR has adequate prior year capital appropriations to cover needed match. That's the result of federal awards coming in less than anticipated when we built the last budget. So there's less federal money coming in. You need less match rates. We had some leftover and it turns out it's enough to cover our current year cost on those two line items. But you'll see in f y twenty seven, we're returning to famines. [Commissioner Wanda Manoli ]: You can only say ditto. [Chair Alice Emmons ]: No. Okay. You alright? [Speaker 3 ]: No. I'm good. [Witness Nicholas Kramer ]: Dam safety and hydrology projects, I think it suffice to say we've all experienced firsthand the importance of our dams in recent years. The state portfolio of dams is extensive. Many of them need repairs. Committee members will notice there's some significant projected needs here on the ten year plan. This is sort of the current pipeline of projects. Their FPR has two line items. One is for sort of general park infrastructure and rehabilitation projects and some three acre stormwater compliance. There are a number of parks owned facilities that will need to come into compliance with that rule recommending six million total in the biennium for that. Public plans infrastructure are more kind of like auxiliary capital investments that are either not directly associated with the park system or help facilitate access to the end users. And I think parks that PR could come in and speak at much greater length to those. Fish and Wildlife has a major maintenance line that encompasses a variety of projects. I'm sure they'd be happy to speak to and provide a breakdown, but everything from our conservation camps to our wildlife management area access points and our fishing access and all the other good fish hatch, everything else that Fish and Wildlife does, that's important. Section ten, clean water. These recommendations, and this is spelled out in the booklet, are in line with the recommendations of the Clean Water Board, which is its own entity. If this committee has not, I I think at some point, it'll hear from ANR or folks from the Clean Water Board to kind of flesh out that process. It's a little bit of a unique instrument in the state. It was set up in two thousand fifteen following the passage of a Vermont Clean Water Act. There's a designated amount of funding that goes to help meet the state's clean water goals every year. This board, which is comprised of a lot of administration representatives and some public members, gets together every year to wrap recommendations for those investments. They have their own public budgeting process. They create a budget recommendation, which is submitted to the governor and then ultimately informs, of course, the governor's recommend and, the budget passed out of this body. So every year for the last several years there has been an appropriation in the capital bill for clean water projects that are eligible for capital funding that's been at ten million dollars That's consistent again this year. The breakdown of those projects is given in section ten. I'll just highlight section for this section, FY twenty seven, members will notice that there is just a ten million dollar sort of placeholder appropriation on line one zero four for FY twenty seven. That's because the Clean Water Board meets annually to craft their recommendations, so they don't have FY twenty seven recommendations at this point. During the capital budget adjustment process in the next legislative session, we'll be coming back with a proposed breakdown for those for that ten million based on those recommendations. Military, the military has a couple they they kind of have their major maintenance item. They have a variety of projects across the portfolio. Mhmm. [Speaker 2 ]: No. I'm just just noting I love the letter r, but there's an extra r in the TIN Fund line, one thirteen Southern Regional. Just thought I would link that out. Two two of them in the name. So Oh, Southern. [Witness Nicholas Kramer ]: Yeah. Depending on what part thank you, representative. Yep. One of them should [Speaker 8 ]: Mark up. [Witness Nicholas Kramer ]: Any tweaks. First change, this committee can make Every every of your I appreciate it. The so they have annual capital appropriation to match what is often really significant federal funding. They're able to draw down from their master cooperative agreements. That's reflected in one zero nine. The next two items, both lines one ten and one thirteen, Northwest Regional Readiness Center and the Southern Regional Readiness Center. This is part of the military's long range plan to consolidate what are a larger number of armories. It's kind of this is not the appropriate the right term, but, like, mega armories or super armories. This is the next one kind of in their their process. So this would be planning and design money for Northwest Regional Readiness Center just to flag for the committee, you know, planning and design rule of thumb, maybe ten percent ish of the project. This is actually state match twenty five percent for seventy five percent to complete the design funding. So this one million leverages an additional three and change, maybe four. So we're talking about five million dollars for planning and design with potentially a facility that could be on the order of fifty million dollars all set and done. So this is a significant project, primarily federally funded, again, based on the