Vermont's annual transportation budget in FY2025 was $879 million. The Federal governmemt covers approximately 54% of transportation funding, primarily for capital projects through programs like the Federal Highway Administration. Fuel taxes, the Vermont vehicle purchase & use tax and DMV fees cover the rest.
As traditional revenue sources like fuel taxes decline with the rise of electric vehicles (EVs), Vermont is considering innovative funding mechanisms to sustain its transportation infrastructure. A mileage-based user fee (MBUF), charging drivers based on miles traveled, offers a fair and adaptable solution. Gas and diesel tax indexing is suggested as a way to help revenues keep pace with inflation by automatically adjusting rates.
Another option is an MPG-based registration fee, where vehicles with higher fuel efficiency pay more. Retail delivery fees, already in use in states like Colorado, could generate revenue from online purchases, with a proposed $0.30 per package fee for Vermont. Similarly, a tire fee on sales, ranging from $0.25 to $5 per tire, could support road maintenance and tire recycling programs.
Other potential options that are under consideration include weight-distance taxes, vehicle property taxes, leasing state-owned rights-of-way, or carbon taxes. These diversified funding strategies aim to create sustainable, equitable revenue streams for Vermont’s evolving transportation needs