VTrans outlines grant reset and targeted $1.5 million adjustments as providers prepare applications

Ross McDonald, a Vermont Agency of Transportation (VTrans) representative, told the House Transportation Committee on March 20 that the agency is conducting a “reset” of its transit granting process that asks providers to examine underperforming routes and administrative costs as part of draft awards for fiscal 2026.

"It was distressing to feel that, members of this committee had felt blindsided, by some recent announcements. And for that, I do apologize," McDonald said, addressing committee concern about recent public reporting and provider reactions. He described the granting process and how it differs from the annual budget cycle.

McDonald told lawmakers the agency has asked providers to take a closer look at underperforming services — he cited a recent list of 13 underperforming routes — and to propose combinations, schedule reductions or other changes that could reduce operating costs. He said the agency is targeting roughly $1.5 million in adjustments tied to underperforming routes, administrative cost allocations and preventive maintenance, not an immediate forced systemwide cut.

Why it matters: The guidance comes as VTrans seeks to reconcile a larger post‑COVID, post‑inflation operating baseline with one‑time funding sources that are not guaranteed. McDonald said the statewide transit budget has grown from about $36 million to about $53 million over several years, and that the agency is trying to identify sustainable levels of service and costs before requesting a larger continuing appropriation later in the budget cycle.

Details and context: McDonald described two parallel processes. The budget planning cycle begins months before the grant awards; the grant applications (due in April) will allow VTrans to allocate funds by route and negotiate adjustments. He said some services have seen substantial ridership changes since the pandemic, including lower commuter demand, and cited examples where morning and evening runs were reduced. He also said providers have been responsive in board meetings and that VTrans does not typically demand the outright removal of routes but is instead seeking service realignments where appropriate.

Funding sources and uncertainties: McDonald said VTrans has $3 million in Carbon Reduction Program funds available for operations — roughly $2 million earmarked for MTI (micro/transit initiatives) and $1 million for e‑sprinter vehicles — and has used other one‑time COVID and federal funds in prior years. "All federal dollars are in doubt, to an extent," he said, describing continued uncertainty over federal program flexibility and competitive grants. The agency is awaiting the outcome of a competitive FTA bus and bus facility grant that, if awarded, would address a backlog of vehicles in poor condition.

Microtransit pilots and local examples: McDonald said some pilots — including an evenings microtransit pilot in Brattleboro — performed below expectations and are unlikely to be sustained without additional funding. He said the Brattleboro pilot had high per‑ride costs (discussed during the meeting as about $53 per person for 16 rides) and that VTrans does not see a path to provide an extra $150,000 locally to sustain that particular pilot.

Process and next steps: VTrans will review April applications, run route‑level spreadsheets comparing prior awards to current requests, and negotiate several rounds with providers to finalize grants. McDonald said the aim is to identify efficiencies and, where possible, preserve successful services. If the applications show larger shortfalls, he said the agency could seek budget adjustments through the VTrans budget committee later in the year.

Votes at a glance: The committee also handled a procedural budget transfer. A motion to approve an Appropriations Committee amendment that removes Section 13 from the committee bill (a transfer of ACCD funds into the transportation appropriations section) was made and seconded; the committee voted in favor, moving the section to Appropriations by a committee vote of 11 in favor.

Ending: Committee members thanked McDonald for the explanation and asked for continued meetings with providers and the agency. Lawmakers said they expect additional detail when VTrans returns with application‑level recommendations in April, followed by potential budget committee discussions later in the summer if funding gaps remain.