agreements that the military has with the National Guard. But just flagging that these are, significant projects. Agency of AG, we are appropriating one point five million dollars in each of the fiscal years for improvements to the big e building. I think that's always a fun, testimony to hear from the ag folks all the good stuff that happens down there. That is a building that sees a lot of visitor traffic and has a lot of economic benefit for the state. Randolph campus of Vermont State University System and the Vermont Agricultural Environmental or Vail Lab. This is a topic of a familiar topic for some members of this committee. There have been ongoing conversations about the needs of the Vail Lab, particularly in the off seasons. They share currently a heat plant with the campus, with the Randolph campus. Because of the sensitive, very scientific nature of what the lab does, they need a certain, pretty high standard of consistency when it comes to, like, steam delivered to their facility. The college, on the other hand, when they shut down for Christmas break or summer break, like, to turn thermostat bogged down. These are oversimplifications on my part. But so thinking creatively about how do we make upgrades to the current system, which is is nearing the end of its serviceable life. It's a number four heating fuel system at that lab. Those that equipment is going to need some investment. So we're trying to think about how do we both help bring the current heat facility up to standard and maybe add some components that would better meet the needs of the lab. So that's what that appropriation. Section thirteen, Department of Public Safety. These are, but there's really only one type of appropriation here listed three times. They are in the process. Speaking of long term capital strategic plans, Department of Public Safety has been updating and improving their field stations across the state. This bill includes funding for this planning and design work for the Shaftesbury field station, potentially lack land acquisition. Rutland Field Station on the line below, this would be beginning construction and funding the what we believe at this point in time to be the bulk of network. But ongoing conversation, Saint Johnsbury, you will see on the ten year plan as sort of next to the pipeline. [Speaker 2 ]: Real quick. Going back to the Shaftsbury Field Station, is that going to replace the barracks, or is that in addition to the barracks? [Commissioner Wanda Manoli ]: They're, I believe, looking to get land acquisition because of the space they're on is they've outgrown. Yeah. And they do and I didn't mean to interrupt. They they do serve be also the whole self depravity state. So they it's being. [Chair Alice Emmons ]: Alice Miller. Alice Miller. Alice Miller. This is we've been trying to deal with the Chatsberry for it's being weird. Yeah. And the question was, at one point, it was to move it. Yeah. And that blew up in the building. So now we're revisiting it. [Witness Nicholas Kramer ]: So that all matches my understanding, yeah, that these will be sort of consolidated regional facilities. Thanks. Home stretch here. I appreciate the committee's, endurance on this. So section fourteen, the judiciary, there are a couple of significant projects here. The first one, at least from a funding perspective, is not one of them. A small appropriation to the Woodstock courthouse for a backup power system. When the power goes out, it has only a very, very limited backup capacity, court operations shut down. We certainly have lots of backlog in our court systems. This seems like a a silly reason to exacerbate those challenges. So they had a request for a backup system that we were able to fund. The White River Junction Courthouse, this is an appropriation, a cash fund appropriation, that will finish out this project. There were some prior year appropriations for a major renovation of that building in in White River. This could completely be there. Essex County Courthouse connector there in for those familiar with the village of Guildhall, as you drive through, there's all those lovely buildings. And this project would essentially from the backside connect a couple of them, which has a myriad, we're gonna understand, of programmatic benefits for the court and kind of jury segregation from the general public. I think there's components of design that are keen to sally port some safety considerations here. So this was a project forwarded by the judiciary that has seen input from a variety of lake of local stakeholders up there. The Newport Courthouse replacement and planning design, this is also a familiar item to focus on this committee. I see that they're nodding appreciatively. We this is an I think it's just fair to say this is an ongoing project. There have been a lot of discussions about the future of this facility. I will yield to future testifiers to get into specifics, but we have included funding here that we believe is consistent with based on prior year appropriations and what we're anticipating to be the kind of current project flow. This seems like the the right number. [Chair Alice Emmons ]: I'm actually I'm gonna see it in my last Yeah. Four million, three point five. [Witness Nicholas Kramer ]: Last item in the judiciary section of Washington County Superior Court, that's in the one the facility in Barrie. There were some discussions last year, in this committee about this