Vermont Legislature SmartTranscripts:

[Sen. Wendy Harrison (Clerk)]: You're This

[Sen. Richard Westman (Chair)]: is Senate Transportation Committee. We are looking at February 4, and we are talking about the miscellaneous DMV bill and specifically section five to start. And I think, Greg, you're first. And then for all of you, introduce yourself and tell us who you represent as you start. Thank you.

[Sen. Wendy Harrison (Clerk)]: Marlene Battie, Executive Director of Finance for the Department of Corrections.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: Linda Ladd, Financial Director for the Department of Corrections.

[Sen. Richard Westman (Chair)]: And Greg Young.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: I am the Vocational Outreach Program Manager, and I also oversee Vermont Correctional Industries license plate production.

[Sen. Richard Westman (Chair)]: Thank you. And I've been told by Megan that Greg, you're first. Okay.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Haley sent out a handout last night about how our license plates are produced. I'm just gonna go real quickly over, we've been producing the license plates for DMV since 1999. Every plate with the exception of the last round of Vermont strong plates was produced by Vermont Correctional Industries. The production is done at Northwest State Correctional Facility with using up to 11 incarcerated folks. We have standardized the process so that we're following the Department of Labor standard occupational codes. So we actually have conditions and standards that they need to sign off on for them to be fully qualified to work in the shop. We pay anywhere from 25¢ to a dollar and a quarter an hour, but we do have the unique thing about Vermont Correctional Industries is that we have a match savings program. So for every dollar that incarcerated individual saves in the special match savings program, the department will match a dollar up to $4,000 So somebody that stays with us for a while could leave with $8,000 in their pocket if they choose to save. So the 25 to $1.25 actually, if they saved a 100% would be 50¢ to $2.5 an hour, up to $4,000 We have two DOC staff that oversee the shop. I'm actually in the shop today because one of our staff is on the road. So I'm helping cover the shop.

[Sen. Patrick “Pat” Brennan (Member)]: And

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: only have the one contract with DMV and we have a contract with three ms, which actually owns part of our blanking line where the, I'm gonna call them stickers, but it's the material that goes onto the aluminum that says Vermont Green Mountain State on it. Three ms actually owns that piece of equipment and we just lease that equipment from them and it comes along with a price of the roll of graphic that we get.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: For those of you who wanna know what that blanking line looks like, it's in this photo right here. The

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: whole process of it is we put in a roll of raw aluminum that we buy at about 60,000 pounds at a The minimum purchase is 60,000 pounds. We buy anywhere from 80 to 120,000 pounds a year. So that goes through there. It goes through a hot tank to take off any oil. Then the sheeting is applied to it, which is the sticker that says Green Mountain State on it. It comes out in the shape of a license plate, and then we send it through our debossing press, which presses the numbers into it. And then it goes through an inking so that any, the white part that's in the middle gets green, gets green in the high areas that it's supposed to. Then it goes into an oven for about twenty minutes at 200 degrees. Then once it comes out of the oven, it cools for about twenty minutes. And then our incarcerated individuals go through it, make sure that they meet the standards. Then they box it up and they get it ready for shipment. Is there any questions there? Last year we made about 500,000 individual plates. I'm sorry, go ahead.

[Sen. Richard Westman (Chair)]: No, we're gonna have questions at the end. I'm gonna let finish your presentation and then we'll take questions.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Sure. So we made about 500,000 plates last calendar year, 200,000 of those are being the single plates where it was only one, we only had to replace one portion or the state only requires one plate to be on. Our biggest deal is the pairs of plates, which I believe is what DMV is talking about, making everything just a single plate. So we made about 300,000 pair of those. Last year's gross revenue was 790,000 plus or minus. Our net revenue was 187,000 and then our cash balance ended up being $1.19. So the impacts of going to one plate for us is we fortunately, we just bought all of our raw material. So that's the aluminum, the three ms stickers that go on top of it and the envelopes that the plates go into, the brown envelopes that everybody sees. So if we went to single plate, it would be FY 20 8 before we'd have to buy any more of that because of the stock that we have on hand. The production process is exactly the same for two plates as it is one plate. Our debossing press can press two plates at a time. It also can press one. So there really is no savings for the Department of Motor Vehicles because we still have to use an envelope. We still use the raw aluminum just at half. We still use the stickers at half, but we still have that twenty minute bake cycle that goes into the oven. And we still have twenty minutes of cool down. We still have to quality control when they come off, when they initially come off the blanking line, there's a quality control. Some of them don't even make it to that point. And then once they get pressed and inked and cooled, there's another quality control inspection that needs to be done. And then they get put in the envelopes and the boxes for distribution. The the the production processes doesn't change at all for one to two plates.

