Comparable to gas tax, $$ will fund highway repair and maintenance

By Guy Page

H.488, the 2025-26 fiscal year transportation spending bill signed June 2 by Gov. Phil Scott, allocates $52 million for public transportation and sets January 1, 2027 as the start date for a highway use tax for electric vehicles.

The mileage based user fee for EVs resolves the ‘drive for free’ bone of contention between drivers of fossil-fuel powered cars, which are taxed at the pump for the construction and maintenance of Vermont highways and bridges, and drivers of EVs, which aren’t. Climate change hawks have resisted road tax efforts for years in the interests of promoting EV affordability. However, even the members of the House Transportation Committee who drive EVs say they’re happy to pay the fee – in part because they’re tired of being accused of not paying their share, House Transportation Committee Chair Matt Walker told VDC last month.

The newly-minted law adopts an amended version of the Agency of Transportation’s Proposed Fiscal Year 2026 Transportation Program, pending the availability of federal, state, and local funds. It outlines the State’s transportation investments for the upcoming fiscal year, with stated goals including reducing transportation-related greenhouse gas emissions, decreasing fossil fuel use, and saving Vermont households money. These efforts align with the goals of the Comprehensive Energy Plan and the Vermont Climate Action Plan, in furtherance of commitments to the Paris Agreement climate goals, the law says. 

Key programs receiving significant fiscal year 2026 expenditures, including local and federal funds where noted, are:

Public Transit Program, $52,695,234. This includes $380,000 for Go! Vermont to support transportation demand management strategies like the State’s Trip Planner and commuter services promoting carpools and vanpools. The Mobility and Transportation Innovations (MTI) Grant Program is authorized for $340,000, including $315,000 in federal funds, supporting projects to improve mobility and access for transit-dependent Vermonters, reduce single-occupancy vehicle use, and lower greenhouse gas emissions.

Rail Program: $61,887,348, including local funds and $31,894,436 in federal funds. These funds support intercity passenger rail services, including the Ethan Allen Express and Vermonter Amtrak services, as well as rail infrastructure for freight. Moving freight by rail can lower greenhouse gas emissions significantly compared to trucks. It deletes a Barre–Berlin–Montpelier project and adds the Hartford–White River Junction Depot Repairs project, authorized with $260,000 in State funds.

Bike and Pedestrian Facilities Program: $21,879,965 includes a local match. This funding supports 33 construction projects and 17 design or right-of-way projects for future construction, plus 10 scoping studies across numerous Vermont towns. The projects aim to create, improve, or rehabilitate walkways, sidewalks, shared-use paths, bike paths, and cycling lanes. Funding also supports Local Motion’s bike ferry on the Colchester Causeway, a small-scale municipal grant program, Safe Routes to School projects, and community grants along the Lamoille Valley Rail Trail.

Transportation Alternatives Program: $6,471,054, including local funds. This will fund 17 construction projects, 26 design or right-of-way projects, and eight scoping studies. Among these 51 projects, 20 address environmental mitigation related to clean water or stormwater, and 32 involve bicycle and pedestrian facilities.

Park and Ride Program: $2,435,740. This funding supports two construction projects for new park-and-ride facilities, improvements to two existing facilities, a municipal grant program, and paving projects. Specific projects include construction of 50 new spaces in Manchester and design and construction of 10 new spaces in Sharon, adding a total of 60 new state-owned spaces.

Town Highways. The program for Town Highway Non-Federal Disasters maintains $1,150,000 for grants in FY26. However, the source of funds shifts from state monies to amounts appropriated from the PILOT Special Fund.

For State Aid for Town Highway Structures and the Class 2 Town Highway Roadway Program, annual appropriations are set to increase based on a formula linked to changes in Transportation Fund revenues or the Consumer Price Index, whichever is less. Each fiscal year, the Agency is directed to approve new grants with a minimum total estimated State share cost of $7,200,000 for Structures and $8,600,000 for the Class 2 Program. Beginning in State fiscal year 2027, these minimum State share costs will increase by the same percentage as their respective program appropriations. Supplemental appropriations may be requested if expenditures exceed the appropriated amounts.

In line with efforts to reduce vehicle miles traveled (VMT) and greenhouse gas emissions, the act authorizes the Secretary of Transportation to spend up to $325,000.00 in remaining State Fiscal Year 2024 funds from the Electrify Your Fleet Program in FY26. These funds will continue the Agency’s partnership with Drive Electric Vermont, supporting stakeholder coordination, consumer education, infrastructure development, and technical assistance for municipal and business fleet electrification.

The Agency is also directed to make progress in designing a mileage-based user fee (MBUF). The General Assembly intends for the State to examine collecting a fee on electricity dispensed through certain public electric vehicle supply equipment. The Agency was authorized to apply for and accept a federal grant for designing the MBUF, with up to $350,000 in Transportation Fund monies authorized for the nonfederal match in FY24 and up to $350,000 in FY25. The design process will utilize State or federal funding authorized for this purpose. 

The intended start date for collecting a mileage-based user fee from battery-electric vehicles (BEVs) registered in Vermont is now January 1, 2027, subject to sufficient funding and legislative action establishing the fee amount and authorizing language. Plug-in hybrid electric vehicles (PHEVs) that are pleasure cars will be subject to an increased annual or biennial registration electric vehicle infrastructure fee starting January 1, 2025, and will not be subject to a mileage-based user fee. The MBUF for BEV pleasure cars is intended to be approximately equivalent to the average fuel tax revenue collected from non-PEV and PHEV pleasure cars.

For medical transports, the act authorizes the Agency of Transportation to utilize up to $600,000 in one-time Transportation Fund monies for providing grants to public transit agencies to hire volunteer coordinators responsible for identifying, recruiting, and retaining volunteers for demand response transportation programs, including the Medicaid Non-Emergency Transportation program. The Department of Vermont Health Access is consulting with the Agency and other stakeholders on expanding the pool of volunteer drivers for the Medicaid program, examining how background checks currently impact potential volunteers.

Other provisions in the act include authorizing the relinquishment of a segment of Vermont Route 36 in St. Albans to the town, amending laws related to State-owned railroads and rail trails including establishing rules for interim trail use and prohibiting certain acts, requiring reports on lease revenues from communications infrastructure on railroad rights-of-way, updating the composition of the Transportation Board, and modifying the area of operation for the Green Mountain Transit Authority. The time frame for marking underground utility facilities after a Dig Safe notice has been extended from 48 to 72 hours.

Several reports are also mandated related to the administration of transportation programs, including a consultant study on the cancellation of locally managed projects, an assessment of municipal transportation assets and funding needs, and an evaluation of Town Highway Aid and municipal grant program efficiencies. The Department of Motor Vehicles will report on processes for issuing vehicle identification numbers to ultra-low volume motor vehicles, kit-cars, and homebuilt motor vehicles. A working group is also established to improve coordination between health care and transportation services.

The sections relating to Dig Safe took effect upon passage, while the remaining sections of the act are set to take effect on July 1, 2025.

This story was written with the assistance of Notebook LM.