project. Same thing. There's a lot of ongoing details to be ironed out, I think, on this project. There are some prior year appropriations to kind of keep keep things moving, and it's just not a priority for the current biennial given everything else that we have going on. On line one forty four in section fifteen, there's the dry hydrant program. This provides grant funds through DPS for local and either professional or volunteer fire departments to install dry hydrants. As a full new member of my own volunteer fire department, these are handy things to have, especially when you're in the backwoods of Corinth and China without a house fire. These are pretty consistent appropriations. Lastly, but certainly not leastly, the Vermont Historical Society in the Spaulding Building in Barrie, which is also occupied by the Department of Libraries and some other state entities they've had with some of our intense precipitation events. We've seen some water infiltration into that building. So a lot of really sensitive kind of archival and historic documents that they house. This appropriation would help make kind of the most pressing remediation investments to prevent any further damage or infiltration into that building. And there's a placeholder potentially for the future to help them replace a climate control instrument that's also sort of critical for maintaining historic documents. And that's the the end of the capital projects. We started with reallocations and the other sections so I won't return in any depth for those. I know the afternoon is wearing on but I really appreciate your time and I'm really happy answer any questions, anything you've discussed. And, collectively, the team will be excited to come back and get in more detail. We can leave [Joe Luneau ]: a digital phone by the phone. [Witness Nicholas Kramer ]: They should be posted. If not, as we speak, they should be our finance manager posted. [Chair Alice Emmons ]: I should Thanks for the next meeting. Sure. [Commissioner Wanda Manoli ]: Scott, can you [Speaker 7 ]: resend the twenty four, twenty [Joe Luneau ]: five spreadsheet to digital as well? Thank you. [Chair Alice Emmons ]: Hang [Commissioner Wanda Manoli ]: on. [Chair Alice Emmons ]: Oh, no. I was just kidding. We're done with you. I think that he rocks the hot seat. We're done with you. [Speaker 7 ]: We're done with you. [Witness Nicholas Kramer ]: We're done with you. [Commissioner Wanda Manoli ]: We've been asking each other again. Protecting you. [Speaker 3 ]: I hate to clean the liquor's thing. [Witness Nicholas Kramer ]: You didn't know there was no Yeah. Right. Yeah. No. Yeah. [Speaker 8 ]: That week, no. Oh, [Chair Alice Emmons ]: yeah. Which [Speaker 8 ]: is something that utilizes Burlington probably, basically. I know. How long [Commissioner Wanda Manoli ]: Differential project. Mark's Berry activity. [Speaker 8 ]: Is there a way to go? [Chair Alice Emmons ]: Is there anything that the committee do you have any questions about a high level process that we do next? Yep. Can we have that? [Joe Luneau ]: Yeah. What we do next. I can't wait to see. What, like [Chair Alice Emmons ]: A lot of real good test. You know, are [Speaker 8 ]: are we just gonna work then for testimony basis from the top, or it's just gonna be [Chair Alice Emmons ]: We'll do as organized as possible. It depends on structure. Like, tomorrow, we've got Laura Trishman coming in for historic preservation. Because I didn't think that one was gonna be I thought that would be a pretty easy she coming in yeah. She's coming in tomorrow at ten thirty to talk about her section. Yeah. We can I thought that would be pretty easy? Well, there's some new additions to that that she may may not get into. It'd be other folks within ACCT. You probably [Witness Nicholas Kramer ]: wanna hear it from the commissioner. Right. [Chair Alice Emmons ]: But what we do when we do the scheduling is try to go we're not gonna be organized in line by line, but we're gonna taste test line on each individual project, each line. You know, later on during the week, we're gonna have BGS come in and start going down with their projects. Some projects are gonna take a lot more testimony than other projects. Some line items will we'll get into quite a bit in-depth, and then others are pretty self explanatory, and we don't spend as much time on it. [Speaker 8 ]: Yeah. I presume something that triggers a federal match that's believe there's not that much discussion required. [Chair Alice Emmons ]: Oh, you gotta figure out what it's for because you gotta make sure that the language it's in our capital bill, the legislative language is very clear in directing the department or the agency or the entity. But those dollars have to be spent specifically what we lay out in law. So John is here, our legal counsel. And if we say this money is for planning and design, they can only use it for planning and design. They can't go out and build the building someplace else. So we have to be very specific what these dollars are are for. The spreadsheet has some specificity to it and it and some not. But when you do the bill, the actual bill, John is the one that will work with us on the language to make sure that we're very clear where these dollars are going. [Witness Nicholas Kramer ]: Sorry about that. I should have stressed. We did provide a draft capital bill in the booklet, so there is a working draft. So [Chair Alice Emmons ]: And John