[Jonathan Slason (RSG Consultant)]: So are you got more screenings or? I'm

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: sorry, what was that, sir?

[Sen. Richard Westman (Chair)]: We're itching to ask questions.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: I'm ready for them. The financial questions will go to Linda or Marlene will take care of the financial questions. Any production questions, I can can feel those for you.

[Sen. Richard Westman (Chair)]: Wendy first and then I've got a bunch.

[Sen. Wendy Harrison (Clerk)]: Thank you. Yeah, me too. Thank you very much for being here. It's really helpful to understand this because I wasn't even sure that Corrections still did it.

[Sen. Richard Westman (Chair)]: Do you let me break in. Do you ever take visitors to see?

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: You can.

[Sen. Richard Westman (Chair)]: Sorry. Was the question? Do you ever take visitors?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Absolutely. We love to have visitors come into the shop. And matter of fact, there was a group of visitors that walked in behind me while I was on this call, and I apologize for that.

[Sen. Wendy Harrison (Clerk)]: Yeah. Well, good. Good. Yeah. I'd like to see it too. So thank you. So the the material that you get from three m, is it? Yes. Not just the the plastic, not the aluminum? The aluminum you okay. Buy So you buy

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: It goes out to bid and whatever the whatever the rate is for that time is what we what we have to pay for.

[Sen. Wendy Harrison (Clerk)]: Okay, and it's great to hear about the matching in the incarcerated folks' account because I'm chair of institutions and we handle corrections now. And so we hear a lot about just the importance of finding ways to get skills while you're and just the financial issues too because there are a lot of things that they had to pay for, you probably know, in the facilities. So how many folks get a substantial amount of, this might be a question for you, have actually money in their account because the pay per hour is still very low. It's is dollar somewhere a dollar an hour.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: A dollar 25 an hour is the max.

[Sen. Wendy Harrison (Clerk)]: Yeah, so I guess I'm curious to know what is the average hourly because the facility rates are when they work in the kitchen for example, that's $5 a day roughly. That's in the range. So I'm just curious about how this relates to that because definitely the matching is a good thing. It sounds like the matching doesn't happen in facility. It does not. Okay, and I can get that later because that's not exactly a transportation. Yeah. Correct.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: Okay, we can definitely.

[Sen. Wendy Harrison (Clerk)]: Okay, but it is. But if you do want to come in and see it.

[Sen. Rebecca “Becca” White (Vice Chair)]: If you can have them at the institution.

[Sen. Wendy Harrison (Clerk)]: Oh no, I will. Yeah, we took that. Thanks. Yeah, I'm just gonna

[Sen. Richard Westman (Chair)]: Go ahead.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah. So you've said it, I think once, that it wouldn't change your process to go from two plates to one plate.

[Sen. Richard Westman (Chair)]: Correct.

[Sen. Wendy Harrison (Clerk)]: If I'm

[Sen. Rebecca “Becca” White (Vice Chair)]: stating it correctly. But you would have a reduction in your revenue is my assumption. So I'm wondering if you could speak a little bit to that and I appreciate the information about two plates to one plate and that it wouldn't change your process. That was a really key question that I had. So thank you for already answering it.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Sure. So right now, DMV pays, let me look at my sheets here. It's for a pair of auto plates, which are the most ones that we sell at $6.98 for a pair of plates. We sell a single plate for $4.28. And the reason for that, it's it's only a $2.27 savings. And that's because we still have the use of the envelope. We still have the box. We still have the labor that goes into it, the ink and the pressing. So we're only really saving one of the stickers, which is about $2.2 a piece and 7¢ worth of aluminum. That was the last price of aluminum was it's about 0.024¢ a pound. So it's like 7¢.

[Sen. Rebecca “Becca” White (Vice Chair)]: Wow, you are, you got the nickels and the dime. Yeah, yeah. And I really appreciate that. That's helpful to know that the cost of one license plate is greater, like the individual cost of one is greater than like half of two, just to say that out loud.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: It is. Yes.

[Sen. Rebecca “Becca” White (Vice Chair)]: So that because of the labor. So it sounds like you you wouldn't wouldn't necessarily see a dip in the revenue going to the program, if I'm understanding correctly. Because you're not you're not giving, like, a dis I mean, I guess you are giving a discount for the two plates essentially in a way. So you're not gonna see a a dramatic I'm just thinking about that a hundred and eighteen hundred the $118,000 that you had as your final that you get as your revenue. It wouldn't you wouldn't see a sharp decrease in that.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: I'm gonna let Marlene and Lyndon discuss that one because it is it is a very complicated financial system on how how it works, so they are much better versed at that than I am.

