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Senate hearing: gas-tax structure hybridized; fuel revenue declining despite higher miles traveled
Summary
Committee heard that Vermont has a hybrid gas-tax system (fixed plus variable assessments), state assessments plus federal tax total about 50.77¢/gallon as of the presentation, and that more efficient vehicles are shrinking per-gallon revenue even as vehicle miles traveled have returned to or exceeded pre-pandemic levels.
Logan Bilberry of the Joint Fiscal Office described Vermont’s gasoline tax structure and recent revenue trends to the Senate Transportation Committee on March 18.
Bilberry said Vermont operates a hybrid gas-tax system combining a fixed cents-per-gallon component and two variable, percentage-based assessments. "We have a hybrid gas tax system. So there's a fixed and two variable assessments," he said, and he reported the state portion plus assessments totaled about 32.37¢ per gallon while the federal tax adds 18.4¢, putting total tax and assessment near 50.77¢ per gallon at the time of the briefing.
The committee was shown that gasoline and diesel taxes are projected to decline year over year, while purchase-and-use tax is projected to grow. Bilberry said fuel efficiency and changes in vehicle technology explain much of the decline: more efficient gasoline and diesel vehicles have reduced gallons consumed. He referenced a federal study indicating that increased vehicle efficiency explains a large share of fuel-tax revenue declines in other states.
Bilberry also presented inflation-adjusted comparisons that show the current combined state tax and assessments, when adjusted to 2024 dollars, are lower than many historical peaks (for example, mid-20th-century levels adjusted for inflation were higher). He said national vehicle-miles-traveled data showed record miles in 2024, even as fuel-tax revenues remain depressed because vehicles are more efficient.
Committee members raised practical questions: which taxes are collected at wholesale versus pump; whether federal gasoline tax receipts are separable from state collections and whether Vermont could stop collecting the federal portion; and whether mileage-based user fees would be a viable alternative. Bilberry deferred legal and collection-process questions to the tax department and DMV and said those agencies could brief the committee on how federal fuel taxes are collected and remitted.
The presentation included a chart showing how miles per vehicle, miles per gallon, and inflation-adjusted tax rates combine to estimate an average annual per-vehicle gasoline-tax payment in 2024 dollars.
Legislators asked for follow-up: a clear explainer of how federal and state gas taxes are collected and remitted and historical retail-price breakdowns showing what portion of pump price was tax versus commodity across periods.
