SmartTranscript of Senate Institutions 2025-01-15 1:30 PM

[Chair ]: Good afternoon. We are in senate institutions on Wednesday, January fifteenth two thousand twenty five. Thank you for being here. Today, we have, first, the staff from department of finance and management to talk about the capital bill, which is one of the major responsibilities of this committee. Let's introduce ourselves as a committee before we go further. Senator Senator [Rob Singles ]: Rob Singles, Justice Director. [Senator Rob Plunkett ]: Senator Joe Major, Windsor District. Senator Rob Plunkett, bad acting district and vice chair. [Chair ]: And we have committee assistant, Linda Linda Leighton and Wendy Harrison, chair. [Senator Rob Plunkett ]: Senator Sam Bowes from Orleans District and clerk. [Chair ]: And clerk. Yes. Congratulations. Yourself. [Rob Singles ]: Oh, it's a hard thought about it. I mean, always. And [Senator Rob Plunkett ]: we always persevering most. I had faith in you. Yeah. From the beginning. [Chair ]: And there is training available if you need it, but I don't think you're gonna need it. Okay. So let us get started. So Nick Kramer should hear it first. [Senator Rob Plunkett ]: Okay. Thank you, madam chair. If it works for the committee, I'd like to bring Will up in here. We can just [Chair ]: Sounds good. [Rob Singles ]: Up a [Senator Rob Plunkett ]: lot here. So for the record, Nick Kramer, chief operating officer of the agency administration, I'm here with my colleague. Hello. I'm Will Anderson. I'm an associate analyst with [Will Anderson ]: the Department of Finance and Management, also part [Chair ]: of the administration agency. Great. Thank you. And congratulations on your promotion. [Senator Rob Plunkett ]: Thank you, Patrick. Thanks. Well, I so, yeah, chair Harrison and senator Ingalls will recall my face from last last year. I was in this committee a lot serving in Will's role. So we've had some some staffing transitions and leads to administration, excited to be here as sort of as point person on the capital bill. Appreciate the time to to speak with you all. I don't wanna cover anything that is repeat information at this point. So I guess I would defer to you, madam chair, in terms of what you all have had in terms of capital. But if you're thinking one on one, I'd be prepared to talk pretty broadly to any number of topics. And talking points are loosely around the CDAC process and general obligation, borrowing, writ large, the process where the administration comes in, where the legislature has come in, and then got some some points to touch on the cash fund budget. [Chair ]: Perfect. Oh. [Senator Rob Plunkett ]: Does that sound [Chair ]: That sounds great. And we have just had a brief walk through of the bill as a spreadsheet and the the tech of the bill. We haven't really talked about the CDAP, so that would be very helpful. The treasurer's gonna be here next week. [Rob Singles ]: Great. [Chair ]: Discuss that. [Rob Singles ]: So I'll [Senator Rob Plunkett ]: I'll try to tee things up. So as this committee's probably, at this point, knows, our capital budget historically has been funded through the issuance of general obligation debt, for borrowing on on the state side. We issued GO bonds largely to fund our capital projects. The rationale historically for doing that, there's a multigenerational equity argument that if you're building a capital asset, which is defined per accounting standards as anything that has a usable life of twenty years or more. That's an enduring asset that future generations will be enjoying, and so it's an appropriate time to bond to issue debt that will then be paid off by those future generations who are enjoying the capital asset. I always put in a personal plug as a sort of younger member of the of the world that I think there's plenty of bills to pay down the road, for our younger generations, and I think that multigenerational argument is important and is best situated in a more complex framework. I think there there are lots of good reasons to borrow, and there are also lots of good reasons to think about alternatives to borrowing, which is something we'll be touching on here. But, historically, for the last thirty years or so, the capital budget, which is the the jurisdiction of this committee and the house corrections and institutions committee has been entirely funded through bonding. So the totality of projects are approved, authorized in this committee, and then as departments go out and actually spend on those projects, the state goes out and bonds to reimburse those expenditures we pay in the [Rob Singles ]: short term out of [Senator Rob Plunkett ]: our cash balances, and then we raise money through the issuance of bonds. The amount of bonding that we issue is has historically been based on the recommendations of this third party technical advisory group called the Capital Debt Affordability Advisory Committee or CDAC, which I'm sure this committee's heard of before. They were stood up, I think, about twenty years ago as kind of a best practice, and they are cited by National Credit rating agencies as a best practice type of entity so that how much borrowing we issue as a state is not a political decision. It's not the governor saying, oh, I think we should borrow this. It's not the legislature thinking we should borrow this. It's a neutral technical body. It's made up of representatives. It's got, the treasurer's office takes a leading role in organizing that. Representatives from the administration are part of that committee. A A legislative economist, the administration's economist