[Marlene Battie (Executive Director of Finance, VT Dept. of Corrections)]: So you're not gonna see 50% less revenue, but you're gonna see we're estimating $2.02 to 300,000 less revenue. Oh. Gross revenue. Gross revenue.

[Sen. Rebecca “Becca” White (Vice Chair)]: Okay.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: Not that. Instead of your close to 800,000, drop that anywhere from 2 to 300,000 gross. So your 118 net is definitely gonna be less because you've taken a significant hit, yet your cost for that aluminum when you buy it and the cost for that minimum number of sheeting, that's not gonna change whether you get one plate or two plates sold. And that's the hard part, is there are minimum quantities that we have to purchase when we do go out to purchase. So when we purchase what they call the Legend, the Vermont Legend that has the Vermont brick in the green, Yes. When we purchase that specific, that's the sheeting that overlays on top of the aluminum. The minimum number of rolls that we can buy is 40 rolls at a time, and they're roughly $1,300 a roll. So if you're buying one plate, that's

[Sen. Richard Westman (Chair)]: going to

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: sit on shelves longer than it currently does because of the production being mostly pairs of plates. The other piece is when you're buying aluminum, it does have to go out to bid, but we do watch the commodities market. You you have to watch the commodity market. What's happening to aluminum? Yeah. And that that's going to affect our cost. The last time we purchased the 60,000 pounds, it was well over $3 a pound. Oh goodness. So that's a hit of a 180 some odd thousand dollars to our balance sheet right off the bat. So if we're not using it, it's it's kinda sitting there, not making any money. Yeah. Well, there's that whole timing and that kind of financial issue. So it would be very unfortunate if the net result of that change ends up where the cash balance is in the negative at the end of a fiscal year, which we just went through with the legislature last year to ensure them that that will never happen again. Oh. So I'm very aware of if if something of that were to happen, then we'd have to really have another conversation with the Yeah, just to break even. Right.

[Sen. Wendy Harrison (Clerk)]: Yeah. Not to be in a deficit position because that's one prevention, you know, electrosyth, you have to fill a whole gap there. We don't want to do that again.

[Sen. Rebecca “Becca” White (Vice Chair)]: Well, this is really helpful because I think we've been kind of pitched this transition for two plays to one as a cost savings overall for the DMV, but it sounds like you're actually potentially at the DOC going to be experiencing potentially a loss or a deficit. Could.

[Sen. Wendy Harrison (Clerk)]: It would We could. We're not sure.

[Sen. Rebecca “Becca” White (Vice Chair)]: You're not sure. Okay.

[Sen. Wendy Harrison (Clerk)]: I We know we'll have a loss of gross revenue.

[Sen. Rebecca “Becca” White (Vice Chair)]: Oh, great point. But that does make me more I did not expect that. That's information that I had not fully thought through. So it does make me a little more apprehensive for the two plate to one plate move. But you're really watching the numbers. If you get new information or if you're able to come to an agreement with DMV or something to make sure that you don't end up in a deficit, know, can they I I just don't want you to end up in a deficit for this situation. So even if we do move to one slate, I think that's a serious conversation we have to have because I would hate for DOC to basically be experiencing negatives for a move that's actually benefiting the DMV coffers. So that's just a thought. So thank you. So

[Sen. Richard Westman (Chair)]: I'm gonna switch gears here a little. And it was mentioned earlier that when we did the Vermont Strong Plate that that was not done in house with erections. Why was that?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: So when the first iteration of Vermont Strong came out, we had the sign shop that Linda was talking about earlier. We had a sign shop where we had almost 30 additional incarcerated individuals that were working up there. So we could lay the signs a lot faster. So what we would do is we would just run plates through the blanking line at our plate shop, box them up and send them up to Newport where they would apply the Vermont Strong sticker. This second round of Vermont Strong plates, we didn't have that shop. So we only had the up to 11 incarcerated individuals at Northwest and we were just barely keeping production. And the request was for, it was for a lot of plates in a short amount of time that we had to turn them around, and we were not able to be able to do that. We we would not have been able to meet the production time frame.

[Sen. Richard Westman (Chair)]: So let me ask this question because this is not an easy If the front plate went away and there is some movement, is there capacity to do a limited number of something else? Would there be capacity to do that? We have a bill on our wall that says Vermont Green. Would corrections be in a position where sometime in the future they might be able to print? Not a huge number, but you know, in some capacity do something like a Vermont strong flame.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Very limited production with our current production process. There is a process out there that we could do that in a high production capacity, but as of what we have right now, we would be very limited on the number that we could produce in a certain amount of time.

