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AOT outlines mileage‑based fee pilot for electric vehicles; agency stresses stepwise approach
Summary
The Vermont Agency of Transportation told the Senate committee it plans a mileage‑based user fee (MBUF) for fully electric vehicles as a first step to address long‑term gas tax revenue loss, pending federal grant approvals and further legislative direction; senators raised concerns about equity, inflation indexing and timing
The Vermont Agency of Transportation (AOT) presented details of a mileage‑based user fee (MBUF) plan for fully electric vehicles, describing the measure as a first, incremental step toward addressing long‑term declines in gas‑tax revenue.
Pat Murphy, senior policy director at the Vermont Agency of Transportation, told the Senate Transportation Committee the agency is focusing first on fully electric vehicles and related piloting because electrification has removed those drivers from traditional fuel tax collection. "What we propose and what's been adopted in language in Act 62 (2023) is just for electric vehicles," Murphy said, explaining that the agency models administrative costs and fleet miles‑per‑gallon scenarios when setting a rate.
Why this matters: the state faces a projected structural funding shortfall for transportation driven by long‑term fuel efficiency and electrification, and committee members pressed AOT on whether an EV‑only mileage fee is equitable and sufficient. One senator said the projected shortfall is much larger than what an EV‑only fee would raise and worried about over‑reliance on a single revenue source.
Key points from the presentation and questions: - AOT described a proposed timeline: begin implementation work this summer, return to the Legislature with draft language in January and — if authorized and funded — earliest implementation could be July 1, 2026. Murphy cautioned that a federal grant the agency expects (about $3,000,000) was placed under a 90‑day federal review and that missing those funds would push back the timetable. - The agency assumes administrative costs in rate design and proposes an escalator tied to inflation so the fee keeps pace with construction and maintenance costs. Murphy said the agency would aim to set rates so the MBUF is "net revenue neutral with what gas tax people are paying for fossil fuel vehicles," using historical fleet fuel efficiency as a baseline. - Senators raised equity and sequencing concerns. One senator said she would not support indexing an EV mileage fee to inflation unless a comparable mechanism for the gas tax exists. Another senator warned against creating an incentive to retain internal combustion engine vehicles by making EV driving relatively more expensive. - AOT noted coordination with multistate efforts (Eastern Transportation Coalition) and referenced other states considering similar phased approaches; Hawaii was cited as an example with a 2027 EV timeline and a 2032–2033 planning horizon for a whole‑fleet transition.
What AOT did not finalize in the hearing: exact per‑mile rates; whether plug‑in hybrids would be included later; and how the agency would handle interstate and border travel. Murphy said those items are part of ongoing grant work and multistate pilot studies.
Ending: Senators asked the agency to return with language and cost projections in January; AOT said it would do so but emphasized the proposal is a first step, not a complete fix for the long‑term transportation funding gap the agency's study projects.