is a nonvoting member or a a I shouldn't not is not a member but participates. I think the state auditor has been involved as a nonvoting voting member in recent years. So it's a a pretty diverse group of financial experts who get together annually, look at a variety of of metrics through which the rating agencies determine our credit rating, and then and a host of other considerations. There's a whole statute on CDAC that I'd be happy to follow-up if anybody is interested in more detail, spelling out a number of different items that they look at to determine basically how much debt can the state take on prudently, how much can we afford. And if we issue this much versus this much, what might the impacts be on our credit rating, on our affordability, or the debt service, technical debt service ramifications of those decisions look like. And so they issue a recommendation. They meet annually, but they issue biannual recommendations in line with the biannual capital bill. So they will come out and recommend, for instance, this year, one hundred million dollars as their sort of prudent cap. That largely will dictate the size and historically has completely dictated the size of the capital bill. So if they say, we think we can prudently issue a hundred and twenty million dollars, that's typically the size of the capital bill with some small exceptions I can discuss. And the the top line story with CDAC in recent years, so the states their recommendation peaked at I think it was f y fourteen, f y fifteen at just under a hundred and sixty million dollars. It's my fourth bullet on the phone talking points. Borrowing has there's there have been ups. There's downs. That will that sort of represents the high watermark of when the state was in its the zenith of its zeal for borrowing. For many, many years, Vermont had a triple a rating from all three great or I think from at least two credit rating agencies, and then the the second highest possible rating from the third. In the late two thousand teens, we were downgraded by those two credit rating agencies down from kind of an a plus to an a or an a minus, the second highest, rating you could get. But the credit rating agencies cited a number of kind of concerning macroeconomic factors driving that. One is no stranger to anybody in this committee who wants demographic challenges and our kind of stagnant economic outlook compared to other states and pure states in the region. Another major contributing factor to our credit rating, they look generally at our debt portfolio across all kinds of different categories. Our general obligation borrowing is one piece of that. Our unfunded pension liabilities are another really big piece of that. Those, in fact, eclipse our outstanding debt by quite quite a bit. Roughly speaking, and folks from the treasurer's office can correct me to the decimal point here, but our pension liabilities are in the order of five billion dollars at this point. So this is a big nut that Vermont has been making steady progress to address. They're we contribute lots and lots of money annually in the operating budget towards those liabilities, but that's a big it's a it's a debt out there. And so saying that and the demographic challenges, the credit rating agencies downgraded us from AAA to AA plus, and in some cases, had some negative outlooks. All of that is cause for concern because our credit rating determines the price of borrowing. You know, I'm just like your with your mortgage. And there there are a number of of really important reasons for Vermont to maintain a strong credit rating as it can. So with that in mind and some other considerations, CDAC has been on a declining authorization of or declining, I should say, recommendation trajectory since that high watermark in, f y fourteen, f y fifteen. Every year, their recommendations have either been lowered or leveled with the year before down to the current recommendation of a hundred million dollars. And so if you do I won't get into the weeds, but inflation, like, this but the CBI, has risen about thirty five percent in those ten years. So if you do the inflation adjusted math of what a hundred and sixty million dollars was back then to now, it is it's more than an order of magnitude decrease that we've been on. And this, of course, coincides with skyrocketing capital costs and everything else. So our costs are going way up. Our CDAC recommendation has been going down for very valid reasons, and we probably need to continue on that trajectory. But all that being said, I mean, it doesn't take an economics list to figure out. There's sort of an issue here with the capital l. So I'll pause there just for a second. There's a lot of words, and I'm happy to take any questions. And I'll tee it up for next talk with my but [Rob Singles ]: k. Other questions? Overlong. Not yet. Okay. [Chair ]: I I I have just a question on the the in the first bullet, you say the annual debt service payments, seventy to eighty million in recent years. Is that for all of the outstanding GEO debt? [Senator Rob Plunkett ]: That's our aggregate debt service payment. Correct, ma'am. Okay. So and that appears in the b one well, traditionally, the b one thousand section more recently as a transfer, but that's that's in the operating budget every year. Okay. [Chair ]: And so the pension liabilities, when I saw this at first, I was hoping that that was an old statement. But because we've got I know four years ago or so, there was a a major pension financing overhaul. [Senator Rob Plunkett ]: There have been several attempts over the last twenty years to