State officials unleash $5M in local flood response aid

Vermont is fast-tracking $5 million in no- to low-interest loans to cash-strapped municipalities walloped by this month’s floods, a panel of high-ranking state officials unanimously decided Tuesday morning.

The state’s Emergency Board — composed of Republican Gov. Phil Scott and four legislative committee chairs in charge of writing the state’s annual budget — met Tuesday to hear an updated revenue forecast from state economists. While the state economy has proven to be “extraordinarily resilient” this year, economists reported, the state has also suffered one consecutive natural disaster after another.

As part of a mid-year budget bill in March, lawmakers allocated millions in state dollars to an Emergency Relief Assistance Fund, a pot of money designed for quick distribution in the event of a natural disaster like last summer’s historic floods. Little did lawmakers know that they would have to dip into that $18 million so soon.

“I guess we were prescient and didn’t realize exactly what we were going to be confronting this soon in the budget itself,” Senate Appropriations Chair Jane Kitchel, D-Caledonia, said Tuesday.

Less than three weeks ago, Vermont’s towns and roads were hit with yet another bout of destructive flooding, one year, to the date, after last summer’s historic floods first struck. And on Wednesday night — mere hours before the emergency board was scheduled to meet — portions of the Northeast Kingdom saw eight more inches of rain , causing flash flooding.

Seated at the head of a long table in his Statehouse ceremonial office, Scott shook his head as Kitchel mused that “it’s just a matter of luck” where a storm cell parks itself, inundating the ground below with unrelenting rain.

Leaders of many of the small municipalities slammed by numerous floods within the past year have told lawmakers that they don’t have the cash on hand to fund continued flood cleanup work on their own. That’s why legislators and Scott voted unanimously on Tuesday to open up $5 million from the Emergency Relief Assistance Fund to distribute as loans to municipalities in need.

The fund is the quickest path for the state to deliver direct aid to flooded communities, and according to Vermont’s Chief Recovery Officer Doug Farnham, the details are still being hammered out. For instance, he didn’t know what amount of interest, if any, municipalities would need to pay on the loans.

Farnham told VTDigger after Tuesday’s e-board meeting that the money will likely be available on a first-come, first-serve basis for municipalities, though the state already has a running list of “towns where the damage really exceeds their ability to cover it in the short term.” At the top of that list are Plainfield and Barnet, Farnham said.

Farnham also said that the Treasurer’s Office is in early talks with the Vermont Bond Bank to offer a loan program to flooded municipalities similar to one that the office operated last year .

Asked if the Scott administration anticipated having to dip into the Emergency Relief Assistance Fund so soon after last summer’s disaster, Farnham told VTDigger that his office was “very worried about that” — a fear that was only reinforced by a bout of flooding in December, just five months after last summer’s initial flood.

“Did I think that we would have the hyper localized, fluvial erosion event that we experienced a couple weeks ago from Beryl? No, I didn’t,” Farnham said. “I do think we’re being hit so rapidly with such a sequence of events that how we adapt to that and how we change in the long term — it’s really, I think, changing pretty rapidly at this point.”

Aside from consecutive natural disasters, Vermont’s state economy is otherwise performing on target, state economists Jeff Carr and Tom Kavet reported on Tuesday.

“We continue to live in interesting times,” Carr told lawmakers, pointing to stubborn inflation and high interest rates. But despite a rising cost of living, Vermont’s unemployment rate remains low, and Vermonters are still spending — and therefore, generating healthy state revenues.

State revenues came in largely on target at the close of fiscal year 2024 at the end of June, according to Carr and Kavet. The notable exceptions were personal income tax and interest income to the state, which exceeded predictions thanks to growing wages and high interest rates.

Looking ahead to the current fiscal year, though, revenues allocated to the state’s education fund appear slated to come in “slightly lower” than lawmakers planned when they crafted this year’s yield bill, according to Julia Richter, a senior fiscal analyst for the state’s Joint Fiscal Office. As a result, the state will likely have to draw an estimated $1.2 million from its stabilization reserve in order to avoid an education fund deficit, Richter told lawmakers.

“That being said, there will still likely be reversions to the Education Fund in Fiscal Year (2025) in the (budget adjustment act), so there are likely to be additional funds,” Richter said.

Read the story on VTDigger here: State officials unleash $5M in local flood response aid .