 Good afternoon, folks. This is the afternoon meeting of the House Appropriations Committee on January 26th. We are gathered here to receive our first walkthrough of the governor's FY fiscal year 22 budget and we're delighted to welcome Commissioner Adam Greshan and Hardy Merrill. I'm forgetting your title again already, Mr. Merrill, but you will correct us when you come on. Thank you for joining us, Commissioner. We're looking forward to receiving this document and I will turn this over to you. Terrific. So Hardy is our budget director. He wears a fairly big pair of shoes and you should have, Madam Chair, for your committee, two documents that were sent. One is a PDF, I believe, of the, we call it a little budget book. And the other is a word doc of the language that is, that goes along with the budget. I would just like to confirm that you guys have both of those. Yes. And they're posted on both websites. Perfect. Okay, thank you. So what I thought we would do is begin with the, just an overview of the budget. You folks who listened to the governor's speech, heard, I think, a very broad and good overview of what's in the document. Hardy's and my job to kind of tell you how we did that. And we're certainly willing to go as deeply as you want or not. Typically, you know, historically you've dug in by calling the various departments of jurisdiction in to speak to you but we're, we're prepared to answer as many questions as we can. So, with that, I'm ready to go if you guys are. Yes, we are. Thank you. Okay, terrific. So I think the what I've done in the past few years is directed you to a an overview document that kind of shows you the construct of the fund and that I believe is on page 19 of the little budget book. The top is entitled FY 2022 general fund budget overview. And pretty much. Yeah, exactly. That's it. It pretty much gives you for those of you who have it on your screen at home you can expand to 125 or more. So you can actually read it, but I did in the budget. So, you know, I'll start by saying that, you know, a couple of unusual things about this budget. I think the governor touched on these in his speech. When we started constructing this budget back in October, a few weeks literally after signature went on the FY 21 new statement. We were constructing it with a revenue forecast from the August eboard that was quite a bit more sober than we have today. So our instructions to departments were to please try to help us out to submit level funded budgets level funded to the FY 21 restatement and keep in mind many departments well on average statewide there was about a 2 to 3% reduction in budget so funding to that was a bit of a challenge. But we thought that would be one way we could save a little bit on our current services and kind of suppress the inflationary aspect of budgeting. Well, as the year wore on as fall turned into winter, and as revenue came in month to month above target. So what we did was rather than change the construct of the budget and departmental spending. We changed our revenue construct, you know, when we started out we were thinking we would use what general fund revenue we had and make some changes or make some reductions as we could, but then you draw on reserves to fill in the gap. And, you know, that was the intention as revenue came in above target for fiscal 21, we started substituting one time revenue from fiscal 21 that we carry forward into fiscal 22. We started substituting that revenue for reserves. At one point, probably sometime around November we reached the point where we didn't need reserves anymore, but we did needed to balance using one time. And that was the case really right up until last week board met. We thought the board forecast upgraded general fund available revenue in fiscal 22 from what was 1508 1.508 billion to the number that you see at the very top of the chart here. 1663 so you know that was about 160 or part yet about 155 million or so base revenue upgrade. So with that, we were able to get rid of the use of one time in our budget and do it the old fashioned way, you know, kind of matching base revenue to base spending. So, but it was, you know, it was a long journey. I mean we honestly were prepared to sit in front of you today and say that we have reserves for a reason and here's how we intend to use them until revenues recover. Well revenues recovered more quickly than we thought. There are all kinds of reasons for that but you guys probably know as well as I am no economist but you know the economy has been chugging right along and, by the way, it's tough to spend about $7 billion of federal money in Vermont without having an impact. So that I think in a nutshell is really what happened. The top line number the official eboard forecast which kind of forms the largest single source of revenue as 1.663 now. We add to that, as we have done in past years, a diversion of property transfer tax revenue, which we achieve through notwithstanding language that you are all familiar with. But that number to with the eboard upgrade just went from about 19 million to up to 26 million. So that was quite a quite a feat. Now the direct apps that you see there are nothing really stands out. There's a little bit more from financial regulation. There's a little bit less from the Attorney General liquor control is what they gave us last year they believe they can achieve that this year. And so on so you see total direct apps of the little over 71 million. And then there are a couple of unusual entries here that I like to highlight. The first is, as this committee knows better than any other there's a reserve that was created in 2016, I believe, when we had that. The last time we had a 27 pay period and a 53rd Medicaid week, and it caused a great deal of consternation in the building because we needed to come up with that money. And we hadn't said anything aside for it. So, having done that and kind of struggled and bumped in ground and came up with the money we decided we'd never do that again we've created a reserve. Well, it turns out that FY 22 is the first year that we will use that reserve. So the general fund is receiving the assets in that reserve we're going to, you know draw it down to zero and then obviously start replenishing at the following year. So the 24 million that you see coming in. That is a wash because you'll notice below we spend the same amount of money. So the, the kind of revenue and use impact on the general fund is a wash but it is a revenue source and we do need to list it up top. The number that you see below that the $213 million number. So that number essentially was what the governor's speech was about. That is predominantly or the largest single share of that is the fiscal 21 anticipated surplus. There's roughly $160 million that the economists had told us will be on the bottom line that was unanticipated revenue when we drew up the FY 21 restate. So that money will drop to the bottom line of the general fund. And in addition to that surplus money of about 160 million is another 14 million from additional property transfer tax money. And there is a, an additional 40 some odd million from the F map enhancement. And that is something that it's a little bit. A little bit different in that, and this was really an idea I'm stealing from an analyst of ours canis elmquist who had and party and I embraced it because we think she was right, and that is that the human services is receiving an enhanced federal payment for their Medicaid spending. The federal emergency was declared CMS, which oversees the Medicaid program among other things, decided to enhance federal matching money by 6.2%. That enhancement took each quarter takes somewhere in the low 20 millions off of our state