[Sen. Patrick “Pat” Brennan (Member)]: Go ahead, Pat. What would that be? A ballpark.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: To purchase the new equipment, to be able to do that?

[Sen. Patrick “Pat” Brennan (Member)]: No, to get a plate out, a certain number of plates out within a certain timeframe.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Because we use three ms material, all of the design and process has to go through them because it's their material and their process is about three to four months from the time it's designed until it's approved by the Department of Motor Vehicles. It takes about three to four months because it goes back and forth to Texas a few times. Once it gets approved, we could probably make 200 plates in a week, 200 of these special plates in a week. Okay. But that would be after it went through the whole entire approval process.

[Sen. Richard Westman (Chair)]: We're probably gonna have to go further with this. But this sounds like is maybe yes. And there is no definite to this, but it doesn't come without ear up and you know, we might be interested in talking about that and what the process is. And it would depend on whether you could get stuff from three ms.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Correct, Correct. It would be their design team that works with whoever. So if Vermont Green wanted plates, they would work with three ms, get the design they wanted to, that would go to DMV, get their approval to go on the road, and then it would come back to

[Sen. Richard Westman (Chair)]: us. Okay.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Go

[Sen. Wendy Harrison (Clerk)]: ahead. Thank you, Sheriff. So just to follow-up on that, would the cost be more per unit because you'd have fewer units?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Yes, it would be.

[Sen. Wendy Harrison (Clerk)]: Okay, so it would be good to know that number and if we do the soccer plays there may be other plays that folks want. Well, there might be capacity to come back.

[Sen. Richard Westman (Chair)]: I think what we're hearing here, it's limited capacity. Yeah. So if we to move in that direction, it would be nice to know what's doable. You know, what would be doable in this press? And if it doesn't happen here, who did the Vermont Strong second printing?

[Sen. Wendy Harrison (Clerk)]: That's okay. I believe that

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: was done out out of Canada.

[Sen. Richard Westman (Chair)]: It was done out of Canada? Yes. Does anybody know anybody from No, that was in the middle of of the the Vermont Strong plates. Is there anybody still around?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Of the first iteration of Vermont Strong? Yes, there is.

[Sen. Richard Westman (Chair)]: And who would we talk to to get information about that? You don't have to answer that right now? I'm going to have

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: to think on that for a minute.

[Sen. Richard Westman (Chair)]: And it would be helpful to us if we could better understand what your capacity might be. Okay. And any estimate, if I went home and Jones says she wants a job done by some contractor, she said, always give me the high level of the most expensive it could be, some idea of what on a limited basis if we said there was going to be a couple of specialty plates if you did have the capacity and what that might Okay, look

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: we can do that.

[Sen. Richard Westman (Chair)]: If we're consider doing away with the front plates and there was any capacity, that might answer the question of DOC losing any money if we could do that. Otherwise, you know, it would be nice to talk to somebody that did the Vermont Strong so we could understand what the capacity to go out of state or somebody else that would do it and what they did. Because Okay. They apparently had experience both in house and out of house. Greg,

[Marlene Battie (Executive Director of Finance, VT Dept. of Corrections)]: this is Marley. I have a question because I'm newer to this process. Our license plate production is the raised letters on the license, right?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Debossed. Debossed. Debossed.

[Marlene Battie (Executive Director of Finance, VT Dept. of Corrections)]: The Canadian shop for the Vermont Strong, were they debossed or were they No,

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: they were flat plates. And even the first iteration of Vermont Strong was flat plates.

[Sen. Richard Westman (Chair)]: So since you asked the question, what does that mean to somebody that doesn't understand that?

[Sen. Wendy Harrison (Clerk)]: Well, and I'm new to this, so I think it means that the flat plates are less expensive to make. Plates, it's just

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: the design of the sheeting just goes on the aluminum. There's no pressing at all involved with a flat plate. When you go to our standard plates that we currently use for vehicles, they're pushed in. My understanding, Greg, correct me if I'm wrong, is that we are the only state that pushes them in instead of pushes them out.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Correct. We are the only state that debosses our plates. Other states either emboss or go with a flat plate.

[Sen. Patrick “Pat” Brennan (Member)]: Flat plates are much less resilient. It seems like in other states that the printing of it can just come off and then it looks like a flat piece of metal where if you have the emboss or deboss, then you're at least gonna see that

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: The impression. Correct.

