Legislators review draft mileage-based user fee for electric vehicles, agency proposes 1.4¢/mile

A legislative committee heard detailed proposals Wednesday for a mileage-based user fee that would charge battery-electric vehicles (BEVs) roughly 1.4¢ per mile to help replace revenue lost as vehicles become more fuel efficient and electrified.

Patrick Murphy, state policy director for the Vermont Agency of Transportation, told the committee the rate — recommended by the agency and its contractor, the UVM Transportation Research Center — is intended to “approximate what a gas vehicle is paying in fuel tax” and landed at 1.4¢ per mile after accounting for fleet efficiency and regional comparisons. Murphy said UVM’s earlier analysis had produced a different figure (1.78¢), and the agency adjusted parameters before adopting the 1.4¢ recommendation.

The proposal is aimed at addressing a multi-part funding gap Murphy described as driven by inflation, rising fuel efficiency and electrification. He provided an example showing a 2013 Ford F-150 paid roughly $271 per year in fuel taxes (about 2.5¢ per mile at that time) while a later, more efficient model pays about $185 (about 1.7¢ per mile), and an EV the agency used for comparison pays about $154 per year under the existing infrastructure-fee approach. Murphy said the per-mile design more closely aligns charges with actual roadway use.

Under the draft statutory language presented by Damian Leonard of the Office of Legislative Counsel, the program would be established as a new chapter (drafted as chapter 43) that applies to battery-electric light-duty vehicles registered in the state. Annual mileage would be reported based on odometer readings taken at vehicle inspections or at a terminating event such as a change of ownership; the bill drafts an invoice model in which DMV would mail (or email) an assessment and owners could pay a lump sum or enter quarterly or monthly installment agreements. Murphy said that, because the existing infrastructure fee would be replaced, the net additional revenue in year one is expected to be about $1,000,000 (gross about $2,000,000).

Members raised practical and fairness questions. Several asked how the plan would treat miles driven out of state and whether owners who spend substantial time beyond Vermont would be “double taxed.” Murphy said not all states tax EV charging and that existing programs in other states — he cited Virginia and Oregon among others — handle interstate travel differently; he also noted a challenge to Virginia’s program had been resolved in favor of a rational-nexus standard for mileage charging. Murphy said future technology (telemetry, geofencing) could allow apportioning miles to states but is not cost-effective for Vermont in the first phase.

The draft leaves exemptions open for later consideration; Murphy said earlier drafts contained exemptions for categories such as agricultural vehicles but that the committee could refine exemptions during drafting. The draft also includes penalties and enforcement measures drawn from the state’s tax code: interest and penalty accrual, a $10 late filing fee in the current draft, a higher default assessment when an owner fails to provide an odometer reading (the draft uses a percentile-based default that the agency estimated could be roughly $375), and administrative appeals and judicial-review provisions.

The language also ties the mileage rate to an annual adjustment mechanism. Leonard described a draft provision that would update the mileage rate each January 1 by the percentage change in the National Highway Construction Cost Index (NHCCI) for the prior year (with a floor so the rate would not decline below the previous year). Committee members asked whether a cap or legislative reauthorization should be added and whether the gas excise tax should be indexed as well; proponents said indexing avoids repeated legislative adjustments and preserves real purchasing power for road maintenance.

Leonard emphasized the draft is a first pass: it defines BEVs and mileage-reporting periods, sets an initial 1.4¢ per-mile calculation for 2027, and identifies open questions (transition provisions for owners who already paid the infrastructure fee, whether payment will be estimated and trued up or paid based on prior-year miles, and administrative details such as record retention and whether to contract with a private account manager). He said the draft also contemplates interstate reciprocity agreements to apportion mileage among jurisdictions.

No formal votes or final decisions were taken; committee members asked to continue work on language and return with further questions. Murphy and Leonard indicated the agency is pursuing vendor contracts and administrative preparations with a tentative implementation target of January 1, 2027, pending further drafting and legislative action.

What’s next: committee members asked the agency to refine transition rules, exemptions and options for caps on annual adjustments and to provide additional fiscal detail; the committee planned to continue consideration at a later meeting.