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Senate committee hears detailed plan to charge electric vehicles per mile and set phased expansion
Summary
A Senate Transportation working draft would impose a mileage-based user fee (MBUF) on battery electric vehicles starting Jan. 1, 2027, set a 1.4-cent-per-mile rate, offer multiple payment options and require a phased expansion plan to include other light-duty vehicles by 2031; agency implementation, outreach and federal grant timing were key concerns.
The Senate Transportation Committee spent the bulk of its session reviewing a House-passed transportation bill’s proposal to replace the EV registration "infrastructure fee" with a mileage-based user fee for battery electric vehicles and to plan a phased expansion to other light-duty vehicles.
Damian Leonard of the Office of Legislative Council told the committee the draft’s core purpose is to "impose a mileage user fee for battery electric vehicles" so that vehicles contribute to the transportation fund in proportion to the miles they travel. The draft sets an initial mileage rate at 1.4 cents per mile and proposes multiple payment methods: an annual lump-sum reconciliation at the end of a mileage reporting period, a pay-as-you-go installment option based on periodic odometer reporting, estimated payments (paid at registration, with year-end reconciliation), or a flat-rate payment that would require no reporting.
Why it matters: declining fuel-tax receipts as vehicles become more fuel-efficient and the growth of electrified vehicles have reduced a long-standing revenue source for road maintenance and construction. The committee was told the MBUF is intended to restore parity so that all vehicles contribute an amount related to usage of Vermont’s highways.
Key details and disagreements
- Payment mechanics and timing: The draft allows owners to elect among several payment options. Agency staff told the committee they prefer upfront collection to avoid cash-flow difficulties that would arise if most revenue arrived at the back end of the year.
- Reporting methods and privacy choices: The draft leaves reporting mechanics to the commissioner and specifies several implementation paths, including odometer reporting, device-based tracking, or opt-in location-based reporting that can distinguish in-state from out-of-state miles. Committee members raised privacy, cost and administrative concerns about devices and asked for explicit outreach and consumer protections in the plan.
- Transition schedule and credits: The draft would transition EVs registered as of Dec. 31 into the MBUF at their next annual inspection on or after Jan. 1, 2027; owners who already paid the $89 EV infrastructure fee would receive an $89 credit against the initial MBUF charge, per the House proposal.
- Phase-in: The bill requires AOT and DMV, in consultation with the Agency of Digital Services, to develop a transition plan to expand MBUF to plug-in hybrids and other highly fuel-efficient light-duty vehicles by Jan. 1, 2029 and to all light-duty vehicles by Jan. 1, 2031. The plan must analyze equity, alternative rate structures, options for distinguishing Vermont miles from out-of-state miles, and implementation costs.
- Enforcement and remedies: The draft provides for notice by mail or electronic message, sets interest on unpaid balances at 1.5% per month up to an 18% annual cap, allows the commissioner to waive fees for economic hardship or errors, and authorizes administrative appeals with judicial review.
- Federal support and timing: Committee members asked about the federal implementation grant that helped design the program. Patrick Murphy, state policy director for the Agency of Transportation, confirmed the FHWA grant agreement supporting CIRC work runs through September 2028, a deadline relevant to planning and pilot timelines.
Quotes
"The purpose of the chapter is to impose a mileage user fee for battery electric vehicles," Damian Leonard said while outlining the statute's intent language. Patrick Murphy told the committee the federal grant for the innovation work "runs until September of 2028."
Next steps
The draft directs the agency to deliver a plan and recommendations to the committee and Senate Finance by Jan. 31, 2027, with a draft plan tied to the federal grant schedule due in 2028 and a final plan for legislation by Oct. 15, 2028. Committee members urged the agency to include robust public outreach and to consider a voluntary pilot or opt-in phase for 2027 to build public trust and collect real-world data on payment preferences and reporting mechanics.
The committee did not take any final votes on the bill during this session; members left detailed technical language and implementation questions for agency witnesses and future hearings.
