Treasurer Urges Vermont to Seek New York Partnership for Transportation 'Cap-and-Invest' Program

Vermont state officials on Feb. 20 presented a study evaluating options for a transportation-focused "cap-and-invest" program and heard a recommendation from the state treasurer to pursue partnership with New York rather than join the Western Climate Initiative.

Julie Moore, secretary of the Agency of Natural Resources, told a joint Senate and House Transportation hearing that the 2024 Transportation Bill directed the Agency of Natural Resources (ANR), in partnership with the Agency of Transportation (AOT) and in coordination with the treasurer’s office and the Climate Council, to study cap-and-invest options. Moore said the study examined linking with existing or proposed regional programs — notably the Western Climate Initiative (WCI), already implemented in California and Quebec, and a New York program that is under development — and also examined variants limited to transportation, an economy-wide program (transportation plus heating), and a third variant that would add major stationary sources.

The study team, Moore said, worked with consultant Cambridge Systematics and a technical advisory group; final technical analysis was transmitted to the treasurer’s office in January so the treasurer could assess cost and revenue projections and make recommendations. "The intention is to set a limit on the amount of pollutants...and that limit declines over time," Moore said, describing the cap-and-invest construct in general terms.

Mike Bichak, Vermont state treasurer, said the technical work showed Vermont is not positioned to operate a standalone cap-and-invest program and that the viable paths are joining an existing program or partnering with a program in development. "We should be looking toward New York as a possible partner," Bichak said, giving three primary reasons: New York would be at the beginning of a program (allowing Vermont to join at the program’s start rather than midstream), a New York partnership would reduce the risk of cross-border "leakage" of fuel purchases at Vermont borders, and starting alongside New York would be less abrupt for household affordability amid current inflationary pressures.

Bichak summarized projected consumer price impacts tied to joining an established program midstream: roughly a $0.26-per-gallon increase in gasoline prices and about $0.30 per gallon for home heating fuels under the Western Climate Initiative assumptions cited in the analysis, with an annual escalation provision of about 5% in WCI pricing. He said a hypothetical rural family could face about $1,000 a year in added gasoline costs under the higher-impact scenario. The report, he said, also projected potential local benefits including cleaner air, health improvements and job creation depending on program design.

Both Moore and Bichak emphasized equity and program design questions that the legislature would need to resolve before implementation. Bichak said the primary recommendation is to design mechanisms to keep low- and moderate-income Vermonters "whole," ideally providing support in as close to real time as possible rather than only as a retrospective tax filing. He noted trade-offs in timing and administration: upfront rebates require estimating household usage; retrospective payments risk imposing short-term cash-flow burdens.

Bichak and Moore also outlined follow-up work the legislature may want: modeling how revenue would be allocated and which categories investments would support. As an example, Bichak asked legislators to consider administrative costs (he suggested 5–10% as a model) and potential allocations such as a dedicated amount to protect low- and moderate-income households (the report used an illustrative split of $10 million for administration, $40 million to hold households whole, leaving $50 million for incentives, resiliency, green infrastructure or other uses if $100 million were raised).

A legislator asked about public transportation; Moore and Lazorchak said investing allowance revenue in expanded transit, particularly outside of Chittenden County, would be a logical use of funds and consistent with the study’s recommendation to model spending options. Moore noted public transit availability is uneven across Vermont and that revenues could be directed to strengthen systems where they are weakest.

No formal vote or legislative action took place during the hearing. Committee members asked clarifying questions and requested additional analysis on equity protections, revenue-allocation scenarios and the timing of any program launch. Officials said New York’s program could become operational as early as 2027 and that joining WCI midstream would likely produce a larger immediate price effect for Vermont consumers.

The hearing closed with the committees taking a short recess; staff said the final technical analysis had been provided to the treasurer’s office in the month prior and recommended next steps including further modeling of benefit distribution and administrative design.