kinda reign in our our pension liabilities. A whole another topic of conversation. But, yes, in two thousand twenty two, there was a act one fourteen, I think, that was the latest effort at bringing in some of our costs. We probably changed some of the employer the the structure of some of the pension reimbursements and and whatnot. And it it made a huge difference in terms of we we did a couple things. We we also started prefunding our medical benefits, which was a big piece. It increases in a very real way the amount of money you have to put into the system each year, which those payments are also made in the operating budget. But it reduces our long term liability significantly because, essentially, you're you're capitalizing on potential gains in the market rather than paying all of your obligations as they come due in a pay up system. So, yes, we've made a lot of progress. There's still pretty significant liabilities. It's It's going to cost the state a lot of money, and we're on a trajectory to do that. But there's an amortization period of our unfunded liabilities, one for the pension systems, one for the retired teacher retired health care benefits for OPEB, other post employment benefits. And the plan is to have those fully paid out by two thousand thirty eight and two thousand forty eight, respectively, but in that interim space. [Chair ]: Thank you. That's very helpful. I agree. You're right. Right. But we're going the right direction in that case, in that situation. Bear on track. [Senator Rob Plunkett ]: Yes. Track. And so those those that debt service piece, I think, is that's an important figure to highlight. So about seventy to eighty million dollars. Historically, in recent years, what that works out to be is a a little bit over four percent of the overall general fund budget goes to paying debt service. [Chair ]: Yeah. [Senator Rob Plunkett ]: I should have started with my favorite back in twenty, which is that at current rates, every dollar we go out to borrow costs tax payers ultimately a dollar fifty over the life of a twenty year bond. So it's an expensive proposition [Chair ]: five o? Five one five One five o. Okay. [Senator Rob Plunkett ]: Taking the current inside of current current interest rates. Of course, who knows what's gonna happen with the feds. These are all in calculations. But it's it's an expensive proposition bonding Mhmm. And both in terms of annual cost with the seventy to eighty million dollars and then that sort of return on investment piece. So and just like you wouldn't I think most of us in our personal finances would rush out to put stuff on our credit card if we have money in our savings bank, savings account. For a while, given the declining CDAC, authorizations, the increase in capital cost, and just this large looming question about bonding, We've been working on an alternative funding proposal for capital projects, which I think is sorely needed. And reading the writing on the wall in terms of the long term future of this bill, it's it's clear that we're not going to be able to continue solely borrowing to meet our capital needs. So a couple years ago, jointly, treasurer Beth Pierce at the time and the administration proposed a mechanism to do that, the creation of what they called the a cash fund. There have been a couple different titles. It's currently called the cash fund for capital projects and it's essential investments, I think, something like that. But it's essentially kind of like a sinking fund, kind of like a pay go model. It's basically, we've got cash in the bank instead of borrowing for capital projects. Let's just pay pay with money we have and avoid these interest costs and those large, long term costs. And the idea, the sort of core of the concept was looking alright. Historically, we're spending about four percent, a little bit more of the general fund budget on our debt service costs. So we're spending about four percent of the general fund budget supporting our capital bill. And the idea behind the cap fund was to try to create this virtuous cycle whereby if we commit to a path or are led down a path following the CDAC recommendations of less and less borrowing over time, and presumably those debt service costs will be pulled lower over time, those aggregate debt service costs, how do we lock ourselves into a stable and sustainable portion of the general fund budget to support capital funding, but kind of recapture those savings? Right? And that's what the cash fund does. So it takes and it's offset towards the bottom of this talking point. The there's an annual transfer mechanism that's codified in statute equal to four percent. There's that four percent of the total general fund appropriations in the last completed fiscal year minus our current debt service obligations. So that's kind of what I described. You look at, [Chair ]: alright, what [Senator Rob Plunkett ]: was the sort of four percent benchmark last year? What are we anticipating we owe in debt service this year? Whatever that balance is gets transferred out to the cash. And that, if we can stay the course with declining authorizations or stable and sort of appropriate given all of the the context that I spoke about with regards to our credit ratings and stuff, our debt service amounts will continue to drop, and that transfer to the cash fund will continue to grow. The less you borrow and the more you cash fund, then, of course, the less you borrow. And it's this snowball, right, that we're really hoping to commit to. And in in, well, no time at all in in the next couple years of the cash fund transfers