money needs. It doesn't change our Medicaid program but it does change the fund mix we're using to pay for it. So with a higher Medicaid match we've been able to claw back general fund that we can drop to the bottom line. What we're doing at the end of 21 is we are highlighting that by that I mean we're making it transparent, rather than just sitting in the AHS federal account we are clawing it back into that general fund and we're dropping it to the bottom line in FY 21, and then carrying it forward into FY 22. It makes no difference to what human services is doing nor what they're spending but what it does do is it kind of brings into the sunlight. The fact that our budget is relying upon these funds that may or may not be present, you know this enhanced match may or may not continue. I found out that I found out yesterday morning that the CMS has given guidance to states that they likely will continue this enhanced match through the calendar year 21. So we did not know that when we constructed this budget. I guess I would say that if they do continue it for the third and fourth quarters of 21. That will be in your hands to figure out what to do with that extra 40 to $45 million, because that is not included in this budget construct. I'm sorry to say we're leaving you with another $40 million to spend. But. So be it. Anyway, but that 213 million of carry forward includes the two quarters of FMAP enhancement that we are dropping to the bottom line and then carrying forward. When you add that into the eboard forecast and the direct applications and the 24 million of 2750 fee reserve the total amount of available general fund is, you know, to it looks like $2,000 shy of no $2 million shy of 2 billion. So it's it's a pretty heady amount of money. And I would again point to the fact that over 200 million of that is one time money but nonetheless that adds to what we can spend. So, in addition to that there are some governor's initiatives with revenue implications. We're anticipating two and a half million from sports betting, which is a proposal we are hoping will be taken taken up by the House and Senate this year, as well. The combination of sports betting and keynote is about five and a half million dollars sports betting, because of the way we've constructed it will go directly to the general fund it won't be handled. And actually be overseen by liquor and lottery but I think what they will do I believe is they will contract with an entity to deliver the service and I think part of that contract will be a percentage that will go to the state. May I ask you to stop I see a hand, Bob. Yeah, just a easy question. And I'm sorry for my stupidity but what, what is keynote. I'm not a big gambler. Nor am I. Is there a gambler in the house. We had this debate last year when we asked the same. We'll find out later. It's a form of gambling. Yeah. The, the one issue that I wanted to highlight with keynote is keynote will be overseen it's it's it's a component of the lottery system. So as this committee knows lottery revenue all goes to the Education Fund. So if you dig into the language, you will notice that there is a transfer from the general fund in the D section is a transfer from, pardon me from the Education Fund to the general fund. And that money is will be sent to CDD as we had done in past years that'll be sent to DCF CDD to be used for their childcare financial assistance program to expand capacity. But that is an anticipated revenue source by the Education Fund. There are a number of smaller revenue. Initiatives here that I'm sure will go over in great detail with Ways and Means Committee. You for those of you have been looking at Governor Scott's budgets over the years you'll recognize the first one on here the military pensions. And that's something that's been in I think every budget he's presented and he feels very strongly about that and I think there's really a good case to make it happen but you know we we didn't want to put a budget up there without putting that in there. There's also a small tax exemption for active guard to take care of their daily expenses while they're on duty. We're looking to expand the downtown and Village Center tax credit. There's a cap on that credit. It's I think currently I'm going to say three and a half million dollars. We're looking to expand that to, you know, just under 5 million, I believe. And that's a program continually has more demand than there is supply for those credits so we think it would be good for our downtowns to do that. I think we have another question. Yes, ma'am. Jim. Yeah, thank you, Madam Chair commissioner or just a question I know Ways and Means will delve into this but the the tax issues are, is that a full year amount on those or is that a half year but just because of the way the fiscal year. Goes I'm looking at the pensions and you know the downtown tax credit I just wondering if there's half year six month or a full year. On the pensions that's a half year amount the full year amount would be roughly double that. I can't answer you on the other ones. I don't know that. Okay, but that's fine Ways and Means will delve into it. I just yeah. Yeah, thank you. You're welcome. There's a small deduction because of the tax expenditures. It actually nets out to be a positive because of the additional revenue were anticipating from sports betting and keynote. If they pass legislation. But the net of it is just under $2 billion of revenue. So, I guess the question is how do we spend that revenue. And I think, as you see below, you'll see in broad categories, how we do that and I thought being that I, my method is generally to tag team a bit I would call on my colleague Hardy and he would take you guys through the uses. Thank you. Hardy. Thanks Adam. I'll pick it up from here. So getting on to the bottom half of the sheet, we'll start with explaining the assumptions behind the 1.692 million dollar number which is labeled FY 22 base appropriations. So where this number comes from is it's the FY 21 as past. And then we're adding to that a number of increases to the base, we're adding a number of adjustments that are based on replacing CRF funds that were incorporated into 2021 base expenditures. And in order to have apples to apples going forward in 22 we need to replace those CRF dollars back into the base. And what we do when we do that is we come up with 1.681 million as our FY 22 adjusted base. And then to get up to the 1.692 we add to that, what we've got built in for pay act in the upcoming year. And that's a number of 11.4 million for pay act. And now this number for pay act is actually lower, lower than you would expect and the reason for this is the way we are incorporating a health benefits premium holiday into this budget and and the idea there is that we've got enough in our reserves that we actually need to, to, to, to follow the guidelines we actually want to want to reduce that amount some, and we'll do that by taking the first two weeks of FY 22. There will be a premium holiday in which neither employees pay their contribution, or employers pay their contribution. And basically the premiums will allocations will be funded out of reserve. And the net effect of that on the general fund is to reduce to be clear though those reserves are not our general fund reserves those are a medical benefits fund reserve. Yeah. Exactly, which have, which have reached such a high point that that this is actually a recommended practice, you know, for, for federal compliance reasons. And that made the decision to take the premium holiday in the first two weeks of 22 and plan on it and actually build it into the budget and the net effect of that is about a $4.1 million GF impact. And the way we're handling