Senate Transportation Committee weighs mileage-based user fee pilot for electric vehicles as funding, privacy and timeline remain unsettled

The Senate Transportation Committee on April 1 heard agency testimony and member questions on a proposed mileage-based user fee (MBUF) pilot aimed at electric vehicles, the state's transportation funding outlook and the funding and timeline needed to start work.

Vermont Agency of Transportation representative Patrick Murphy told the committee the agency's 10-year unconstrained needs analysis is intended to show an order of magnitude for system needs rather than a proposed budget. He said the study's assumptions include roughly 3 percent general inflation and about 5 percent construction inflation, and that the unconstrained gap figure cited in the study—about $317,000,000 beginning in fiscal 2026—describes needs under no budget constraints rather than a dollar-for-dollar shortfall the state must immediately fill.

The funding shortfall and the state's shift toward electric vehicles were presented as the primary rationale for considering a mileage-based user fee. Agency staff told the committee that indexing the gas tax would slow decline in revenue but not stop the long-term loss of purchasing power as vehicles electrify; by contrast, an MBUF charges by miles driven and, the agency said, can be designed to spread burdens differently across income and geographic groups.

Committee members raised three recurring issues: equity, privacy and pay-frequency mechanics. Murphy and other agency staff cited a University of Vermont review and other analyses saying an MBUF can be more equitable than a flat fee or an indexed gas tax because it charges by distance rather than by fuel purchases or a uniform flat charge. The agency said the initial proposal would focus on EVs because, until recently, EV owners paid little or no gas-tax revenue and so represent a logical initial cohort for a pilot.

On privacy, agency witnesses repeatedly rejected a GPS- or telematics-based system for the pilot. Instead, they sketched a system that uses odometer readings collected during existing annual vehicle safety inspections and reconciles charges at registration renewal. "There's no requirement to have telematics or a plug-in device," Murphy said, explaining the odometer-based approach is intended to avoid collecting trip-level location data. Committee members asked how to adjust for out-of-state travel; the agency described a multistate approach and said freight apportionment methods already in use could inform how revenue is split across states.

On payment mechanics, staff said participation would allow monthly or quarterly payments with a reconciliation at registration renewal, and that the draft design would apply a default higher fee if an inspection odometer reading were not available. The agency also said it could evolve the system over time to account for factors such as vehicle weight or road impacts.

Members questioned the budget and schedule. Agency witnesses said the administration set aside $350,000 in the current fiscal year and $350,000 in the prior year (total $700,000) to serve as state match for a federal discretionary grant application. The transcript records that the agency sought federal funding—committee discussion referenced a $3,000,000 federal grant award and elsewhere a $3,750,000 federal request to Federal Highway Administration — and that the House included a $1,000,000 general fund line in its appropriations language to ensure work could proceed if the federal grant was not awarded. Agency staff said the federal discretionary grant decision is pending review and that award notification should be known within a few weeks.

Staff described the implementation target in current transportation bill language as July 1, 2026, but cautioned that date is unlikely to be met if federal funds do not arrive; committee members repeatedly urged contingency planning and expressed reluctance to appropriate general fund money to start a multi-year project without a clear, realistic timeline and commitment to finish the work. "I'm very reluctant to put a million in, and then we get in a place where we can't complete the project," a senator said.

Speakers also noted political and public-opinion risks. One senator said that during campaigning they faced visible opposition (handmade lawn signs) to a mileage-based approach and warned that the policy is more controversial than committee members may appreciate. Privacy concerns were echoed by another member: "Many Vermonters are tracked, and they're tracked more than just the amount of miles," a participant said, pointing to vehicle manufacturers and insurers as additional sources of vehicle data.

The committee did not take a formal vote during the session. Agency staff agreed to develop contingency language tied to possible federal award outcomes, clarify appropriation language and return with a plan and timetable if the federal grant is not approved. The agency said it hopes the discretionary-grant decision will come in the next few weeks and that the committee would need to finalize budget numbers for the general fund process within about three weeks.

The discussion combined technical details about system design and payment mechanics with fiscal and political constraints. No formal decision to start a pilot was recorded; staff and committee members left the meeting with directed follow-ups on contingency budgeting, clearer appropriation language and a request for a realistic implementation timetable.