under current models is projected to grow pretty significantly and and could potentially eclipse capital, general obligation borrowing as a major fund source for the capital bullet. So it's something the administration feels really strongly about. The treasurer's office has also stood behind as a concept. This is certainly, if you're the state's banker, something good for books. I I'd also mentioned this is a mechanism. It's not as much as we'd love to take credit here in Vermont. We're not the only state doing this. There are lots of other states that are moving towards a pre funding model or a PEGO model for capital projects. We are compared against them, like, in the credit rating worlds. Right? That's our universe of peers. So not only is it a good idea, but it's it's also a good idea just to just kinda keep up with the times. Right? And I would like the treasurer and his staff, I'm sure, would be happy to testify to that and speak more in-depth. But this is something it's a very high priority, administration. I can't, of course, get into any detail of the capital budget that we'll be delivering in a couple of weeks, but I think it's fair to say you can expect cash fund transfer to be fully funded as a separate amount. I mean, factor significantly in our overall funding costs. [Rob Singles ]: Senator Amos? So the problem has been and I helped, senator Joe Benning, who was the chair at that time, and myself actually went and set up the first cash fund with senator Kitchell. And we funded it with ten million dollars at the first time, and it's seed money to start that. And it's a great concept, and I'm gonna call it a concept because it's better than a concept. It's great. But bringing cash into this building is like dropping a goldfish into a piranha pen. And and it's been raided continually, and it's been used everywhere else. I'm glad that hear that the treasurer is on board with that because it should bring some more protections maybe because if he's for that, if that office is for that, it's great. I would I don't know how we're gonna keep that fund from getting raided. It's very discouraging. It's gonna be very discouraging to this committee because as you correctly said, our borrowing has gone down and gone down. Our obligations keep on going up. And so without the full support of all the fundamental mechanisms we can have in this committee, it's it makes we're gonna have to make a lot of decisions, and there's gonna be a lot of general maintenance and a lot of other project. We're just gonna be a general maintenance committee. That's all we're gonna be. We're not going to be able to fund all the things that make this committee great because we just won't have it. So I hope that we find a way to keep it from being rated. The high risk bond management? [Chair ]: Yes, please. And then I have a similar question, but [Senator Rob Plunkett ]: Perfect. Yeah. So I'm really glad you brought it up, senator Engle. I mean, I think that's obviously, we've sat through this process. Many of us in this room, for for several years. The the issue of the cash fund has been a topic of conversation. The issue of its jurisdiction is another, right, between whether these appropriations should be the jurisdiction of this committee or your colleagues across the hall given the origin of the general fund, transfer. I think I I with full deference to the the validity of everything you raised, Senator Ingalls, I think from our perspective, you know, this can this concept, which I would also point out, yes, there have been some adjustments made in prior years to the transfer amount. And I think largely, and this is credit to this body in general, the cash fund overall has been, I think, a success even so far in its in its three years of I mean, we I could go back and pull the total number of projects, but it's in the tens of millions of dollars if you count cash from b appropriations, maybe even hundreds of millions of dollars for that one time slug. So there have been adjustments. There have been slight disagreements around the edges about the amount. We'll certainly be putting forward a proposal that we think kind of secures and bolsters the the commitment to the cash fund this year. But I think it's something that, as a body, you all have been able to embrace. Certainly, this body was the one that codify the cash fund. Notwithstanding some of those some of those disagreements, there's been a lot of progress, and I think there's a lot of progress continued to be made, which is great because I think the issues that I just spent, you know, twenty minutes describing are not going away, right, which is why we're back here again beating this drum, talking about the cash funds because, yes, there can be there can be adjustments. There can be disagreements about purview. But as long as the state has buildings, to your point, senator Ingalls, if we're gonna need to maintain them, as long as we have policy priorities that require facilities, we're going to have to make investments in new facilities. And barring some other miraculous funding first falling from the sky, if any of you all encounter that, please let us know. The Department of Finance and Management, we will be glad money increase. We haven't found any in real life. Some things gotta get right, and we're gonna have to figure out a way to fund this. And we really see this as our best bet to doing that. So I think my hope is and and we're, of course, committed to working with this committee and your colleagues across the hall to figure out, okay, you know, in in an ongoing way, what makes sense in terms of