it is basically by reducing the pay act distribution, which means we're budgeting when we budget the internal service fund charges for employee benefits. Those budgets will be budgeted for 52 weeks but for the first two weeks they simply won't be charged to departments so when departments come back to request their pay act monies. And they will have had this, this, in addition to the increases in personal services to pay act. There will also be this corresponding $4.1 million decrease in benefits costs spread among spread statewide. They'll have so they won't have to ask for as much at pay act so the way that that's how we figured out how to hand how to best handle this premium holiday in the budget so the pay act amount would have originally been about five and a half million dollars and what we've got built into the budget is 11.4 based on the premium holiday budget. I'm sorry if that was, you know, it was hard for me to get my head around initially so I wouldn't be surprised if that was confusing. I'll pause for a moment, if there are any questions on that pay act and premium holiday. Yes, thank you. So, first question is just absolutely clear. This proposed budget fully funds the pay act for FY 22 using the device that we just talked about but it fully funds the contracted amount for FY 22. It does. And so that amount would be 15.52 million dollars. And we had that built into our budget construct. And then in order to incorporate the premium holiday. What we did was reduce the pay act amount by 4.1 million dollars which is what our estimate is for the GF impact of two weeks premium holiday health and dental. Thank you. And then if we can turn for a moment to the reserve account with the health insurance. I'm sorry I'm not naming it correctly but the thing that from which we are taking a premium holiday. Give us a little spreadsheet that shows us the amount that is in it. So the total amount in that account, and the amount contributed by employees and by the employer by the state of Vermont per pay period. I would like to understand that account better and its effect on the payroll. We'll do that. Yeah, thank you. And I am surprised that we're only talking about one premium holiday and I personally have an opinion about that. I'm sorry. I may have said two weeks and I should have stated two pay periods. So that would be four weeks of premium holiday. Yes. Okay. And so you've talked about the employees can contribution side. What is the value for the employer with, and I assuming you're giving yourself a holiday from your contribution. That's right. Yeah. I talked about the employer contribution effect, which is the 4.1 million dollars that we've built in, as far as the employee contribution amount. I don't have that on the tip of my tongue. I would have to look up my paste of personal implication there. I remember when this first came up about a couple a month or so ago. I was looking forward to the holiday. We have a ways to go before you can take your holiday. So if you could provide us information about the total value of the employee side of a one pay holiday period and the employer side of one pay holiday period, I would appreciate it. I'm going to break that down for the various plan options because it varies of course, whether you're single to or family plans. So I see another hand up your hand. Yeah, sorry, and I can wait until the end if that's better but on on the pay act assumptions besides fully funding the second year of the classified contract. Assumptions made for exempt employees who were passed over last year. Do you mean exempt employees who did not receive a cola. They did not last year. Right. We did not make assumptions that they would be made whole. It's just the contract that you saw on paper. Okay, so any, if, if go Bob says, for example, they want to apply the cola for the coming year to exempt employees or constitutional officers, then that would be in addition to the budget that you have here. That is correct. Okay, thank you. You're welcome. Good question. Thank you, Jim. Back to you, Hardy. Okay, so we'll start down to the next line and talk about the changes to the current services portion of the budget. So starting from that, that adjusted base number. We've got the, the ups and downs. We've got the increase in employer contribution for state employee pension open OPEB and system admin as the first line at $14.4 million and this number. And I would also like to clarify is not only broken out every year in these GF overviews. I think this number is broken out so that it can be seen uniquely as what's the effect of retirement increase. We're actually breaking this out, not just for informational purposes on the GF overview on this report. This is also broken out as a one time appropriation in our budget construct, which is I believe a departure from how it's been handled in the past and there are a couple reasons for that. The primary one being that we expect that this, that this number may change. As you know, the treasurer is involved in negotiations and efforts around around the pension system. And, and so this number, this number may be subject to change and trying to with the indefinite nature of of the magnitude of the increase in employer contribution and the fact that it's usually built into apartment based budgets as part of internal services funds, and due to the fact that we really went out to when we started the budget process we went out to all the statewide departments with laying down a pretty tough challenge of maintaining level funding which means absorbing salary and benefit cost increases by making other cuts. So this number being so big and also being somewhat indefinite depending on the outcome of potential changes to the program. We really wanted to break it out separately as an appropriation. And then the way this is working that 14.4 million is going to be a one time appropriation to AOA, who will then basically reimburse the departments for their actual excesses and retirement spending since we budgeted them just flat with FY 21. That's how we built the ISFs for the departments. So, so presumably they'll end up spending more, and then we'll have this pool of money that will allocate back out to the departments to make them whole. And so if that number changes to be a larger amount or a smaller amount, we're not affecting all the department budget statewide and more importantly we weren't forcing them to but level fund with this artificial target and for instance be cutting, you know, be cutting operating supplies to pay for more retirement expenses that may not have been achieved to that magnitude. So this was another one that takes a little bit of attention to get one's head around so I'll pause here for a moment if there are any questions. I'm not saying any. Okay, great. In fact, we may have some later, except Dave does have a question. Yeah, I'm, what's the risk here. Help me understand this. If we don't make any changes, the cost to us is estimated to be 14 million. The net higher. So, I mean the cost is probably more than that but the net high, it would be 14 million. Yes. And that would create upward pressures and Fi 23 or is it just, it's ongoing base. You kept saying one time. At least I thought you did. It's correct or we're handling this 14.4. This is not a one time expenditure correct. That is correct. What we're handling it what we did, Dave is normally with the state employees pension, you don't see any line item in the budget. It's kind of invisible in the sense that we bake it into the internal service fund charges for each department. This year, really, with two thoughts in mind, we did it differently. The first thought was, it's a pain in the neck to bake it into department