As the rise of fuel-efficient vehicles cuts into revenues from Vermont’s gas tax, Senate lawmakers are considering a new way to charge drivers — based on the number of miles they drive.
Taxes on gasoline and diesel have long provided the lion’s share of funding to maintain the state’s transportation infrastructure. Those revenues, however, haven’t come close to keeping pace with the cost of road and bridge repairs.
Lamoille County Sen. Richard Westman, the Republican chair of the Senate Transportation Committee, said the century-old gas tax doesn’t account for electric vehicles, plug-in hybrids or even gas-powered cars that travel as far as 40 miles per gallon.
“So what we’re getting per-vehicle is less and less money all the time,” he said.
The widening gap between costs and revenues is taking a toll. If Vermont maintains current funding levels for paving projects over the next 10 years, the percentage of state highway miles in very poor condition will rise from 6% today to 48% by 2035, according to a recent state analysis.
“These numbers are frightening,” Westman said. “And we’ve reached a point where the numbers are so stark that we need to move.”
Westman’s committee approved a new mileage-based user fee Thursday that would help shore up the transportation fund. The committee also wants to redirect $50 million in tax revenue from vehicle sales from the education fund to the transportation fund over the next five years.
“The system now is totally inequitable."Lamoille County Sen. Richard Westman
Westman said the gas tax and mileage-based user fee would act in concert. The state would determine a per-mile amount it needs to derive from personal vehicles in order to adequately fund transportation infrastructure. That amount, according to Westman, would likely be around 1.4 cents. The state would then use a combination of the gas tax and mileage fee to collect the money from individual drivers.
Mileage would be recorded at annual inspections and sent to the Department of Motor Vehicles. The new fee would go into effect at the beginning of 2027 for electric vehicles only. Plug-in hybrids would join the system in 2029, and all vehicles would be subject to the new fee in 2031.
“The system now is totally inequitable,” said Westman, noting that lower-income residents with older, less fuel-efficient vehicles shoulder a disproportionate burden.
But key House leaders are already voicing concerns. While four states — Utah, Oregon, Hawaii and Virginia — have adopted mileage-based fees for EVs, none has expanded their programs to include all cars and trucks.
Noting that the Vermont Senate’s proposal hasn’t been implemented elsewhere, Swanton Rep. Matt Walker, the Republican chair of the House Transportation Committee, said, “We’re not ready to take on the entire world.”
Republican Gov. Phil Scott is the elected official who first proposed the mileage fee for the approximately 8,000 EVs registered in Vermont. But he said the state needs to “test drive” the new program before it brings the rest of the fleet into the mix.
“It gives us an opportunity to try this out and see if it’s worthwhile,” Scott said.
The Senate plan is also facing pushback from environmental organizations that are pushing for a more flexible fee.
Johanna Miller, with the Vermont Natural Resources Council, said Utah, Oregon and Virginia all offer drivers the option of paying based either on mileage or a flat fee (Oregon’s will be $340 in 2027; Utah’s will be $280).
Subjecting EV owners to a new and complex administrative process, she said, could discourage Vermonters from going electric. The Agency of Transportation has secured a $3 million federal grant to create a mileage-based fee.
“We also do not oppose vehicular usage fees as a whole, but their efficacy depends on design,” Miller said. “We have serious concerns about a program that unfairly targets electric vehicles.”
The Senate Transportation Committee's proposal will allow EV owners to pay based on mileage, or to pay an annual flat fee of $178.
Secretary of Transportation Joe Flynn opposes the flat-fee option. He acknowledged that no other state currently has a mandatory mileage-based fee in place for EVs. But he said the flat fees have proven administratively difficult in other states. And he said mileage is the fairest way to assess fees.
“The mileage-based fee is directly more proportionate to what that vehicle contributes in … wear and tear,” Flynn said.