needs to put that into our our documents for that, and that's the starting point. But first, then, for some of these, we may put parameters around those what those dollars can be used for or how the structure like, those three for the Bennington, the Bradbury, and Berry. That's brand new. We may wanna be very specific on what those dollars are used for. And that all comes down to language that we would put in our bill and language that would be on the spreadsheet. But very specific of where those dollars go. Or if somebody just doesn't get the money and then do it do something else for them. That. So we will be taking testimony on all of this. We'll also be working with appropriations committee because we are saying that for the appropriations from appropriations committee, [Joe Luneau ]: sure I'm on [Chair Alice Emmons ]: the right line, for cash, we got fourteen point eight million of their budget here plus a little bit more. We face with sixteen point nine million. So we have to work with appropriations committee because they may find we don't have the capacity for us to have that money, or they may find that they do. [Speaker 8 ]: Well, the testimony we received is that that allocation is statutory. [Witness Nicholas Kramer ]: No. That's not Doesn't matter. It's not. If I not withstanding. So there's the the current language, the proposal from the administration is a codified transfer. It has always been a codified transfer. There was language added by this body couple years ago. Two little words into statute that say up to up to a four percent transfer mechanism. So allowing for transfers less than that, I didn't highlight today. You will see that part of our capital bill recommend is [Commissioner Wanda Manoli ]: to remove that up to the modified [Chair Alice Emmons ]: I think that's the way we're making it. Sure. [Witness Nicholas Kramer ]: So We'll be back with the same recommendation next year. [Chair Alice Emmons ]: And we'll say the same thing because you can't lock it. I mean, the Appropriations Committee, they've gotta do their work on the budget. So we end up negotiating with them what is and that's on the House side. When it goes to the Senate, it can change. [Speaker 8 ]: So yes. [Chair Alice Emmons ]: All change. [Commissioner Wanda Manoli ]: Madam chair and committee members, section one, there's a tab that is administrative for. It's a document that Nick actually put together that gives you a brief overview of that cash fund and the statute, which is really beneficial to me because that was new as as well just to address. It tells you which statute, where we are, any direction. And if I can just It is. It is the administration's board. Right. Thank you very much, Ruth. You're welcome. [Chair Alice Emmons ]: So we're gonna have John go through through the statute, Nishfa. Of course, he'll explain it. And we can take a recommendation from what the administration proposes. Doesn't mean we do it. It's proposal. That's all it is. It's a proposal. So the executive branch proposes a a budget. They propose language. It's the legislative branch that makes the final determination in terms of how much is appropriated and the language, and then it spoke to the governor at the end for the governor's signature to become law. Well, that's that's a process. So right now, all all of the budgeting right now is in the legislative arena right now. Presented as budget, and now it's our turn. So let's just let a branch to do the work for that. And we'll be working closely with the probes one way or the other for that because our budgets are intertwined. Thoughts? Questions? [Speaker 3 ]: I was just gonna say in simple terms for new people. You're you're going to hear a lot of information from a lot of different people. This is your starting point. And we've done our foundation history. Now you get your starting point for this year. Everything could change could change by by a lot. You won't be left behind. Like, dude, you may if you miss a day, you might be left behind. You watch it on Zoom. But you like, we're not skipping something, you know, like sneaking something in. You could, like, every everything is done in in a specific way. You know, as the chair said, try to lump testimony together in in like categories, but it won't necessarily go down the list. But, you know, I always feel like asking questions, but, like, trust that trust the process, I would suppose, that if we're dealing with, you know, I don't know, a kid or, you know, I don't put my glasses on. If we're dealing with one section, don't don't worry about asking about something other other side. You're gonna get to that. Mhmm. You we'll get to that other section after. So, like, just you got the whole picture. Now we're gonna start whittling in on the small stuff and then we'll pieces, and then you'll build back up to the big picture at the end. [Chair Alice Emmons ]: And that's what I'll go over with you tomorrow at nine o'clock. We're gonna go over, and I would ask Troy and Mary and Gina to help in this in terms of really thinking what questions should be asked of folks to come and testify. Because just because they're telling you something, you don't need to believe it and you don't need to take it to the point and sinker. You gotta ask questions. So they you gotta draw the information out from folks. And we'll go over terms of, like, cash flow. We'll go over how much previous appropriation have we got. What