charges and then at the end of the session, take them out again or reduce them by half. Now that's not your problem and ours or ours, you know, we're here to serve, but we thought that would be a bit troubling but the bigger issue was we just wanted to put a spotlight on it and tell you this is at stake, the increase this year is this amount. If it turns out that the treasurer or the governor whoever its proposal is successful at reducing the amount of contribution to retirement that then that's the amount that is in play. So if we reduce it by half will have $7 million in play. If we reduce it by three quarters will have, you know, 10 or $11 million. And our intention is whatever the ADEC turns out to be at the end of this session, we will provide that to the departments to put into their budgets, so they can meet their additional ADEC requirements. Thank you. You're welcome. And I'll just add about that some more as we do that budget. I don't think that's going to be a problem. Hardy, were you just making a point with regard to this? I would. I was just going to make a point because I think I, I. You said everybody off. This is the time my daughter comes home from school. So I think she's walking up the driveway right now. And the point I did want to make is that, well, I probably caused some confusion by use of the term one time. So I was describing really the accounting mechanism by which we're building it into the budget construct. However, I'm not implying that we consider this to be a one-time expense in nature. And so that's why it does appear here in the section of the GF overview that's labeled current services changes to the base. And we're considering this part of the base construct in our presentation here and in the budget. So I just wanted to clarify that and I see there's another hand up as well. Thank you, Robin. Thank you. So if I'm understanding this correctly, this line item is just about the increase for this year and all that we spend on these items that have been there in the past are still embedded in the different department and agency budgets. This is just the increase, is that right? You're exactly right, yes. We're budgeting the same amount as FY21 as being budgeted, embedded in every department. And then this is the increase that we're showing as one line, yes. So if you like how this works, this would happen again in future years. Not necessarily. Not necessarily, but I think that's a good question to ask because I think we may find that it's a useful mechanism for dealing with the challenging ups and downs in the budgeting process. Right, okay, thank you. So I'll move to the next line. This is the increase in teacher pension and Artham OPEB appropriations. So the teacher's retirement system costs. This is broken out as a single line of $36 million just like the $14.4 million line above. However, the difference is this is built in, embedded into all the departments, or I'm sorry, not into all the departments, but this is built into the base budget construct. So there's the B section, B dot, I forget the number, but this is in the base. It's not being handled as a one time outside of the base budget construct. And the number of the increase is $36 million. It's in the B 500 section. The next line is the unusual, although it will become normal, although every four years, like a leap year construct, which is the expense for the 27th pay period and 53rd week of Medicaid, which is broken out as a unique line that ties to the funds being unreserved from the 2753 reserve that Adam noted on the sources section of the overview above. So now the remaining four lines, if we look at those, we've got annualization of pay act and employee reclassifications, which is the $7.8 million number. Did the screen share go away for anyone else? Yeah, so I froze and got kicked out, so hang on and I'll put it back in. I've got a sheet up for myself, so I can keep reading to that while we try to get it back up. So the line I'm on, there we go. Okay, the line I'm on in the current services changes section is the FY22 annualization of 21 pay act and employee reclassifications. So this is really the upward salary pressure of 5.8 million and another 2 million of employee reclassifications based on estimates from DHR for 7.8 million. The next line down is what's unusual is that it's coming into this equation as a credit because AHS is typically showing upward pressures and increases over the base. And this year due to a variety of factors, pandemic related, we've got some additional, besides the enhanced FMAP that Adam spoke to, there are some other FMAP increases that are a factor in increased revenue. And then there are also, I was somewhat surprised to find the amount of caseload and utilization decreases within AHS, which are notable. And I won't try to speak to those with much specificity and AHS can provide more detail behind this 5.1 down number, which I know ties to their numbers as well. So they can explain more what's going on behind this, but it is, I point out that it is somewhat unusual just from my looking at past budget years. The next line. What I will say though, sorry. No, please go ahead, Adam. What I was going to say is that, as Hardy mentioned earlier, there's some FMAP movement in here and a good share of that number that you see has to do not with the federal emergency enhancement to the FMAP, the 6.2% bum. But recall that every year, they readjust the normal base federal matching percentage for each state based on a variety of factors, but supposed to account for the relative economic growth or strength of each state. And to the extent that a state is weaker relative to other states, it gets a higher FMAP amount. To the extent that it's powering ahead in one of the faster growing states, it gets a lower amount. So Vermont's percentage went up 1.9%. That is not due to the federal emergency, that's due to the standard FMAP calculation, but that resulted in something in the order of $20 million to Vermont, additional federal money. So that reduced our general fund requirement to maintain our Medicaid program. So that's kind of a good news, bad news. The bad news is that we're viewed as among the weaker states, but the good news is it results in more federal money. But that had nothing to do with the federal emergency. That was strictly their annual F-time calculation. Thanks for the clarification, Adam. The next line is really the $2.8 million figure is really the net of all the other ups and downs combined within the current services budget, netting out to 2.8 million up. There are a lot of individual departmental ups and downs within that to arrive at that final number. The last number, the total statewide allocations associated with internal service charges is really a remarkably low number this year. I just looked back at the report, the same report from last year, we had something like a $4.8 million number there. I think there are a couple of factors behind this. For one thing, we've had some good luck on the insurance side of the ISF calculations. Absolutely minuscule increase in workers comp and really savings in the other lines of insurance that are spread across all the departments. We are showing no increases to health benefits in this line. We're also not showing any increase to retirements. Of course, that's in part because the 14.4 number up at the top that we started with will eventually be distributed down to this line across the departments. However, I'll note that when I point out that $4.8 million number in this slot on last year's report, that report was also breaking out that pension increase as a separate item at the top line as well. So we really are showing an effort to really hold the line on ISFs this year, which