Transit agency leaders told the Senate Transportation committee on Jan. 9 that declining grant capacity, rising insurance and operating costs, and pending state budget choices pose a substantive threat to both urban and rural transit service levels.

Clayton Clark, general manager of Green Mountain Transit, said GMT's fiscal year 2027 budget is "in the red by about $800,000," but told senators the more significant risk is fiscal year 2028, when GMT projects a roughly $3,000,000 gap and said carbon‑reduction funds that previously helped backfill operations may be unavailable. "If we are told to live within our means then we are gonna have to probably do another 20% reduction in GMT's urban service," Clark said, framing the scale of potential cuts.

Speakers described structural differences between Medicaid—where agencies are contractually obligated to provide qualifying medical trips—and the federal on‑demand (O&D) program, which agencies must scale to the grant awards they receive. An unnamed GMT representative and Tri Valley Transit officials said rising external cost drivers — insurance, workers' compensation and vehicle costs — plus flat O&D allocations mean fewer total trips can be provided for the same dollars.

An RCT/TVT speaker outlined specific recent projections: RCT reported an $800,000 loss in one recent year and a projected $500,000 shortfall for the current year tied to Medicaid program changes and contract timing. Committee members pressed agencies about the real‑world consequences, noting that O&D decisions often prioritize dialysis and critical medical trips; speakers said about 17% of Northeast Kingdom trips go to dialysis, underscoring the stakes for riders who require regular medical transport.

The committee also heard about a dispute in Chittenden County and Colchester, where local officials threatened legal action after notices about possible O&D reductions; GMT said notifications went out Nov. 24 and that partners did not take preparatory steps, while VTrans provided funds that kept reductions from being critical‑care‑only. The committee asked agencies to return with documentation of the notification and allocation process.

Agency leaders proposed several mitigation options — better municipal match, philanthropic supplements, state budget adjustments and prioritization conversations among partners — and asked the legislature to consider funding choices that would avoid service contractions that disproportionately affect older adults and persons with disabilities. The committee paused proceedings for floor business and said it will return for further oversight.