Vermont Agency of Transportation outlines $883.4 million fiscal 2026 budget, flags bridge and program risks

The Vermont Agency of Transportation on presented a proposed $883,400,000 budget for fiscal 2026 and told the Appropriations Committee the plan relies primarily on federal formula dollars plus state matching revenues from motor-vehicle fees and registrations.

The proposed budget front-loads spending on state and interstate bridges, maintenance and roadway safety, while reducing the agency's state paving allocation from about $130,000,000 in fiscal 2025 to $102,000,000 in fiscal 2026, the agency said. The presentation emphasized federal formula stability from the Federal Highway Administration but warned that grant programs and some one‑time federal funds remain at risk.

Why it matters: AOT said aging bridges, higher construction bids and lingering post‑flood recovery work are forcing prioritization decisions that shift more money to bridge rehabilitation and maintenance. Those choices affect paving levels, town projects and the timing of large replacements across the interstate and state route systems.

Budget and revenue mix

AOT told the committee the agency's recommended fiscal 2026 budget totals $883.4 million. The largest single revenue source is formula funding from the Federal Highway Administration; the agency identified that piece as about $388,400,000 for fiscal 2026. Other revenue lines include federal rail, transit and aviation grants; local and other pass‑through funds; a Central Garage fund; and a statutorily required Transportation Infrastructure Bond (TIB) account. AOT officials said the department raises state match through Department of Motor Vehicles fees, registrations and related receipts.

The agency noted that some federal emergency and one‑time funds from recent flood responses (Federal Highway Emergency Relief and FEMA Public Assistance) are included in recent years’ revenue and that the governor’s recommended budget expands language to allow certain one‑time state match dollars to be used for Federal Highway Administration eligible projects.

Priorities and program breakdown

AOT presented a pie‑chart breakdown showing the single largest expenditure category is state and interstate bridge work, followed by routine maintenance and roadway safety programs. The agency said the state will fund roughly: - 38 paving projects statewide in fiscal 2026; - 16 interstate and large bridge projects; - 40 state‑road bridge projects; - 45 roadway projects and 17 traffic and safety projects; - 7 park‑and‑ride projects and 33 bike and pedestrian projects (transportation alternatives).

The administration framed the reduction in the state paving line as a response to sharply higher construction costs (agency staff said average bid costs are roughly 40% higher than a few years ago) and to the need to shift limited state transportation funds toward bridge rehabilitation. The agency said it intends to keep state paving above $100 million despite the reduction from the prior year.

Bridge condition, prioritization and temporary bridges

AOT officials said many highway and interstate bridges are approaching the end of their original design life and described an annual inspection and deficiency‑rating system that feeds project prioritization. If a structure is judged unsafe, the secretary of transportation has the authority to close it immediately, the agency noted.

Committee members asked how long replacement projects can be postponed without compounding deterioration. AOT responded that postponement increases deterioration and that the department maintains an asset management process and a white book listing more than 800 active projects at various life‑cycle stages (design, right‑of‑way, permitting, construction). The agency said it triages projects for criticality when revenue pressures force schedule changes.

AOT also described the use of temporary modular bridges in flood recovery and other emergency responses. Those temporary structures are engineered for rapid assembly (AOT said they can be left in place for several years where necessary) and in some cases are already performing at or above the condition of the pre‑flood structures.

Maintenance, fleet and winter operations

The agency’s district maintenance and fleet budget (across nine districts and roughly 64 garages statewide) covers salt, materials, labor and equipment. AOT officials described substantial reductions in salt use per mile over the last decade, from permit limits near 800 pounds per mile to current operational averages they said are below 300 pounds per mile, achieved through telemetry, pre‑wetting and operator training. AOT said Vermont follows a “safe roads at safe speeds” policy rather than a bare‑road mandate and prioritizes interstates and principal arterials for winter clearing.

Policy planning, intermodal programs and electrification

Michelle Boomhower, director of policy, planning and intermodal development, told the committee that intermodal programs — rail, public transit and aviation — are included in the budget and that some grant programs tied to electrification and active‑transportation remain uncertain. The agency said the National Electric Vehicle Infrastructure (NEVI) program work has been paused: projects already completed and paid are finished, but awards or projects under procurement that had not broken ground were placed on hold when the federal grant program was paused.

Public transit and fleet electrification

AOT said 17 battery electric buses are in service statewide and roughly 48 more are in procurement or other stages of acquisition. The agency contracts with and provides pass‑through federal funds to all local transit providers in Vermont.

Rail and international connector

On passenger rail and the Montreal connector, AOT described technical and governance barriers: track condition, freight‑oriented infrastructure, customs and preclearance requirements and the need for upgrades in Montreal’s Central Station. The agency said refreshed engineering and cost estimates exist and that project timing depends on multi‑jurisdictional agreements; AOT characterized the project as closer to delivery than in past years but still dependent on coordinated federal, state and Canadian decisions.

Department of Motor Vehicles IT modernization

AOT and DMV officials said the DMV core system replacement is in its second and final phase, with completion targeted for November (projected fall). The agency described the program as a near‑$50,000,000 IT modernization effort that is currently reported as on time and on budget.

Risks to federal programs and civil‑rights funding

Committee members asked which federal programs are most at risk from funding shifts in Washington. AOT staff said Federal Highway Administration formula funds, Federal Aviation and Federal Transit grants were not suspended as of the presentation, but discretionary grant programs and some one‑time grants — notably portions of EV charging/NEVI, the Carbon Reduction Program and the Protect program (hazard mitigation and resilience) — are vulnerable. Staff estimated the Carbon Reduction and Protect programs were each in the ballpark of $23,000,000 over the five‑year authorization, and finance staff said a small portion (roughly $150,000–$300,000) that supports civil‑rights and disadvantaged‑business programs was, at one point in the day, reported at risk.

Context and next steps

AOT officials asked the committee to consider the relative stability of federal formula funding against the uncertainty of discretionary grants, and they said continued federal and state coordination will determine how many bridge replacements and resilience projects proceed on schedule. The agency invited follow‑up questions and reported it would continue to provide project‑level details, including the white‑book project list and project prioritization metrics.

Ending

Committee members thanked agency staff and requested follow‑up on a number of local road and bridge conditions raised during questioning; AOT staff said they would provide additional details offline and acknowledged the continuing challenges of aging infrastructure and rising construction costs.