State officials present $50M-plus public transit budget, warn of service cuts and higher operating costs

The Vermont House Transportation Committee on Feb. 4 heard a presentation on the state’s public-transit budget for fiscal 2026, during which agency staff said the roughly $50 million program will rely on a mix of federal funds flexed from highway programs, $10 million in additional state match and one-time carbon-reduction and innovation grants while the system grapples with rising operating costs and falling volunteer capacity.

Agency representative Ross McDonald told the committee, “we have the most well funded rural public transit program in the country, but it's still not enough,” and detailed how the state braids programs — including Medicaid non-emergency medical-transportation funding — to sustain demand-response and fixed-route service.

McDonald said Vermont’s annual public-transit budget is “approximately $50,000,000” and noted the state adds about $10,000,000 from state funds to support the non-federal match. He said providers are also using roughly $16,000,000–$18,000,000 per year in Medicaid non-emergency medical transportation funds administered by the Department of Vermont Health Access to amortize overhead and deliver trips.

Why it matters: transit supports access to jobs, health care and education in communities without frequent service. Committee members and the presenter repeatedly flagged demand-response trips as the costliest category — a modest share of trips that consume a disproportionate share of operating dollars — and said changes will be needed to avoid an abrupt budget ‘cliff’ that would force larger, sudden cuts.

Key funding and one-time dollars McDonald told members the agency has moved its Mobility & Transportation Innovation (MTI) grant program from $500,000 to $3,000,000, and that roughly $1,000,000 of that has been or is expected to be obligated in the current federal fiscal year, leaving roughly $2,000,000 available for FY2026 and beyond if plans proceed. He also said the…