jurisdiction and oversight and and how do we use this to the best effect for the state? [Rob Singles ]: One first follow-up. I thought Sure. [Chair ]: Let's go ahead. [Rob Singles ]: Yes. Because I think we were lacking about ten million dollars out of that fund last year after it got done being rated. I might maybe just a little shy about that. And I and I and I do agree with him as far as the the success of it. You can see the success of it. I just can't I'm just I am hoping that everybody can see the success of it and that it is instrumental because we don't go around taking anybody else's money as this committee. I'm hoping that everybody can have enough respect for the process of what's going on in this chair's leadership that that maybe there's a new way in in this building, and I can only help. Thank you. [Chair ]: Okay. You're welcome. So, I guess, I'm I'm looking at finding a more understandable way to frame the the cash fund and the funding money because the the way that I look on this is last year's finished bill. It's the last page. And the cash fund is shown as funding in addition to the to the bond funding. So I would have thought that the goal of the cash fund is to not just supplement, but to replace some of the bond funding. Right? Because we want the bond funding to go down. Or, you know, what is the overall goal? I I I think it would be helpful to to have dollar amounts before we have projects. Because at at the end of last year, it didn't seem to matter that much which like like, which projects are in which categories because they're getting funded. You know, the project itself doesn't care whether it's Right. It's it's not impacted by by whether it's bonded dollars or cash dollars. And a lot of the cash I mean, most of the cash are capital projects. I mean, I wanna say they all are, but [Senator Rob Plunkett ]: I I think those are all accurate statements. Yeah. Your concern is having sort of clearly articulated what the long term objective is with respect [Chair ]: to that sort of That and also just bringing the long term into our work because decisions on which projects go in which categories of funding don't seem that relevant to me. [Senator Rob Plunkett ]: Right. So that that's helpful. [Chair ]: Or or meaningful, I guess. [Senator Rob Plunkett ]: And I think that's intentional. I mean, when the cash fund was set up, it there were conversations about, well, what kind of projects should this fund? And there was there had initially been some debate. Well, maybe it should just be for sort of shorter term things and the capital dollars, the bonded dollars with a twenty year payoff should be longer term. Eventually, those conversations kind of fizzled out, and it was determined to your point, but I'm sure that, no. This this is really meant to be an alternative funding source for capital projects. So there should be parity between what can be funded with bonded dollars and what can be funded with cash fund. There's some minor, minor differences on the back end technical side in terms of how we roll out the appropriations. But to your point, there really is very little difference from a programmatic perspective whether they get cash fund appropriation or not. So in terms of the long term policy objective, at least from the administration, I mean, I think our hope is that us, Will and I sitting in here today and the time we spent in this committee last year describing our goal and our intention sort of helps frame that conversation. I think it's fair to say in in very simple terms, we will continue to present capital bills that are a mix of cash fund and a mix of borrowing. As to whether the cat fund will fully supplant borrowing, I mean, I think that intergenerational equity argument will continue to be in play. There's a diversity of opinions even among CDAC on kind of philosophically what whether borrowing makes sense or not or in what degree. So I think and I don't have a crystal ball any more than anybody at this table, but I think it's probably unlikely we'll get to a point where the capital bill has no borrowing so that there's this kind of nuanced interplay between cash funds and borrowing. But I think our hope is that that ratio, whatever size of the bill looks like over time, that that will continue to shift against the cap fund itself. [Chair ]: And I completely agree with you that bonding makes sense in the in the long term. Because a lot of times people will say, well, in my family, you know, we wouldn't borrow if we had cash. But in public in the public sphere, we're not all related. You know? We're and and there are different people using the asset at different times, and so it's it's more fair to to have that. Have you ever looked at, like, fifty year bonding? Or because some many projects last longer than twenty years. Has that ever been considered to reduce the payments? [Senator Rob Plunkett ]: Yeah. I wouldn't wanna speak authoritatively, madam chair, just because I haven't been here for fifteen years or [Chair ]: Or or thirty years, forty years, but just a longer [Senator Rob Plunkett ]: I believe that the twenty the current twenty year practice was set years ago that that's been our historical practice for a variety of of reasons. I mean, similar to your mortgage payment, better trade offs based on your term. Certainly, it lowers your debt service obligations in the short term. You wind up paying more in interest the longer the term is. I think, given your point that there's a mix of capital assets that the state maintains and they frankly mature at different rates and and sort of depreciate at