was certainly helpful in assisting the statewide departments in meeting the challenge of level funding their budgets, which was our mandate in the face of what we thought was a much different revenue picture when we began the revenue exercise. Thank you, Dr. Hardy. I would be interested in understanding this a little more deeply, not now, but seeing the breakdown and perhaps a comparison year over year of the individual charges. I know that my, I don't know. My recollection is that last year, we were trying to hold down some of those IFS charges and I think it may have been a wee bit artificial in our trying to control those. I think we were trying to come into a budget number. So that's a concern that I have. I may be remembering that incorrectly. I also know that in past years in looking both at I think the liability insurance as well as the workers comp, that there was, they were bouncing around a little bit and I think we were concerned about just making sure that we were properly funding those. So I just generally like to understand how that works so that we're not shorting any of those unintentionally. So thank you. Understood. We'll be happy to follow up with the detail on that. I think I'd like to take a pause here for just a moment and describe when we look at the current services changes here in this section, if we take out the increases to, so we've got that $80 million total there for all those lines, but if we don't count the retirement increases and the cost of the 27th pay period, and if we remove pay act, the $11.4 million that's included in the 1.692 base. So if we're really going for an apples to apples, you know, what's the cost, not including really not including the retirement increases year over year of providing the same level of service, we're only up 1%. So pretty flat. I mean, that kind of really, that number really jumped out at me when I performed that calculation. And if we do bake in the retirement increases, but still exclude the 27th pay period, so we're apples to apples, even with the retirement increases were up 3.4%, is what I'm seeing just based on looking at these numbers year and comparing to the base. So I think it's important to relate that, back to what I had said earlier, that when we started this budget process, we were under a very different revenue construct and we were very worried that we were going to be able to balance. As revenue came in, we viewed it as one time revenue and so it really didn't inspire us to make any changes. And we don't really know where we're going from a standpoint of revenue. So we've tried as best we can to suppress the inflation in our base and kind of prepare for the rainy day to the extent that it comes. And I think what you see here is a reflection of that. We've been pretty sober with our spending department to department. Yes, thank you for that. You're welcome. I would follow up on Adam's comments by saying, it was a challenge working through the budget process with the statewide departments and really trying to hold that tough line to maintain the level funding challenge. I ultimately think it was still the right thing to do because if you look at where we did turn out, we're still just barely covering our base expenses with base revenue. And I think that's the right place to be from a standpoint of fiscal responsibility. But obviously when we look at that 1% up number year over year trying to do an apples to apples current services comparison, it was tough. So we'll move on now to the, I'm sorry, Adam, do you have another comment? No, no, I was just going to in fact, just move on to the base uses. I want to jump in now. Pick it up again. I think probably for the sake of the expediency, we ought to pick and choose here. We're certainly happy to go into every one of these, but I know that you'll have committees of jurisdiction that will want to do that. Couple of highlights at the top of the list, you see the agency of public service, Riorg, actually, gosh, that's a tie. We should say agency of public safety. We will make sure we correct that. Lest anyone start to- Don't worry, Commissioner Tierney. Right, I hope she didn't see this, so if you had seen the governor's executive order, he is calling for a agency of public safety, Riorg, which will include a number of different things, but they're looking for a couple more staff members that will oversee some of the departments within the new agency. So that's what you see on that line, and I'm sure they'll be very happy to talk to you about their initiative. A little further down, I did want to note to you that it would just not be a good year if we didn't go through the discussion with the Community High School of Vermont and the Education Fund. So moving the Community High School of Vermont out of the corrections department and into the Education Fund in terms of funding, it would result in a savings of $3.3 million, which you see. And we are continuing the new work or grant program, which may be familiar to some of you. And there were also a couple of kind of what we call justice reinvestment initiatives on there, including transitional housing for corrections, offenders who are released, trying to smooth their way back into the mainstream, as well as some AHS initiatives in the Department of Health and Behavioral Health Services. So again, that was kind of a quick run through, but there are any, these are importantly, I guess I should emphasize, these are initiatives that are in the base. There will be quite a few more initiatives that are one time, but these are initiatives that are in the base funding that we're providing to you. So we've called them out separately. Thank you. We have a question, Jim. Yeah, thank you. Commissioner, the move of the, what the right word is from Department of Children's and Families to the Ed Fund. Does that therefore increase the Ed Fund or is just net saving, so 3.3 million overall? So this will be at 3.3 up in the education fund. Okay. It's not a change in the amount we spend on the community high school, it's simply a change of payment. Yeah. Got it. I just didn't know if there were some efficiencies there that I was missing that. No. Okay. Just a transfer. Thank you. You're welcome. So, if you move further down, the one time initiatives in this budget, many of which are just terrific. I mean, I think the governor did a great job in explaining and, but many of the initiatives you'll see if you thumb through or electronically page through the little budget book, but the way we represented them in the budget are either one time debt IDs, one time initiatives or transfers. Some of them are transfers to funds that are already existent. Like there's a transfer to the Environmental Contingency Fund. There's a transfer to a Brownfields Remediation Fund, the transfer to the Clean Energy Development Fund. So those will show up as transfers. There are also about $125 million of appropriation, most of which, not all of which, but most of which are new initiatives. And the new initiatives in the budget, I don't wanna spend too much time on it because you'll have a lot of time to dig in with the department's jurisdiction. But they really, they follow along a number of, call it broad themes that I think are, that you see in the pages before you get to the general fund overview. But one of them is the economic development and recovery. There's initiatives with the working lands, enterprise. There's a total of $10 million initiative building our outdoor recreational assets, half of which will go to VOREC, which is the Vermont Outdoor Recreation Economic Collaborative, which I think many of you are familiar with. And the other half will go into rebuilding our trail network and ensuring accessibility to