[Sen. Rebecca “Becca” White (Vice Chair)]: The deboss is out and in. Emboss is in.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Deboss is in. So we press the numbers into the top of the plate. Emboss is they press the numbers in from the bottom of the plate. We press them down from the top of the plate.

[Sen. Rebecca “Becca” White (Vice Chair)]: Because I'm like, okay. I'm just looking at plate. I love that.

[Sen. Wendy Harrison (Clerk)]: So they're both raised. It's just how they do it. It's just So that's That

[Sen. Rebecca “Becca” White (Vice Chair)]: is the b box. That needs it explains why they're so yeah. Okay. Oh, I see. That's cool. I guess

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: I never thought about that.

[Sen. Richard Westman (Chair)]: That's what we had. None

[Jonathan Slason (RSG Consultant)]: of us know much about this.

[Sen. Rebecca “Becca” White (Vice Chair)]: That's good. I mean,

[Sen. Wendy Harrison (Clerk)]: I'll keep it. Don't have sample on your card.

[Sen. Richard Westman (Chair)]: Well, really would be helpful if we could get some information. Do you have capacity? Sure. Under different scenarios, what might be the cost in estimate, what would it take to gear up, how long would it take you to gear up. Give us some idea if we took this move and it was a reduction of 200 or $300,000 in revenue, would some limited capacity for limited production of specialty plates be possible?

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Okay. I can look into that. Can get those answers to you.

[Sen. Richard Westman (Chair)]: Thank you. Thank you. Do you are we missing anything? And, when's

[Sen. Wendy Harrison (Clerk)]: a good time to visit?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: It's okay.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: You just work through Hailey on that and we will open your we will open our doors for you anytime. But Hailey can Hailey can work through the details on that.

[Sen. Richard Westman (Chair)]: Yeah, I think it would be, you know, we don't do a lot of field trips here, but you know, we might It's an experience. Everybody should see at

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: least how plates are made one time.

[Sen. Patrick “Pat” Brennan (Member)]: Yeah.

[Sen. Richard Westman (Chair)]: Yes. Well, lot of what we do has to do with your license plates. Okay. Thank you. Thanks. And thank you all for coming today. Okay, thank If you could contact Megan, as we are approaching a timeframe where we've got crossover, and I'm gonna say this members of the committee, we've got eighteen days left for crossover

[Sen. Patrick “Pat” Brennan (Member)]: for

[Sen. Richard Westman (Chair)]: us. So we're a little bit in a tight timeframe to get some solid numbers to help our thinking.

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: Sure.

[Sen. Richard Westman (Chair)]: Thank you. Thank you.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Thank you.

[Sen. Wendy Harrison (Clerk)]: Thank you, Greg.

[Greg Young (Vocational Outreach Program Manager, VT Correctional Industries)]: Bye now.

[Sen. Richard Westman (Chair)]: He thought he was in the office. I know. I know. D boss. Emboss is flat. Is that

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: But the emba.

[Sen. Wendy Harrison (Clerk)]: What could we even tell if we had one of you?

[Sen. Rebecca “Becca” White (Vice Chair)]: No. We did. I mean, you can tell. Right. Right.

[Sen. Richard Westman (Chair)]: But Yeah. Those are the end. Yeah. But I

[Sen. Wendy Harrison (Clerk)]: mean, functionally everything stops. You know what I mean?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I thought yeah. I I stopped waiting. Thought so

[Sen. Wendy Harrison (Clerk)]: too. Well, the the winter ones, that's what I saw. Yeah. Well, kind of. Well, it should

[Sen. Rebecca “Becca” White (Vice Chair)]: be held by Monday.

[Sen. Wendy Harrison (Clerk)]: Monday. Yeah, we should talk. Well, that's all.

[Sen. Richard Westman (Chair)]: Yeah. I never realized, never realized in this that a savings in our budget is all good Well, for

[Sen. Rebecca “Becca” White (Vice Chair)]: that was the that's what the life model was for me.

[Sen. Wendy Harrison (Clerk)]: I didn't honestly well, that's a a preparations thing

[Sen. Richard Westman (Chair)]: probably.

[Sen. Patrick “Pat” Brennan (Member)]: Yes.

[Sen. Wendy Harrison (Clerk)]: But but it We

[Sen. Rebecca “Becca” White (Vice Chair)]: have to call it. No.

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: I have not.

[Sen. Rebecca “Becca” White (Vice Chair)]: You get a mini super ear. Oh, yeah.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: Actually, no. I think we should

[Sen. Wendy Harrison (Clerk)]: have a policy that that one that that if we do want one fund to subsidize another fund, we do it consciously. Yeah.