are you anticipating this going out the door in this fiscal year? There's some real questions that need to be asked yet. Write down the answers because we have to go back to that in a month or six weeks when we start doing markup. Because markup is well, they've asked what markup is. Let's go to, like, the Asia Asia Bloomberg building. Well, they've had a lot of appropriations in the past. How does this new request of one point five play into that? Are you gonna get that what is it gonna buy? Because it just says system upgrades. So what part of that system upgrades? Is it planning? Is it design? Is it construction? What is it? That's that's what the testimony needs to draw out. And then when we go to markup, one point five, well, do they really need that one point five? Because they said they're not gonna get it all out in f y twenty six. So maybe we bumped some of that to f y twenty seven. [Speaker 8 ]: Yep. Additionally, so part of the conversation, I I presume maybe, yeah, we see some merit to line item twenty, but, line item twenty eight, that appears to be underfunded, so we're gonna reallocate x from a to b. [Chair Alice Emmons ]: You can cut one to feed the other. [Speaker 3 ]: Can discuss It's [Chair Alice Emmons ]: not a reallocation. It's moving the money around. [Speaker 8 ]: We're gonna make a different recommendation than what's your current recommendation. [Witness Nicholas Kramer ]: As long as we [Speaker 3 ]: stay in the parameters. [Speaker 8 ]: Of the bottom line. Yeah. [Chair Alice Emmons ]: And some new projects will come to light too that aren't here, probably. [Joe Luneau ]: With Chester Arthur. [Chair Alice Emmons ]: And who [Scott Moore ]: else? Does that, like will will the DOC and and will they tell will they share that with us over the next [Chair Alice Emmons ]: In terms of what? Their line item, their request [Scott Moore ]: Yeah. Like, if something okay. Good. [Chair Alice Emmons ]: Yep. Like like, the question I had immediately in talking about the work camp and changing the use of those beds Yep. There's gonna have to be some renovations in that building. Absolutely. Where's the money coming from that for that? Is that is that included in the appropriations bill, or is that something they have internally that they have to find for some previous appropriations. Oh, fine. Those that's something we're gonna get into because there's no way you can change that function depending who you put in there without some renovation in that building, I would think. So, you know Nick at? Nick? Demo? Oh, Nick. Nick's not aware [Witness Nicholas Kramer ]: of it. It's it's At a high level, I'm sure, yeah, I would recommend maybe some further testimony on the details of the proposal. My understanding is there's pretty significant big cost. Obviously, there's nexus on the same. It's right from a facility in service. [Chair Alice Emmons ]: So we do a policy for correction. And that could be a trade off. It could be some trade off. Maybe they can't have as much maybe they don't have as much cash capacity for them. We'll have to pick it up in capital bill. We don't know yet. It's too soon. So to figure it out. But that's what testimony will lead you into, those decision points for that. So testimony is really, really important. [Joe Luneau ]: Mhmm. And [Chair Alice Emmons ]: and that's right. Mhmm. [Speaker 3 ]: And so especially so, like, testimony, like, something somebody says during testimony might lead you to a different question [Chair Alice Emmons ]: Mhmm. [Speaker 3 ]: That you're not even thinking of or anybody. I mean, Alice is probably thinking of it or [Joe Luneau ]: or or. [Speaker 3 ]: But maybe not. But, you know, pay attention to their testimony because it might trigger you to go, wait a minute. I I have another question now, and that's okay. But also just just my own values, ask questions and be pointed and stuff, but make sure and I don't think anybody in this room has this problem, but it has happened in this building. Just it's not a it's not an argument. It's, you know, it's not an argument. It's it's you know, you're trying to get information, and you're you're you're working together to get the best information possible. I don't see any problem here, but it has happened and it's been a couple of times. So just keep that in mind. It's [Chair Alice Emmons ]: May not agree with the testimony that's occurring, but then another statement that comes out of the person's mouth may agree. Yeah. So and the and the key is take notes. [Speaker 7 ]: Okay. [Chair Alice Emmons ]: Take notes because you're gonna go back to those when we do, Mark. [Speaker 3 ]: And I would do the last thing I'd have to say is you might not agree. Like, we Mhmm. I might not agree with a project, but it's what they're saying factually correct. Two different things. Two different things. [Chair Alice Emmons ]: We'll be in touch. [Joe Luneau ]: I'll see [Speaker 3 ]: you guys soon. Thanks. [Chair Alice Emmons ]: Thank you. Anything else for today before we wrap it up? And then tomorrow at nine o'clock, we'll go through. And I would lean on Troy and Mary and Gina to help out too to really help the committee figure out what questions to ask, how to approach folks who are coming in. Mhmm. Because we don't just sit here and accept what they say. [Joe Luneau ]: Mhmm. [Commissioner Wanda Manoli ]: Apart from it. Awesome. Mhmm, Troy.

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