Ways & Means committee finds H.488 favorable; bill delays mileage-based user fee pending federal funding

The Ways & Means Committee found H.488 favorable in a 10-0-1 vote after hearing staff and agency presentations on a package of transportation changes that includes rules for rail trails, local aid adjustments and a delayed, funding-dependent mileage-based user fee for electric vehicles.

The bill makes technical corrections to the state transportation program, authorizes the secretary of transportation to relinquish a short segment of Vermont Route 35 in Saint Albans to the town, sets uniform rules for state-owned rail trails and adds language on transit authority charters and town-highway aid inflation. The committee heard that development of a mileage-based user fee is tied to a federal grant currently in a 90-day review.

H.488 matters because it would change how the state manages several transportation programs and how Vermont will recoup road-use revenue as vehicle electrification reduces gas-tax receipts. Committee members and agency staff described potential multi-million-dollar revenue effects and flagged federal funding and administrative design as decisive to timing and final rates.

Damien, a staff presenter to the committee, summarized the bills structure and key changes, saying the measure is primarily technical in the first sections and then addresses a set of discrete policy areas. On rail trails, he said the bill redesignates certain state-owned former railroad corridors as rail trails, adds cross-references, and lists prohibited activities in the rights-of-way including starting unauthorized fires and placing signs without permission.

Patrick Murphy, Agency of Transportation, told the committee the agency has been working on a revenue replacement strategy to address losses tied to increased electric-vehicle use. "We're probably losing over $2,000,000 in revenue, this year alone," Murphy said, and estimated that by the time a mileage-based fee could be implemented the lost revenue could grow to a range the agency estimated at roughly $4 million to $7.5 million depending on whether the fee is set to replace state tax only or both state and federal gas taxes.

Logan Louberry of the Joint Fiscal Office reviewed the fiscal note and told members that, aside from a possible civil penalty tied to rail-trail violations (not more than $300), the bill as drafted is estimated to have a de minimis fiscal impact. "This bill is estimated to have a de minimis impact," Louberry said.

On the mileage-based user fee, the bill updates prior 2023 intent language. The committee heard that the statute now contemplates beginning implementation on July 1, 2026, but only "subject to sufficient funding." The state previously appropriated two $350,000 amounts (FY24 and FY25) for development work; the agency was awarded a $3,750,000 Federal Highway Administration grant for further development, of which $700,000 served as the state cash match and roughly $3,000,000 is federal funds. Committee witnesses said the federal award is under a 90-day administrative review and that access to those federal dollars will affect the timeline.

The bill clarifies design choices discussed in 2023: inspection mechanics will record odometer readings used to verify mileage, but those readings will be reported to the agency rather than used as the point-of-collection by mechanics. The draft also specifies a default: if a recorded odometer reading is not available, the assessed mileage would use a high-percentile assumed mileage (the transcript references the 90th percentile) rather than an average. The proposal permits various payment schedules (annual, quarterly, monthly) and allows a 60-day period after terminating events (sale or move out of state) for final settlement.

Current interim policy remains in effect: an EV infrastructure fee that took effect Jan. 1 and is collected now (described in committee as an $89 fee) will be repealed when the mileage-based user fee goes into effect; plug-in hybrid vehicles were described as continuing to pay half the interim infrastructure fee and any gas tax for fuel they consume until a mileage fee schedule is implemented.

Committee discussion touched on how a mileage fee would attempt to set an "approximately equivalent" per-mile charge to what drivers of internal-combustion vehicles pay in state and (in the bill as amended) federal gas taxes combined. Staff and agency witnesses cautioned that the phrase "approximately equivalent" reflects variability in vehicle fuel economy, differing driving patterns and the administrative costs of a mileage system (the committee heard an estimate of 3'5 percent administrative overhead compared with a lower cost on fuel collection).

On nonrevenue items, the bill adds authority allowing the Transportation Board to name additional officers (secretary, vice chair), limits the boards appeal jurisdiction so bid protests are handled by the secretary rather than the board, updates Green Mountain Transits charter language to reflect operations in Chittenden County and optional service outside the county, and attaches an inflator to town-highway general aid and structure grants so those lines rise and fall together with the transportation fund appropriation or CPI rather than remaining fixed.

The committee voted to report H.488 favorably by recorded voice roll call; the clerk announced the measure passed the committee by a vote of 10-0-1. Committee members directed staff and the agency to return next legislative session with statutory language and rate-setting proposals (witnesses said the agency plans to return in January with recommended statutory language and a proposed rate). Implementation timing remains contingent on access to the federal grant and final design decisions.

Votes at a glance: the committee recorded H.488 as favorable (motion: "find H.488 favorable"); vote tally announced as yes 10, no 0, absent 1.