House Transportation panel reviews Ways and Means rewrite of mileage-based user fee, adds EV rental charge and $2.2M transfer

The House Transportation Committee on March 20 reviewed an 11-page Ways and Means amendment to the T bill that substantially changes how Vermont would collect a mileage-based user fee (MBUF), adds a 1% road-usage charge on electric-vehicle rentals, and transfers $2.2 million into the transportation fund to cushion near-term revenue shifts.

The amendment, summarized to the committee by Damon Leonard of the Office of Legislative Council, removes the previously proposed ‘pay-as-you-go’ and upfront estimated-fee options and leaves a single end-of-period mileage-accounting method. “There is now only one method for calculating the mileage-based user fee in here,” Leonard said as he walked members through the replacement chapter labeled “road usage charges.” The amendment also requires the Agency of Transportation to produce a report and legislative language if a self-reporting pay-as-you-go option is to be offered later.

Why it matters: the change pushes the first full MBUF collections well past the coming fiscal year and alters near-term cash flows for the transportation fund. Joint Fiscal Office (JFO) staff told the committee that, under the amended language, the state likely will not generate MBUF revenue in fiscal year 2027 and that fiscal-year timing creates uncertainty for budgeting and town aid allocations.

Agency and fiscal office concerns Patrick Murphy, state policy director for the Agency of Transportation, said the agency did not anticipate the change and raised operational concerns, including the removal of a convenient pay-as-you-go option and uncertainty about how to handle terminating events such as vehicle sales or total losses. “We do have some concerns with the approach,” Murphy said, pointing to potential administrative and information-technology work to enable alternative payment frequencies.

Logan of the Joint Fiscal Office presented preliminary revenue estimates: the state will repeal the existing $89 EV infrastructure fee on Jan. 1, 2027 and, depending on payment timing, could see a small net revenue shortfall in FY28 (estimates ranged roughly from a $200,000 loss to an $850,000 loss) before reaching a projected net gain in FY29 (roughly $1.2 million in JFO’s estimate). Logan cautioned the figures are preliminary and sensitive to how many vehicle owners choose to pay upfront versus monthly or quarterly.

New charges and exemptions The Ways and Means amendment also creates a new subchapter imposing a 1% road-usage charge on EV rental transactions, collected by rental companies from renters and remitted to the transportation fund rather than the purchase-and-use tax distributions. Leonard said the amendment adds exemptions for state-owned EVs and makes short-term rentals subject to the new rental charge so that rental fleets cannot avoid the fee by registering vehicles out of state.

Appeals, waivers and enforcement The amendment extends the time to appeal an assessment from 15 to 45 days, adds an administrative hearing step before court review, and allows the commissioner to waive interest or amounts for ‘‘good cause’’ or on grounds of economic hardship. It also preserves existing enforcement tools (interest, suspension or refusal to renew registration) and adds a commissioner assessment option if no mileage report is filed.

One-time transfer and town highway aid To offset immediate timing effects, the amendment directs a one-time transfer of $2.2 million from a transportation infrastructure bond fund into the transportation fund; $1.7 million of that would be allocated to general state aid for town highways, and $500,000 would remain in the transportation fund as a cushion against revenue shortfalls. Committee members noted that the transfer repurposes existing transportation funds rather than creating new revenue.

Next steps Committee members asked for a side-by-side comparison showing differences between the committee’s original T bill language and the Ways and Means amendment and requested additional analysis from the Agency of Transportation and JFO. The committee scheduled time to review the amendment further before any floor presentation and plans to take a straw poll to advise members who cannot attend the floor debate.

The committee heard no formal motions or votes on the amendment during the March 20 meeting; members asked staff to prepare fiscal detail and implementation clarifications ahead of next week’s committee time.