Agency of Transportation warns federal reauthorization uncertainty could affect Vermont projects

Costa Pappas of the Vermont Agency of Transportation briefed the Senate Transportation Committee on federal transportation reauthorization, funding streams and program rules that shape Vermont's capital and operating budgets.

Pappas said Vermont relies heavily on federal dollars for transportation work and that federal sources account for roughly 55 percent of the state's transportation budget, though the exact share fluctuates with competitive grants and disaster relief. He reviewed the major federal programs that support Vermont: the National Highway Performance Program, the Surface Transportation Block Grant (the most flexible federal highway bucket), Congestion Mitigation and Air Quality funds (CMAQ), safety and resilience programs, and program-specific formulas for transit, airports and rail.

Pappas explained how the federal Highway Trust Fund is financed in part by the federal gas tax (18.4 cents per gallon), and that Congress has provided general-fund transfers to the trust fund in recent years; he told senators the federal gas tax last raised in 1993. "It's the gas tax plus what comes from the general fund," Pappas said, noting the typical 80/20 mix between trust-fund receipts and general-fund support in recent appropriations cycles.

He said the Infrastructure Investment and Jobs Act (IIJA) brought significant discretionary and formula funding to states, including supplemental competitive programs, and that stimulus-like components in IIJA make the next authorization difficult to predict. "When the next reauthorization came along, that money disappeared," he said of past stimulus funding, noting that some IIJA supplemental programs are unlikely to be reauthorized at the same level.

Pappas told the committee the current multiyear authorization covers through the end of September 2026; Congress may extend the current bill while working on the next authorization. He cautioned the committee that recent executive-branch direction (executive order) affecting certain discretionary programs has already created uncertainty about whether specific federal grant programs will be funded or disbursed. That uncertainty affects Vermont's ability to plan projects that rely on competitive or discretionary federal grants such as airport and some rail investments.

Committee members asked how soon the Agency would know whether federal programs such as NEVI or specific discretionary grants remain available; Pappas said federal agencies and appropriations action will filter guidance to states and that some program clarifications could be expected within a few weeks, but broader outcomes may take longer. He said the agency works closely with the congressional delegation and federal partners to track changes and will notify the committee when policy or funding guidance is available.

Senators asked about the predictability of aviation and rail funding. Pappas said aviation funding includes both formula and a significant competitive grant component and can vary year to year; rail capital programs are, he said, almost entirely dependent on competitive federal grants. The agency urged awareness of both funding volume and the policy conditions tied to different funding buckets.