different rates. Twenty years has been kind of the sweet spot in terms of and since we we generally don't pick out and say, okay. We're gonna bond to to, reimburse ourselves for project x. For project y, that'll be a different bond. Right? They're all sort of aggregated. But, actually, the treasurer's office might be a good entity to ask for Yes. [Chair ]: Consideration. Okay. Good question. Good. Thank you. So I think we weren't you paused for questions, which was perfect. Thank you. Great. Any other questions? It keeps going. Okay. [Senator Rob Plunkett ]: I don't have much more on my formal, talking points here other than, I guess, sort of building off senator Ingalls' comments. And I don't I don't wanna get too much into the weeds of the history of what's happened over recent years, but it is fair to say that there's been some discussion about the cash fund. Again, we will be presenting a detailed capital bill with with policy recommendations in a few short weeks here, so I don't wanna jump ahead in that process. But I would just speak on behalf of the administration. I think we feel pretty strongly that the cash fund exists to fund capital projects and that since its inception has been with its purpose. Maybe I'll I'll sort of parenthetically insert here. So the cash fund as proposed as I've been describing, that's the there's two subaccounts in the cash fund currently. So a couple years ago in sort of a late stage in the legislative process, there was this second subaccount added, which into which some one time money that's not part of this transfer formula was added. And that was to help leverage primarily to to draw down federal match that we knew we were gonna get as IIJA money in both, a, the Agency of Transportation and the Agency of Natural Resources that we knew we were gonna get. We had a large general fund surplus in that year. So we stuck some money aside, you know, good Yankee financial sense there to kind of set that money to so that we could draw down, in some cases, like, twelve to one type of amount. [Chair ]: Senator Ingalls mentioned that. [Rob Singles ]: Yeah. I think that we had at one time, we've had seventeen million dollars. I thought and I think tonight, I apologize for the numbers. But I think we had had seventeen million dollars that we had had in here, and it got two got us two hundred and sixty million dollars, something like that. And then there was another one. Yeah. So and then we did the same thing in transportation as well. I can't remember that number. [Senator Rob Plunkett ]: It does sound like the right orders of magnitude. So yeah. I so so that and that was a great investment, certainly, and use of the fund. That second subaccount, I think, moving forward, those are sort of extraordinary circumstances in the pandemic. That so that second subaccount is probably unlikely to be a continued focus of the administration, so it's great that it exists. It's its mechanism. We're really dialed in and focused on what we call cash fund a, but it's the first subaccount, which is really this capital funding. And what I was so that's my parenthetical insertion. What I was on the way to say is that we, you know, we as the administration feel really strongly that this belongs in the capital committees of jurisdiction with representative Emmons and her, committee and with, this committee as well, that you all are the ones that are really plugged into the granular details of capital projects and looking to senator to chair Harrison's point at the whole list of projects and balancing, you know, what do we do, what do we cut. And so that it makes sense for given that there's this parity between the cash fund and bonding for you all to be the ones kind of weighing everything in a cohesive, comprehensive manner and not, as has been the practice in a couple of recent legislative sessions, that the cash fund appropriations are made separately in the operating budget. Some of the concerns there as members of this committee will, of course, know, is that there are very different time frames for the operating budget development. The committee of conference process over there proceed very quickly. There's a lot of last minute changes. If this committee is having to wait on decisions being made over there that might impact the cap funds, it really complicates the words of this committee. And there's also some logistical pieces about the timing of the of the bills. I mean, typically, the capital bill is effective upon passage and passes sometime in, you know, late April or early May. If cap on appropriations are made in Capriville, those departments can turn around and start doing those projects late April, early May for anybody that lives in Vermont knows that's that's prime construction season. That's something that's really important to get after. If we are having to wait for passage of the big bill, which sometimes your conference committee is the very last bill out of the building, it's not effective until July first, typically. And even the uncertainty, if there's a veto session and it's not until June that it's finalized, It just it kind of wastes half of that construction season and introduces an element of uncertainty into the program planning that's pretty difficult for state entities. So we continue to think it's really important that it lives here. We are fully committed to working with the people, committees of jurisdiction on the capital side and appropriations committees to kind of make that pitch and describe. I will say, since this has come up in years past, the appropriations committees will always retain