Legislature looks to lighten up on vehicle inspections

by Matt Cota

Vermont’s demographic reality is shaping nearly every major policy debate in Montpelier. By 2030, one in three Vermonters will be over the age of 65—a shift with wide-ranging consequences, from fewer students in our schools to rising healthcare costs and growing pressure on the state’s housing supply. At the same time, Vermont has the second-oldest housing stock in the nation, the result of decades of constrained development that have left supply far behind demand.

Demographics affect State of Vermont revenue. Vermont’s latest revenue forecast avoided the downgrade many officials feared, but lawmakers and Governor Phil Scott are still preparing for the tightest budget year since the pandemic. Economists for both the Legislature and the administration reported Friday that revenues are largely unchanged from July.

Revenues may be steady, but they’re barely keeping up with inflation—while costs continue to rise much faster. Transportation revenues are expected to grow by less than 2% as construction costs have surged roughly 60% in five years. Education revenues are projected to rise by about 3%, which is far short than the anticipated increases in school spending. Adding to the problem, Vermont is losing federal funds and faces further Medicaid-related reductions that could increase state healthcare costs.

There are some opportunities to bend this curve. The Community and Housing Infrastructure Program (CHIP) allows access of up to $200 million per year in tax increment financing for ten years to support housing-related infrastructure. There is also legislation to permanently remove the sunset on the Vermont Employment Growth Incentive (VEGI). The state’s only statewide business incentive is set to expire at the end of this year, which creates uncertainty for businesses looking to expand or relocate.

Vehicle inspections: every two years? None at all?   

Lawmakers are considering letting Vermonters skip a year when it comes to getting their vehicle inspected. Proposed legislation would require that motor vehicles be inspected every two years, instead of annually. Another bill would eliminate them entirely. That’s what New Hampshire and about a dozen other states have already done. The topic was discussed in depth with the Morning Drive Team on WVMT last week, listen to the segment here.

‘Clean car’ emissions rules need clarifying

This may be the year Vermont’s complex vehicle emissions rules are finally clarified. In 2012, the state adopted Advanced Clean Cars I (ACC I), applying to model years 2015–2025 and setting standards stricter than federal rules to reduce tailpipe emissions and increase sales of electric and plug-in hybrid vehicles. Vermont later adopted Advanced Clean Cars II (ACC II), which requires rising electric vehicle sales starting in 2026 and effectively ends new internal combustion vehicle sales by 2035.

However, Governor Phil Scott paused enforcement of ACC II through 2026. And then Congress overturned the federal waivers supporting state EV mandates, prompting Vermont to join a multi-state lawsuit. Earlier this month, the Scott Administration has filed new rules with ICAR this week that keep us under ACC I and not the less stringent federal standard.

Vermonters use less total energy than the residents of any other state in the nation and their total energy consumption per capita is among the lowest five states. About 11% of Vermonters heat with wood, the highest share of any state, according to the EIA.

The combined federal and state tax on gasoline sold in Vermont is 50 cents per gallon during the the first quarter of 2026. Most of the money goes directly to maintaining and improving our roads, bridges, and transportation infrastructure  Learn more about the Vermont gas tax, diesel tax, and EV Infrastructure fee here.

Vermont speeding tickets have declined over the past ten years. Tickets for driving an unregistered vehicle are back to where there were nearly a decade ago.

Notebook

• New legislation (S.171) proposes the creation of a Clean Fuels Program aimed at reducing greenhouse gas emissions from transportation fuels. On paper, the bill sets a target of reducing emissions by at least 10% below 2018 levels by 2030. While it doesn’t directly impose a tax or fee, it would raise money indirectly through a credit and trading system—similar to cap-and-trade models in other jurisdictions.
• It’s been over a year since the Second Check Back Report on the Clean Heat Standard was released by the Vermont Public Utility Commission (PUC). After an eighteen month investigation, the PUC’s 2025 report revealed the program was too complex and too costly. No decision has been made by the legislature to go forward with the program or to repeal the law that created it.
• A Vermont municipal electric utility is in deep fiscal trouble according to the testimony before the House Energy and Digital Infrastructure Committee on Thursday. Hyde Park Electric is facing insolvency, with $3 million in annual revenue and $4.5 million in debt. Rate hikes could exceed 20% to stay afloat. 

The author is principal of Meadow Hill Media, a policy consultant group, and is former president of the Vermont Fuel Dealers Association.