Vermont eyes new taxes to combat loss of road funding

Saturday December 15, 2012

MONTPELIER -- Vermont will likely face a funding shortfall for road and bridge construction and repair of about $250 million a year in the next several years, a draft report on transportation funding said Friday.

In its draft, the special Committee on Transportation Funding listed options to address the shortfall, including raising the state gasoline tax, levying a property tax on vehicles based on their value, and enacting a "vehicle miles traveled tax," likely based on annual odometer readings. A tax of 1 cent per mile traveled would raise $64 million a year, the report said.

The seven-member committee was formed by the Legislature and includes lawmakers, transportation officials, a regional planner and others. The report will be presented to lawmakers as they begin their 2013 session next month.

The report says the state’s money problems surrounding roads and bridges come from the convergence of several factors.

The federal government is providing about 60 percent of Vermont’s $658 million transportation bill in the current fiscal year, but that’s not expected to continue. Also, money the state received as part of the 2009 federal stimulus package to bear up under the Great Recession is drying up, as is federal aid the state received to fix washed out roads after Tropical Storm Irene. In addition, Washington recently ended the "small-state minimum" in its transportation funding formula, which had been a boon to Vermont and other rural states.

Meanwhile, more than a quarter of the $201 million that Vermont is paying toward its transportation budget comes from the state’s 20-cents-a-gallon tax on gasoline. But with underlying gas prices rising and more fuel-efficient vehicles on the road, Vermonters are driving less and using less fuel. Vermont motorists drove 30 million fewer miles in 2010 than in 2005. And the trend is expected to continue as people switch to hybrids and electric cars over the next decade.

Committee members emphasized Friday that the options were preliminary, and would be the subject of extensive hearings in the Legislature. Also, members appeared to disagree about the degree to which their report should be viewed as a plea for more federal funding versus a wakeup call for the state to depend more on itself in the future for maintaining and improving its infrastructure.

Transportation Secretary Brian Searles said much of Vermont’s highway system was built with federal money, beginning in the 1930s and expanding greatly with the construction of the interstate highway system in the 1950s and ‘60s. He said Washington needs to be told it bears a significant share of the responsibility for maintaining that system.

But Steve Jeffrey, executive director of the Vermont League of Cities and Towns and a member of the special committee, said Vermont should prepare for dwindling federal aid in the coming years.

"What we end up fighting for ... is our portion of a smaller and smaller pie," Jeffrey said. "I don’t see the feds driving to our rescue."


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