Study recommends transferring Green Mountain Transits rural routes to regional operators to save costs

A consultant presented to the Senate Transportation Committee on Tuesday a financial study recommending that Green Mountain Transits rural services be transferred to regional providers to reduce operating costs and preserve statewide transit funding.

The studys author, Steve Pfauber, said the report compares GMTs per-hour and staffing-based costs to those of other Vermont providers and concludes that moving rural service to providers such as RCT and TBT could lower annual operating costs statewide by roughly $1.2 million once transitions are complete. "The recommendation is that Washington County service be transferred to TVT," Pfauber said during the presentation.

Why it matters: The study was requested in the transportation legislation from the prior session and responds to a growing fiscal gap driven by rising operating costs, changing federal relief funding and flat state and local revenue. Committee members and presenters said savings on rural unit costs could free limited state Medicaid and public-transit funds for other services.

Key findings and recommendations

- Cost gap: Using fiscal 2024 inputs and updated first-quarter fiscal 2025 numbers, the study found GMTs reported rural hourly rate rose substantially; updated Q1 2025 data show GMTs rates outpacing other rural providers. The consultant summarized potential net savings after full transition of about $1.2 million annually.

- Medicaid trips: Pfauber reported GMTs cost per Medicaid passenger trip was about $77 in 2023, roughly 50% higher than the next-highest provider; other rural providers reported Medicaid trip costs in the $30to40 range. Shifting Medicaid service to lower-cost operators could increase available funds for additional trips statewide.

- Recommended transfers and timing: The study recommends transferring most rural operations to regional providers rather than piecemeal moves. Specific recommendations presented included transferring Washington County service to TVT; the Mountain Road shuttle to RCT; most Franklin County service to RCT while retaining two commuter routes with GMT; and moving seasonal services (for example Sugarbush) to a regional operator. A phased implementation beginning in fiscal 2027 (July 1) was presented, with some limited transitions possible in FY26.

- Implementation costs and risks: The report flags several transition challenges that the legislature and agencies would need to address before transfers occur: collective-bargaining and Teamsters-union issues; cash-flow impacts because VTrans pays rural service up front while FTA urban funds reimburse in arrears; and facilities work in central Vermont. Pfauber said a new heavy-maintenance facility in central Vermont could exceed $10 million if GMT built full heavy-maintenance capacity; using nearby TBT facilities could reduce a central-Vermont facility to an estimated $5to6 million.

Discussion and context presented to the committee

Ross McDonald, public transit program manager, gave a program overview including revenue sources and program scale: roughly $13 million in annual FTA formula funds, about $20 million from FHWA programs, $9to10 million in state funds and a similar amount from local operators, for a FY25 program budget of about $48 million. McDonald said Vermonts rural program is unusually well funded compared with many states but faces ongoing cost pressures: "We do wanna provide access to employment. We wanna mitigate congestion. We wanna promote energy efficiency," he said.

Presenters emphasized several operational pressures: post-pandemic cost increases (noted as 20to30% increases for some items), higher wage costs from recent collective-bargaining increases, lower volunteer-driver pools (about 300 volunteer drivers statewide), and electric-bus procurement and specification delays that have affected the fleet (presenters cited funding for roughly 65 e-buses, about 15% of the fleet, with about 18to20 in revenue service).

Pfauber described two costing methods used in the study: a service-based vehicle-hour model using 14 cost components, and a staffing-based model based on rural operatorsestimates of appropriate staffing. Both methods produced similar comparative results in most cases; updated FY25 quarter-1 inputs widened the gaps between GMT and other operators for some counties.

What presenters and the committee identified as next steps

- The study has been submitted to the legislature for consideration. Pfauber said the three rural boards involved have "met and voted essentially to say we are open to this," and GMT took a neutral position.

- Further due diligence recommended before any transfer: additional financial analysis, facility planning for central Vermont, continuing talks with the Teamsters, and FY27 budgets developed by affected agencies to reflect transitions.

- Committee-level briefings: Committee members requested follow-up briefings focused on numbers of rides and people affected and on cash-flow and funding timing. Committee leadership scheduled a short overview lunch session to walk through funding sources and program structure.

Limits and unanswered questions

Presenters said the Q1 FY25 data tend to overstate hourly rates because seasonal service increases the denominator over a full year; Pfauber said he is working with GMT staff to verify vehicle-hour reporting and expected some reported Q1 cost increases to decline when full-year data are available. The study does not assume how any savings would be redistributed between Medicaid and public-transit programs; those allocation decisions were presented as legislative policy choices to be made later.

Ending note

Committee members requested additional detail about how many riders and which communities would be affected before any legislative action. Presenters said more refined budgets, union negotiations and a facility plan would be next steps if the legislature chooses to pursue the studys recommendations.