[Sen. Richard Westman (Chair)]: Well, I I But We're we're trying to but I would say if they could do, say they could do touristy specialty plates and it made up the whole thing. Yeah. All of these things go up against each Right. Are you ready? Wait. You're a little slow, disputing.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I didn't wanna connect him. That's up their testimony.

[Jonathan Slason (RSG Consultant)]: So

[Sen. Richard Westman (Chair)]: Well, they did pretty good, and let's see how you do. Oh

[Jonathan Slason (RSG Consultant)]: my god.

[Sen. Rebecca “Becca” White (Vice Chair)]: Pressure's on. You're it's so crazy to a house transportation.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I know. It's like the lion's den.

[Jonathan Slason (RSG Consultant)]: Are you taking time? We're just we're

[Sen. Richard Westman (Chair)]: just sitting here twiddling our couch. We do.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Okay. Well, thank you, chair and and committee members. Jeremy Reed, chief engineer, agency of transportation. And I'm here presenting on two reports that were submitted this past January, and they were compelled by last year's key bill out of out of this committee. I'm gonna just combine the two reports into one presentation and go through it that way. So the first one is section 16 out of act 43 of 2025 that in effect had two objectives, to evaluate the state's town highway aid and grant programs to look for any sort of efficiencies and to evaluate the various funding streams administered through the agency's municipal assistance bureau. So there's, and as you'll see in later slides, a plethora of various avenues for funding for TANS. So, as I just alluded to, here are the various funding sources. You've got a number within the Municipal Assistance Program, and those are generally grant programs. Within the Finance Administration Division, you have the Direct aid program. Within district maintenance and fleet, there are a number of grant programs. And then within planning, there's better connections grant program. And just for terminology, when we say grant, that is an indication that there's process involved in that the municipality has to apply for a grant, and then somebody generally at VTrans then makes a decision on awarding those grants. You'll also see that the funding source is split between state only and state and federal funds. Obviously, as we've discussed previously, there comes strengths with those federal funds, so we are somewhat limited in what we can do on the federal fund side. So, of the key findings are that municipalities have limited resources. I think we can acknowledge that various municipalities have different levels of sophistication and general apparatus to administer these types of programs, and this is particularly relevant on the federal side just because of the strings that are attached. You need to check all the boxes for federal funds. Additionally, frequent turnover with small towns causes problems because you lose that knowledge on a fairly regular basis. Therefore compounding that problem. Transparency. So, it was acknowledged that there is some programs that are very transparent and obvious, and others are a little bit less so. And so, the finding there is that to be it's not a blanket finding that we need to be more transparent, that we need to be more consistently transparent.

[Sen. Patrick “Pat” Brennan (Member)]: When you say we, you mean trans. Generally,

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: we trans, that was targeted at.

[Sen. Wendy Harrison (Clerk)]: Do you want questions as you go along?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Whatever the pleasure. Go ahead.

[Sen. Wendy Harrison (Clerk)]: So does transparency include a good amount of notice so that when programs are open the town has more than thirty days to respond?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: That wasn't necessarily highlighted, but I think transparency is all of the above. So it's how does a grant get award? Is it clear to the towns that there is a notice of funding opportunity? What is the evaluation criteria, what are the expectations for that grant award. So, it's all of the above. It's not specific to any one concern or one component.

[Sen. Wendy Harrison (Clerk)]: Okay. I guess so then I just need to say, because I think I did say it last year, that is a barrier. It's really hard when you only have that amount of time because many, with small towns and even medium towns, the select board is gonna wanna see it twice. And so some only meet once a month. So if you need a program, they need the application period to be longer than a month.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Fair enough. The report authors also looked at what some of our neighboring states have done, principally Maine, Massachusetts and New Hampshire, and the key findings of that are that a formula driven process eases the administrative burden. Right? So as I discussed, aid is is kind of direct. There's not a very heavy bureaucratic process, whereas the grants, there's a notice of funding opportunity that may have to apply, then we evaluate, then we award the grant. So, they did notice that there was certainly efficiency on the direct aid versus the grant programs. Now, that would be limited to state funded programs because we can't get aid from federal funds. There is also a downside that if towns do not use the aid in the manner that we would want, there isn't that backstop. So, prime example of that would be like a structures grant out of district maintenance and fleets. If we converted all that money to direct aid and they did not establish a capital reserve fund and and took a portion of that on an annual basis, there would not be a grant program when they had an issue with a bridge to receive a one time $100,000 grant award. So they would need to have the fiscal discipline to take that money on an annual basis, let it accrue, and then do the required work. So, what you gain in efficiency as the offset of basically necessity and fiscal discipline. So, some of the recommendations to try to make the whole process more efficient is a singular webpage for all municipal funding opportunities, and perhaps a cloud based application that in some way could address all of those. Again, we're a little bit limited once we introduce federal funds as far as the content of that, but that was one of the ideas. A training series intended to improve municipalities' understanding of the funding requirements and expectations. Is that a training series for the application? For the program in general. So, not only the application, but what are the requirements by America, some sort of timeliness, what are the documentation requirements.

