House Transportation Committee hears funding overview as lawmakers face constrained revenues

Logan Moberg, a fiscal analyst with the Joint Fiscal Office, told the House Transportation Committee on Jan. 14 that federal grants provided the single largest share of Vermont’s transportation funding last year and that state revenue streams used to match those grants are growing slowly, creating a notable constraint for upcoming budget decisions.

Moberg told committee members that “last year was almost $500,000,000 in federal funds,” and that federal funds accounted for about 56% of the state’s transportation funding last year. He said most federal grants require an 80/20 match, meaning the state must provide roughly 20% of project costs to draw down federal dollars.

The presentation explained the two main legislative vehicles the committee will handle: the T bill, which carries the four‑year “white book” of proposed projects (the governor’s Transportation Program) and related transportation policy language, and a separate miscellaneous motor‑vehicle bill that addresses technical DMV and motor‑vehicle law changes. Moberg emphasized that the T bill provides spending authority for the projects in the white book, while actual appropriations for one fiscal year come through the Appropriations Committee.

On state revenue sources, Moberg outlined five principal revenue categories: motor gasoline taxes and assessments, diesel taxes and assessments, the motor vehicle purchase and use tax, DMV fees (licenses and registrations), and various miscellaneous receipts. He summarized official forecasts (July forecast referenced) showing fee‑fund revenues of about $323,000,000 for FY26 and purchase‑and‑use receipts forecast near $1,200,000,000 for FY26.

Moberg described Vermont’s gasoline tax as a hybrid system of a fixed cents‑per‑gallon tax plus two variable assessments tied to the tax‑adjusted retail price. He said the state portion totaled 13.1 cents per gallon (about 12 cents fixed plus smaller allocations), and that an additional federal gasoline tax of 18.4 cents per gallon remains unchanged since 1993. He explained the assessments have minimums and caps: for example, the 4% motor‑fuel assessment carries a 13.4‑cent minimum and an 18‑cent maximum; the 2% assessment has a minimum but no cap. Moberg noted gasoline consumption has declined since the early 2000s, fell sharply during the COVID‑19 pandemic and has not returned to pre‑pandemic levels—about 65 million fewer gallons than before—which reduces gas‑tax revenue over time.

Moberg gave a simple illustration of scale: taxing roughly 285,000,000 gallons yields about $2.85 million in revenue for each penny added to the state gasoline tax. He also summarized diesel taxation: state levies that send about 28 cents per gallon to the Transportation Fund, a 3‑cent assessment to the related fund referenced in the presentation, and a 1‑cent petroleum cleanup fee, totaling about 32 cents; a federal diesel tax of 24 cents brings a combined total in the presenter’s chart to roughly 56 cents per gallon.

Moberg described the Transportation Fund (T‑Fund) as the primary state revenue depository for transportation spending and the Transportation Infrastructure Bond Fund (TIB Fund) as the fund created for debt service on bonds and for long‑lived projects (bridges and major assets). He said the state currently has no outstanding TIB bonds and the TIB Fund is being used on a pay‑as‑you‑go basis. He also noted not all T‑Fund dollars are appropriated to the Agency of Transportation (AOT); typical transfers include payments to Buildings and General Services for highway information centers, payroll costs, and an annual appropriation to the state police.

Other revenue details cited during the presentation included DMV fees estimated at about $103,000,000 to the transportation fund and miscellaneous revenues (overweight permits, railroad income, penalties and the like) forecast near $27,800,000.

Committee members asked whether tolls, mileage‑based user fees and higher EV registration charges were on the table. Moberg and the committee said several revenue options have been studied and will be part of broader discussions; he noted some options would require federal permission or statutory changes. The committee also noted that a fee increase for electric vehicle registrations enacted last year is earmarked for EV charging infrastructure build‑out.

Moberg and members repeatedly returned to the central budget problem: federal funds dominate project financing but require state matching dollars, while key state revenue sources tied to fossil fuel consumption are flat or declining. Moberg closed by urging members to review the white book and the June/July forecasts as they prepare questions for upcoming agency briefings.

The committee adjourned after scheduling a Jan. 15 meeting with Agency of Transportation Secretary Flynn and his leadership for an agency overview.