our state parks and recreational assets to those with less mobility. Either people who have a physical challenge or people who are aged or the like. So to try to make sure that all our assets are accessible to everyone. There's also some seed funding for a couple of agency of commerce community development initiatives, including tourism and marketing. As we mentioned earlier, we're looking for a higher cap on the downtown village tax center credits. So there's a number of really exciting programs there that I would encourage you to look at, at your leisure. Housing is another major category that the governor is very interested in building on. Importantly, I think for this committee, we have discussions, and I've already actually been called in by your House General Committee to talk about the Vermont Housing and Conservation Board and their funding mechanism. You'll recall, typically, there's statutory language about how VHCB will be funded. They get slightly less than half of the property transfer tax. Most years, we not withstand that language and we give them a straight appropriation. As the property transfer tax has grown, has been a larger and larger appropriation directed to the general fund. This year, we have fully funded the VHCB. In fact, we've overfunded them by approximately a million and a half dollars of general fund. So, but instead of changing the funding mechanism, we've put aside $20 million of long-time funding, which we hope they will use for developing permanently affordable housing across the state. I mean, I don't think there's any question that they know how to do that. We relied very heavily on them during the, we're CRF money, they put up the numbers, they know what they're doing. So, our hope is that we can work with them to further develop the housing lots around the state. There's also in housing and investment in very successful VHIP Vermont homeowner investment. Program that deals with predominantly rehabilitating old rental stock. This works with the landlord to encourage him or her to invest in their buildings and make them available for low and moderate income people to rent. There's a large initiative on broadband. I don't think there's any question that, well, it just seems like that's one area where you can never put enough money, ever. So, we're acknowledging that we're putting just under $20 million into broadband. We fully anticipate the federal government will double or triple us up. We certainly hope that you never know, but broadband again is the kind of investment that pays huge returns going forward. And there are many areas of the country, of the state, many of the counties that could really use some help on that. So, there's three different programs that's overseen by the Department of Public Service. Two of which are ongoing, or pardon me, one of which is ongoing the line extension consumer assistance program, which I think we're familiar with, that was funded with coronavirus relief fund money. It's also a poll data harvest study and almost $16 million into a broadband facilities deployment program, which basically is making and administering grants and revolving loan funds, two cuts to try to help them in their rollout of broadband accessibility. There's a lot of money directed towards environmental stewardship. Adam, could we pause? We have a hand. Dave? I apologize. I didn't mean to break Adam and make the stream. I've been scanning through the 40-page document. It may exist here, but would it be reasonable to ask for one sheet listing of all the one-time investments the governor's recommending? It sure would be reasonable. We can do that. That would be helpful to me. And then if I may, this is unrelated, Madam Chair, to the one-time, I think, but it's regarding the pensions. My notes when the governor was speaking, I think he said that we'll be spending, I think it was 381 million on pensions this year, of which 103 million is additional. And those have got to be gross dollars, not just GF. That's correct. Did I get it right? That's correct. We're gonna, okay. So I'm seeing in the budget, I think 14 million for the pensions that you mentioned, there it is up there. That can't possibly leverage 103 million. Am I missing something? So I am missing. The 14.4 that you see up there is the general fund delta for state employees. Okay. And the 36 million that you see up there is the general fund delta for teachers pension as well as their health benefit. So those are that 103 number is the all funds increase from last year of which a hair under 50 million is general fund increase. So the general fund increases roughly half of the 103 million increase, the 381 million number is all funds. That includes general fund, transportation fund, special funds, everything. Thank you. You know, that's just frankly a scary number. Yes. Thank you. You're welcome. So just to quickly finish out there, I mean, there's a large investment in Brownfield remediation in two components. $14 million is going to go to ACCD for a program that they have going already and 11 million is going to the department of environmental conservation. They have a Brownfield remediation fund. So in addition, even to that, there's another $10 million that we're putting into the environmental contingency fund. And that is a fund that, you know, as a name implies is used in case of emergencies if we have major cleanups and the like. And that fund has a number of calls on it. That was one of the funds that was brought into service during the whole Bennington issue several years ago. But it's running low on assets. We wanna just build up assets in that fund as a reserve so they can use it when they need it. There's also about a $25 million investment in weatherization. It will be split up in three different ways. One, I think this committee is familiar with the DCF weatherization program. They will get $4 million. And the Vermont Housing Finance Agency will get $16 million to help develop programs for low and moderate income weatherization efforts. And that's predominantly leveraging private capital, excuse me, to help us do that. And then there's another $5 million for the ongoing state energy management program, SEMP, which BGS operates and just does a terrific job there. And finally, in the more environmental sphere, the governor is calling for $10 million to provide affordable community solar energy. These would be community energy projects that for example, my town has one where they build solar arrays that you rent a panel or actually I think you buy a panel or two or three depending on how much you wanna spend. This community solar has been very successful across the state. However, typically it's not available or not reasonable for people of lower or moderate income households to participate. So the kind of the initiative here would be to allow participation by people of lower or moderate means by subsidizing their purchase or rental of these panels within a solar array. I think the governor mentioned in his speech, but there's $20 million for the Mont State Colleges. We are aware as I know this committee is aware of the need at Mont State Colleges. We were before you a week or two ago talking to you about directing additional coronavirus relief fund money for them. This would be directing 20 million of additional general fund money. The committee will recall last year we gave them $10 million in general fund bridge funding. They, their normal appropriation is approximately $30 million. This would be on top of that. So we're doing what we can to keep them thriving and essentially to provide them some breathing room as they go through their structural reorganization. Commissioner, am I correct? Maybe you don't know this, but Peter may in my recollection that the select committee on state colleges was recommending what 42.5 million or is it 47 million? 