[Sen. Patrick “Pat” Brennan (Member)]: I used to do grant writing for our fire department, federal fire fire fighter grant or whatever right there from fifth I can't remember the names. But they had really good training. Like, if you're gonna apply, do this one hour webinar. Sure. It was really helpful. So you did an application correctly instead of going back and forth. They're not getting funding because you didn't fill it out correctly or just and they I think they would also say, like, be aware if you get this money, you're gonna have to do by America. Right. Right. Like that. But those and it didn't seem like it was it was the federal government. They did whole country. But if there could be something like that, like those little white arms, they're the key things. Yeah.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: And I think that's exactly what this is pointing to. Yeah.

[Sen. Patrick “Pat” Brennan (Member)]: Go ahead. Didn't we have staff at one time? Maybe it was during I don't know if it was pre COVID or what, a couple staff that would go into towns and help them do the grant MPAPS? Through the grant process.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. MPAPS and, I think, ACCD, so I don't I don't know. They don't do that anymore? I don't know.

[Sen. Patrick “Pat” Brennan (Member)]: Oh, yes. I don't. They're there. I think they have money. Yeah. They're running out of money, but

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Okay. Yeah.

[Sen. Patrick “Pat” Brennan (Member)]: I think it was to help them for all grants. Yeah. Transportation and other federal.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah, so I think that's an ACP Another recommendation is to make the commitments and risks more transparent, and this really ties into the next report. If a town in good faith, but somewhat uninformed walks into a grant, and then after the fact realizes what they signed up for, then they have to cancel it, that introduces a lot of inefficiencies. Whereas if we made those commitments and risks that are known upfront, in theory, would be some efficiency savings. And I mentioned already the transparency piece amongst, or the consistency and transparency amongst all the programs and what we, or how we operate. That's fee on the program. Project managers. Excuse me. So you've got municipal assistance program has municipal project managers, and then within district maintenance and fleet, you've got district project managers that have helped them with those grant programs as well. I don't really understand what you're what

[Sen. Patrick “Pat” Brennan (Member)]: specifically you're talking about when you're saying transparency transparency about program department.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: And and how exactly how it's awarded. So so all of the above. Right? So it's how the program works, what the expectations are of the program for the aid. Exactly how do we calculate and award aid? You know? What is that calculus? Does every town get the same? Think the statute, and I'll just paraphrase here, basically says that the district transportation administrator has to equitably distribute the funds. But again, because it's sort of a rolling average, one town may get something one year and then fall a third of the way down the list, whereas if they got a bigger award, they fall all the way down the list. So just being more consistent in our transparency. Correct. Right. So so in theory, you've got nine districts and five DTAs. So I think I think they were just looking to read we're consistently transparent. And this was derived from feedback from RPCs and VLCTs, so I think that's where the consistency piece is. Think some RPCs reported, Yeah, we've got great service, we know exactly how this runs, and I think other RPCs or these VLCTs as well, we're not entirely sure.

[Sen. Patrick “Pat” Brennan (Member)]: Right, and I think that changes when you get program managers maybe or the district, I can't remember if there's a what the name of the person is that works in the towns in the district.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah, district project manager and district.

[Sen. Patrick “Pat” Brennan (Member)]: That changes. I know when I was on support, we would get a new one and I was like, well, this is totally different. Right. Yeah.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I mean, we all do things differently and have different strengths, and I think that's just the nature of having nine districts. So, Chair, we need our district map to be displayed.

[Sen. Wendy Harrison (Clerk)]: Oh, yeah. And we have. It's very large. You'll be fine with this.

[Sen. Richard Westman (Chair)]: Why don't you panic over here?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: So that's the high level summary of the first report.

[Sen. Wendy Harrison (Clerk)]: Can I just ask a question? The first report is, the title is municipal?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: It's, I don't know exactly what the title is.

[Sen. Wendy Harrison (Clerk)]: It's like a payback.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: No, no, that's the efficiencies. So, the first report, section 16, is grant efficiency.

