Vermont Senate advances $883 million transportation package, senators warn of looming funding cliff

The Vermont Senate on Wednesday moved H.488 — a transportation appropriation and policy bill totaling roughly $883 million — forward with committee amendments and an added amendment, and ordered the bill for third reading.

Senate Transportation Committee Chair Senator Westman (Senator from Lamoille) told colleagues the current package is balanced for this year but that Vermont faces a structural funding shortfall going forward. “We're literally approaching a point of no return for the transportation fund,” Westman said during a lengthy presentation that reviewed revenue forecasts, construction cost inflation and program changes.

Westman said this year’s plan uses a mix of transportation funds, federal aid and one‑time general fund and FEMA monies to balance the budget, but warned those supports will not repeat. He cited a projected $30 million state‑fund shortfall in the next fiscal year that, because of federal matching rules, would translate to roughly $149.5 million in federal funds the state could not match. “If we don't do something, we do lose ground,” Westman said.

The bill includes a broad set of policy and program provisions: adoption of the 2026 transportation program; technical fixes for rail projects and a $260,000 reallocation for depot repairs; a required beginning FY26 unobligated transportation fund balance tied to DMV and other fee changes; new reporting and a project dashboard under 19 V.S.A. §10g; authority for the secretary of transportation to relinquish portions of state routes (including a portion of Vermont Route 36 to the City of St. Albans); renaming the state acquisition chapter for rail and rail trails (5 V.S.A. ch. 58); statutory changes regarding rail‑banking notifications; a list of prohibited activities on rail‑trail rights‑of‑way; and a provision to facilitate registration and emissions/safety certification for ultra‑low‑volume vehicle manufacturers and owners.

The bill also addresses transit and non‑emergency medical transportation. It authorizes a $600,000 appropriation to fund grants that hire volunteer coordinators to recruit and retain volunteer drivers for demand‑response transportation programs; it requires detailed reviews of proposed Medicaid non‑emergency transportation contracts and calls for stakeholder meetings to expand volunteer driver pools. The Senate added $325,000 to continue a contract with DriveElectricVT to provide consumer information on electric vehicles.

Senators described several committee‑level reforms intended to make state funding for towns and transit agencies more responsive to inflation and local asset conditions. The bill requires development of a method to assess town highway conditions and directs the Agency of Transportation (AOT) to produce updates on state and federal funding and to provide a dashboard of project status starting January 1, 2026.

Transportation committee members and appropriations and finance committee reporters said the bill received unanimous committee support. The Senate accepted a committee amendment offered by Senator Westman and others that moved several one‑time allocations between funds (including a $1,150,000 reauthorization moved to a pilot special fund for one year) and shifted the $600,000 for volunteer coordinator grants into the transportation fund as part of a cleanup amendment. The amendment passed by voice vote. Finance and appropriations committees recommended concurrence (each reported favorable votes).

Supporters said the bill helps shore up medical and demand‑response transport in rural areas where clinic closures and reduced hospital services have increased reliance on state‑funded transport. Opponents and questioners pressed for more detail on specific lines — including traffic and safety and aviation funds — and for a comprehensive package to address long‑term revenue erosion rather than a series of incremental fixes.

What happens next: The Senate voted to propose amendments to the House as recommended by the transportation committee (as amended) and ordered H.488 to third reading. The bill will move back to the House for concurrence on the Senate’s proposed amendments and then return for final action on third reading in the Senate.

Why it matters: Committee leaders described rising construction costs (National Highway Construction Cost Index increases of roughly 60% since 2020), near‑flat revenue forecasts for the transportation fund (a cited 1.2% compound annual growth rate in the fund’s revenues), and demographic shifts that reduce fuel tax receipts. Those trends, witnesses told the Senate, risk larger and costlier infrastructure backlogs, reduced access to medical and community services in rural areas, and missed federal match opportunities if the state cannot provide required matches.