42.5 in is 7.5 in capital, 30 million in general and 30 million or 5 million in general going to VSAC for scholarships for kids that were going to the colleges. So it's 35 million in general. In general, yeah. So yes, this is a substantial amount but at least according to one group not sufficient to meet the need there. Understood. And we look, I think we as this committee are very committed to the success of that institution and we're happy to have a dialogue with you on that. We appreciate that. Thank you. And Bob, you have a question? Yeah. And I think what you just said, Adam is probably the best you can tell me. But so this is a, I'm going to pass it by you and have you tell me that you can't tell me but this is a long-term situation. It's not a one year, two year, anything like that. So was there any discussion maybe on what the governor might be interested in doing for them next year? I mean, do you think that this is something that will trail for some time or we're just going to look at it year to year? And I know we have to look at it year to year but you get what I mean, I think. I do, yeah? I will say Bob, and I think actually we do say in this book that this is unsustainable. We just are unlikely to have the financial horsepower to do what we're doing again. And yeah, I do recognize that they've had other funding sources. As you know, they probably, when you add in their appropriations, their coronavirus relief fund, their direct federal funding, I mean, they've received almost $90 million over the past year, either from state or federal sources. And that type of funding is simply not sustainable. Certainly not at the state level. I won't speak for the federal government but at the state level, it's not sustainable. I think most of it was corona but nonetheless, then I guess if the point is probably 20 million won't happen next year, then in the next year, somebody's going to have to restructure the colleges into the dollars in which we have or structure the dollars in which we have into the college is one or the other. I mean, there's only two ways to do it. And there's a third way and that's to do nothing at all and let it all go down the tube. But there goes 4,000 jobs on a statewide basis too. You know, so I don't know, it's just a tough one. I know, but we're into it and we've got to deal with it. But so thank you. You're welcome. The one final initiative that I would be remiss if I didn't mention was roughly a quarter of the available money that we have were proposing to invest in technology. You'll notice in the language, there was a section that establishes a technology modernization special fund that we proposed to put just $53 million or just shy of $53 million. We have a number of projects that probably are better going over at another time. Maybe another person. But there's a number of projects that have been on the back burner for financial reasons that really should be done. You know, in many of our agencies, we're operating on 20th century technology. One of which I just can't help but point out our THR system is run with Cobalt. And you know, when I was in college, in my last year of college and I think 1982, I took a computer programming course where they offered either Cobalt or Fortran 4. So I ain't no young chicken. So, you know, some of this stuff just needs to be released. It's not just a question of clunkiness. It's also a question of security as we saw with UVM. So anyway, as I think many people know, the agency of human services has a very large integrated eligibility project that has been receiving funding through the capital bill over the years. And, you know, the governor who sat on Senate institutions for years has never liked the idea that we're funding technology projects with capital funds. So this we're proposing to beam them out of the capital bill and, you know, make room for other initiatives and fund it with general fund and, you know, trying to get the head start on two years of additional funding. So, you know, there's a number of projects in there that actually are quite exciting. But anyway, what we thought we would do and frankly, knowing that you folks would wanna dig in very deeply, we thought we would create a fund and provide suggestions on how we'd like to allocate that fund, but we'd like to start a dialogue with the committees of jurisdiction in the building and get it going. So. Thank you. Marty has a question. She's starting the dialogue. Right. My question is, where is this fund? Is it part of the governor's $210 million or is it something different? It would be funded with part of the governor's $210 million. So, it's roughly 25% of that total. We didn't do that purposefully and say 25% to technology, but it did work out that way. And it's a fund that- Is this fund described in it? I'm sorry? Is the fund described in the language? Yes, if you go to, this would be in the E105 section, I believe. Okay. It's under the ADS section because it would be overseen by the secretary of digital services. Okay. I think with that, as much as I hate to say it, I think we've gotten to the end. There's, I don't know if I, oh, I guess I'd make one other note, Adam, under transfers to cover deficit. Yes, please do that. Yes. So in addition to all the one-time uses for kind of new programs and services initiatives, under one-time uses other, there's a line that says transfer to cover fund deficits, NRB forest parts revolving fund and victims compensation fund. And I just thought it was worth calling out because it is somewhat unusual to have large general fund transfers into special funds, which are for functions typically funded by fees or other revenue sources specific to those funds. And what we've got are a few problems that you're probably aware of from other proceedings. There's an Act 250 permit fee fund, which has been having funding problems and running into deficit. So there is a million dollars going from GF to that fund in order to support those functions. The forest parks revolving fund, there's about a $2 million transfer in here. They're really having trouble based on a double whammy of some, there's some upward budget pressures, but then there's also an expectation for a substantial decrease in ski lease related revenue next year, which will be the payments of revenue will be based on the actual results of the ski season this year, which are certainly expected to be down. There's also just under a million dollars going to the Victims Compensation Fund, which will support the work of the victim's advocates positions that are paid out of that fund. They work out of the state's attorney's office, but they're funded by this fund, which is typically supported by fees having to do with convictions and citations. And there's just been so much less of that activity during the pandemic. However, the crimes have still been occurring and there are still victims that are needing services and needing compensation. So we're supporting that activity as well. That has up to $4 million in just supporting essentially current services activities, but doing it because of special fund shortages that are being replaced by general fund. I see a hand up. Yeah, Marty. Yes, I'm wondering if in that group of special funds you are considering some support for the Universal Service Fund, which covers the E-911 Board as well as other things that have been suffering declining revenues for three or four years now. That's a great question, Marty. And we did, as we were looking at special fund needs, that did come up as a question. Because we've got some substantial investment taking place with the agency of public safety