control of the cap fund transfer amount. That four percent minus debt service that I was talking about, that will always happen in the d section of the big bill where fund transfers happen. So it's not like they're ceding any authority in terms of controlling the faucet of the general fund. What we are proposing is that that faucet, once turned on, that bucket should go to this committee to decide how it's spent and not have projects sort of part of the larger appropriations mix with everything else, right, which is this huge list. And it certainly gosh knows. That committee gets a lot of input from a lot of different stakeholders. And so we just feel like there's this real value to having those processes be separate. And just to [Will Anderson ]: your point, Nick, with the boss on that board, we also wanna ensure that that boss stays fixed on and not turned the hard way, you know, in changing this four percent number of work, permitting this four percent number to be mitigated. We see [Senator Rob Plunkett ]: it as important to maintain [Will Anderson ]: a constant stream to the cash funds because we want to continue to grow and believe that as we decrease volume, it would [Chair ]: The con constant from year to year. Is that what you're saying? [Senator Rob Plunkett ]: Right. Permitted to the statutory Right. Formula that's described. Yeah. It will change. [Chair ]: So then one kinda in the weeds question, but so you said section d, whatever. So if their bill isn't effective until July, how can their section d be effective [Senator Rob Plunkett ]: earlier? So it's a good question and a good catch, madam chair. There's a a distinction here, I think, that's important sort of in in the weeds answer about spending authority versus fund balances. So if if the appropriations were to be authorized in the capital bill prior to the passage of the big bill, that spending authority exists and departments can go out and fund those those projects. Special funds in in our accounting system are allowed to spend into deficit. So there there's we, of course, maintain financial controls. But because of cash flow issues, it's not uncommon sometimes for a fund to spend into. I would say I mean, obviously, there there will always continue to need to be close communication between the chairs of these committees and the proprietors. And if there was an understanding that at the last minute, their cash fund transfer was going to be reduced, then I I think that would be a certainly a talking point that you all would want want to be in close communication about. But I think and you'll see this as part of our ongoing recommendations. I think part of what we've been advocating for in our construct is actually statutorily committing to that NASHCON transverse of evidence of law that's that's codified. I mean, this is the committee. This is the body that writes laws. Right? So there's always not withstanding language. Chair Evans loves to remind me of that every time I bring this up. But if we sort of as a state and as a body and an administration and a treasurer's office and all kinda get marching to be the same drum on this and commit to this concept, I think a lot of those concerns and some of those some of the back and forth that we've seen in recent years can really be mitigated through that. [Chair ]: Right. It's very helpful. Save us some time too. That's the whole point. Mispressions. So this is a lot. [Rob Singles ]: I would also That was a wonderful presentation. I would also add that, Jared, this is probably the best duo right here to ask about the construct or the you know, if you're at all having any questions about the capital build ish because, you know, we're all learning it again. I mean, it takes a long time to learn it and but these guys are the ones to say, hey. You know? And this is what's this? What's that? How does it work? Because we're learning every bit more and more every day about how this thing lays out. [Senator Rob Plunkett ]: We're certainly around and available. Very appreciative of the committee's time today. You will all likely see Will's face a little bit more often than mine, especially as the capital bill comes over. Will will be in committee. Will is our BGS analyst or has a lot of background in their operations. And [Will Anderson ]: Yeah. I'll I'll just briefly say, like, I've been to BGS portfolio holder since I came on to the state a few years ago. And the reason I'm here now is because I've taken over the treasury portfolio from Nick. So both of those departments are in my purview, and Nick is getting me up to speed on all this so much as he's presented to you. And I'll try to make my presence here as much as possible for your information and to represent the administration's interest as well. [Senator Rob Plunkett ]: We're certainly always available and glad of any contact. I'll leave probably my I think, chair Harrison has my phone number and contact information. Linda's got my email. Please, don't hesitate to reach out at any point. You know, we'll be seeing more of us as Definitely. I'll be back in here with brand new. We're really reaching out to speak to you all today. [Chair ]: Thank you. And you know when to find us. Yeah. So so now too, you know, before we see [Senator Rob Plunkett ]: you guys are here. [Chair ]: Yeah. So any questions or comments? Okay. No. Alright. Well, thank you very much. You're very welcome. [Rob Singles ]: Yeah. Thank you. My pleasure to meet you, Will. [Senator Rob Plunkett ]: Likewise. I know. [Chair ]: You too. Yep. Great. Thanks. Bye.

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