Ways & Means reviews H.941 mileage-based user fee, debates flat-rate rollout and hybrid expansion

Damien Leonard of the Office of Legislative Council briefed the Ways & Means Committee on H.941, a mileage-based user fee proposal that would shift some vehicle-road revenue collection from per-gallon taxes and the current EV infrastructure fee to a per-mile charge. "For the record, I'm Damien Leonard with the Office of Legislative Council," he told members and walked through the Senate's extensive amendments to the House bill.

The Senate version restores pay-as-you-go and estimated-payment options and adds a temporary flat-rate option the legislature would keep in place for the program's first two years. Under those provisions the bill includes a $178 two‑year cap (or $89 for a one‑year registration), which Leonard said is "about a $178" and sits slightly above the expected average MBUF amount (the fiscal estimate cited an expected average near $154). A core calculation in the draft sets the mileage fee at 1.4¢ per mile — "1.4¢ per mile traveled, calculated based on the difference in the odometer readings," Leonard said — which the committee was told equates to $1,400 per thousand miles when scaled.

The draft also changes definitions to use the Senate's term "covered vehicle," so the statute can expand to additional vehicle types without rewriting the chapter. That expansion is explicit for hybrids: the Senate construct would bring plug‑in and mild hybrids into the program in 2029 and requires AOT and DMV to prepare transition plans to expand to all light‑duty vehicles by 2031. Leonard described required reports and deadlines tied to the program's federal grant: an initial plan due next January and a draft/final submission for the federal grant process (draft in July, final in September 2028).

Leonard explained how the bill would apply a fuel‑tax credit for hybrid vehicles: first compute the mileage‑based fee, then estimate gasoline tax paid (miles divided by EPA combined fuel economy, multiplied by Vermont's gas or diesel tax), and subtract that figure so hybrid owners are credited for fuel taxes they still pay. He gave a numeric example: a Toyota Sienna doing 22,000 miles at 35 mpg would show a theoretical MBUF of about $308; after subtracting roughly $200 in estimated gas tax, the net MBUF would be about $109.

The Senate removed the House limit on interest for unpaid amounts and adjusted the default penalty mechanics. Under the Senate draft, if a registrant has not filed required mileage reports and the agency assesses the default at renewal, a $178 default would be collected at reregistration; if the driver obtains an inspection within 90 days showing a lower amount owed, the difference becomes a credit toward the next mileage fee (Leonard emphasized the bill provides credits rather than refunds).

Logan Moberg of the Joint Fiscal Office summarized the fiscal note and cautioned the committee about transitional revenue timing. "This reflects what came out of senate appropriations," Moberg said, noting the mixture of payment options and the two‑year transition can defer revenue: in FY27 many registrants may still be paying the $89 registration charge, producing roughly $600,000 tied to the prior EV infrastructure fee, while larger true‑ups and mileage payments could shift revenue realization into FY28 and FY29. Moberg flagged sensitivity to EV adoption and payment‑option choices and estimated early‑year net effects ranging from several hundred thousand to low millions depending on uptake and accounting timing.

Members asked operational questions about installment payments, handling newly registered vehicles, and out‑of‑state registrations. Leonard said operational details such as installment timing and notice periods are left to the commissioner of motor vehicles to set in the time and manner prescribed; he noted enforcement of out‑of‑state registration avoidance exists but that the bill does not fully close all avoidance pathways and that recent work has addressed some temporary‑registration loopholes.

Committee members also questioned housekeeping items added on the Senate floor and flagged technical corrections likely needed in conference. Leonard raised a separate drafting item (section 55) that would transfer a longstanding Public Utility Commission authority to the commissioner of taxes for limited railroad‑tax waiver or suspension in extraordinary circumstances; he described that insertion as late and said it may require cleanup and further legal review under Title 32 practices.

The briefing closed with members agreeing to coordinate with House Transportation and clerks on conference options and to continue follow‑up with agency staff on implementation details and outreach plans required by the bill.