reorganization. And because the E-911 program is going to be combined into that greater agency as part of that effort, since there were so many other things going on in terms of restructuring, we thought E-911 would be best be considered by that agency in the context of its new structuring. For instance, I can't speak with too much precision, but perhaps there might be some decreases in the cost of that program if it's now working in another location and sharing resources with other functions. So aware of that issue, but that's why it's not addressed with a transfer right here right now. Okay, they have just informed me that they expect to perhaps finish this year, 21, being half a million dollars in the hole. And that needs to be addressed somehow. So I just wondered if it was in this line. It's not in this line, excellent question. Thank you. Thank you, Marty. Along these lines, did you speak with the other branch, the judiciary about any special funds or holes in some of their funds and their needs to have some resources? We did not, we did not. Okay, so I suspect that there is also a need over there that should be considered in terms of some shortfall in terms of fees and how do we fill deficits that may be there. Thank you. Do we have any other questions for our guests? I'm not seeing any hands. I'm reluctant to say to the committee, oh, let's pick up the language at this point, which I think it's more than a couple of days but well, it's two dozen pages long. I'm sure we're happy to come back and review the language anytime you want. Yeah, so let's do that, give us a chance to read it and we can ask some questions, but we've been sitting here for about an hour and a half and that begins to get to our capacity levels. Everybody's capacity level, yeah. Any final questions for the commissioner or for Hardy Merrill? Okay, thank you, commissioner. We look forward to beginning this journey with you. It's going to be an interesting and different one and pulling together, we will do our best for Vermonters. So thank you for that. Committee. Thank you Madam Chair. Yeah, thank you. So we are, the way this is scheduled is that we have time for committee discussion right now. I do not have anything to discuss with you. Do you have, well, let's do a debrief on any kind of response that we're having or concerns that have been raised about the budget adjustment in preparation for Thursday? Any feedback that we're getting? Strategy is to be quiet so we can get done, right? Yeah, Mary, I haven't heard anything. A little bit of pushback was in the economic support, $10 million, that was the little bit of pushback and I explained that the commerce committee had voted unanimously to continue to evolve that request to make it more functional and so that question went away. But I've heard nothing else, so. Okay. Teresa, is there anything that we should be attending to in preparation for just getting rolling here? I just need to find out, I probably don't need to do this online. I just need to find out who wants paper before you all sign off. I have a list here that I need to figure out and everybody's got the public hearings listed on their calendars. The dates for the public hearings. I sent you a sheet with all those important dates and there's. Would you mind resending it? I will. Thank you. Bob, then I think Robin. Bob. I gotta have two things, but I get so much stuff on this. I can't manage, you know, I can't even find the Zoom sometimes that I need to get into my own committee meetings. So anything that you can send me in the mail would be much better than I have it here in front of me and it won't get lost. But now what I really wanted to say though is on a nice note that it appears to me just from a small conversation I had with one member, the people, the representatives from up in Highgate area, whatever district that is, they're getting a big airport project done and the governor mentioned it today. That's all I know about it. And I know one is just tickled to death. So my point is if you've got one that's really happy with what's going on, you might have more than one, which is a good thing for us. Well, only if we agree with the governor, if we don't agree with the governor, then it's a bad thing for us. Well, that's a good point. You can turn a good thing into a bad thing, I guess. Yeah. You don't want to do that. We want to be very judicious in how we use our constituents' money. Right. Yeah, we're teasing each other. Marty, did you, Robin, did you have a... I think I'm okay on the budget hearings if they're all on February 8th, I have this in my calendar. If there's other ones, I don't have them. And Teresa, do you want me to just email you with what I'd like to have printed and sent to me? Is that the easiest way to do that? Well, when we go offline, let's talk about it. Okay. Okay, thank you. We'll have to handle it. Oh, boy, another day of slacking. So... So we are scheduled to be in tomorrow at 8.30. I'm not sure what we have scheduled, but hopefully we... Have you managed to fill that in, Teresa? No, and we lost our central office, they moved to the afternoon. Yeah. So I don't know if there's any updates you need in the morning, or if you... Just everybody wants to scramble and get caught up now that they have the budget. The problem is we won't remember that we had these nice luxurious chunks of time in a month when there is no time at all. But I guess that I don't want to waste people's time. So if we have nothing to meet about, we should not meet before we let everybody go. Meada and then Jim. Yeah, if I can arrange it, I'm hoping to catch up with finance and management and agency of administration ahead of tomorrow afternoon's budget presentation. Yeah. So if we don't start at 8.30, I could use that time. Thank you. Yeah. This is a good opportunity. You've some insight into what the budgets are going to be. So being in touch about those, now is the time to take the deep dives. BGS, Jim, you have BGS. So we were talking about the state energy management program. It's a fascinating program worth really spending some time with the manager of it and understanding. So here we go. And that's true of a bunch of these. Meada, you're muted. Meada, you're muted. Thank you. Thank you. I was just thinking that commissioner Gresham said that he could come back and talk with us at whatever time. I was wondering, you know, we might all cast an eye over the language tonight, familiarize ourselves. And I don't know if anyone else thought it might be useful to have him talk us through that. And that's another thing that might be scheduled tomorrow, but I now have heard that Jim has suggested we could be using this time otherwise. So whatever, I'm just putting it out there. Teresa, why don't you, so we're just looking, are we getting AHS in the afternoon? Yes, I can check with him. I don't know if he realized that the press conference got moved to tomorrow morning and that was the problem with AHS. But I will certainly check. And if he can come in the morning, I'll get him right in at 8.30. Okay. So pay attention to your emails because you're right, Maita, that would be, that is another thing to knock off. Particularly as we're taking testimony from the agencies, we need to remember to look at the language. We always forget to do that and then do a head slap. So just being familiar with the language. And I think it's, we need to have the administration tell us their intentions, not us interpret. Okay, though. So with that, watch your emails, make your appointments tomorrow, you'll figure out how to juggle that. And depending on what Teresa tells us, we will see you at 10 o'clock or possibly sooner, but we'll learn if that's possible. Okay, thank you guys very much.