By Peter Hirschfeld, Vermont Press Bureau

MONTPELIER — Legislation being proposed by Vermont's congressional delegation could free up federal transportation funds and provide the fiscal flexibility needed to move forward with projects that might not otherwise begin this fiscal year.

The proposed law would waive the state and local matching funds that are generally a prerequisite for any federal funding. That match can amount to anywhere from 10 percent to 20 percent of a project's total cost. With state transportation revenue on the downslide, the matching money is getting harder to come by.

"It's the same amount of federal money, but we wouldn't have the state match," said David Dill, secretary of the Agency of Transportation. "Therefore it would free up state dollars to do other things."

The law, at least in theory, might help Vermont move forward this fiscal year with projects that wouldn't otherwise fit into its budget. A spate of revenue downgrades, the most recent of which saw $5.1 million shaved from this year's budget, has whittled down an already austere spending plan.

"It would give us more flexibility to manage the monies we're got," Dill said.

If the state doesn't have to come up with matching grants, it could reallocate federal money in such a way as to proceed with scheduled projects. It might also help the state avoid a poorly received plan to slash state funding to town highway aid by some $3 million. The administration had proposed the cut because the only alternative, agency officials said, would be to cut state funding for projects with a federal match. Such a decision could force Vermont to forego as much as $15 million in federal funding; the proposed legislation, however, could allow Vermont to pull state funding without sacrificing the federal money.

"State and local governments have already received significant amounts of federal funding for infrastructure improvements, but they can't access that money because they are unable to provide the matching grant they need," Sen. Bernard Sanders, I-Vt., said. "To my mind, what is a reasonable solution is for the federal government to repeal the matching grants and get to work rebuilding infrastructure and create good-paying jobs."

John Zicconi, communications director for the Agency of Transportation, said it's too early to know exactly what the proposed law would mean for Vermont. The state has 47 projects scheduled to move forward before the end of the fiscal year in July. It's unclear, he said, exactly how many of those projects will be affected by the revenue downgrades, or how the proposed law might undo any damage wrought by the difficult fiscal situation.

"Any flexibility is good, so if something were to happen with this law, it probably would make it easier on us," Zicconi said. "The question is how much easier. And only time will tell us that."

The proposed law would apply to funds already allocated by the federal government. But members of the delegation said they are also working to ensure that any federal stimulus package also waives state and local match requirements. All indications point to a stimulus bill being passed shortly after the president elect takes office. Though it's unknown yet exactly what the package will consist of, Dill said Monday that he is expecting the plan to include a substantial amount of new transportation funding.

"Obviously that would be a big shot in the arm," Dill said.

Any stimulus-related transportation funding, though, would mean little if it required matching funds, Dill said.

"That's very important. In fact, it's probably the No. 1 criteria of any economic stimulus package," Dill said. "And the reason, quite frankly, is we don't have the match to provide, to put it bluntly."

Rep. Peter Welch said other states are in the same situation, and House leaders in Washington, D.C., are seeking to eliminate matching requirements from any stimulus package.

"State budgets are in the red … and they don't have money for a match," Welch said. "If you take the logic of the stimulus plan … which is to create jobs, then if you waive the state match you're likely to be more successful more quickly."