[Sen. Wendy Harrison (Clerk)]: That's the efficiency report. So, that's what you're giving us now.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: So, that's what I just did, was the Can efficiency

[Sen. Wendy Harrison (Clerk)]: we just go back to the slide that says municipal funding Some of these are automatic and some are not. I'm trying to figure out, so the town highway structures program, that doesn't have, there was a the keyword was So

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: so the yeah. So the the keyword is aid versus grant. And so and I see some of these don't necessarily say grant, but Town Highway Aid, for instance, is a direct formula based on the mileage certificate. Each town gets that on a quarterly basis. There's no application, very low level of bureaucracy.

[Sen. Richard Westman (Chair)]: Right.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: You know, you just get it.

[Sen. Wendy Harrison (Clerk)]: Right. Which is actually great.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. Yeah. I think everyone

[Sen. Wendy Harrison (Clerk)]: And it's a good amount

[Jonathan Slason (RSG Consultant)]: of funding.

[Sen. Richard Westman (Chair)]: Which is how much in my hour are they getting this year?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I don't know that off of my head. It it varies depending on the class. Right? So you get

[Sen. Richard Westman (Chair)]: Well, I last time. By class, what are they getting?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I don't know. Can I can work with Ernie to provide that?

[Sen. Richard Westman (Chair)]: Well, and I know that the agency's done well to keep up with their formula and what it is. And this is a technical term from the chair, tuning for men. Yeah. We match this.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I'll I'll get don't mean to No. No. I I just

[Sen. Patrick “Pat” Brennan (Member)]: understood. Yeah.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: And I'll just say, you know, the FY '27 budget, we match the the statutory required amount.

[Sen. Richard Westman (Chair)]: I I already said that. Okay. I I knew I knew what you were gonna say.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I don't even need to be here.

[Sen. Richard Westman (Chair)]: No. No. We love having you here.

[Sen. Wendy Harrison (Clerk)]: So so then so that's the automatic

[Sen. Richard Westman (Chair)]: Right. The town highway aid. Yep.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Municipal grants and aid program is automatic. I think I think yeah. So I think

[Sen. Wendy Harrison (Clerk)]: It it would be helpful to know.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Right. So so I'll so, like, the municipal grants and aid, I think you just need to submit a letter of intent, and you get it automatically. And and because they have a fixed amount, they have to wait, understand, because, again, there are some program requirements for that. So they just need to wait for the towns to say, We've got qualifying work. We will do.

[Sen. Richard Westman (Chair)]: Okay. Go ahead.

[Sen. Rebecca “Becca” White (Vice Chair)]: And I just wanna point out, like, one thing we're kind of missing here is that there's no dedicated formula funds for improvements to bike and pedestrian is my understanding. The only way you can get funding as a community is through a grants program.

[Sen. Patrick “Pat” Brennan (Member)]: Correct.

[Sen. Rebecca “Becca” White (Vice Chair)]: So, just want to highlight that. I this funding, I wish this study had included the differences between access to certain programs and fixed money that people are getting. Because I think what we've seen is that's a policy choice, is the towns that can get the fixed formula funds are going to not necessarily be the same towns that are going be able to apply for a bike and pedestrian grant program. So we just see this continued where they're not doing grants, they're not able to fill them out, whether or not staff time or interest and ability. And so they're just doing the basic what they're getting in Town and Highway A funding. They're not doing pedestrian safety measures in the same way with sidewalks or or bike safety. So I do think there's also a a clear policy choice in the way we've delineated the funding for towns where they're prioritize their small towns are having an inability to access complete streets programs, for example. So I just want to call that out because I I was surprised it wasn't a finding in here. And then I also want to point out that my understanding is you can own you are prioritized within your grant applications for better roads, for example, depending on how you've zoned your community right now. And I don't know what's happening with 181, but what I've heard is Hartford, because we have a designated downtown, we get more we get higher on the list when it comes to applying for grants. So I'm wondering, did you look at how some of our other laws are affecting who's getting prioritized within the grant application process? Because that's confusing.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. So so the scope of the report wasn't to do a deep dive into the details and then a phase of each grant program or each aid program. It was just as a collective pot of money.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Is there a way to run it in aggregate more efficiently?

[Sen. Rebecca “Becca” White (Vice Chair)]: Okay. If I remember I I'm gonna have to look back at our wording because I think the term efficiency that you're using is maybe overstating, I think, what I was hoping to see from the report, at least when we wrote it. I was hoping to see how we could better not necessarily even yes. Efficiently use our dollars, but also support communities in a in a and I guess that wording didn't translate into what was actually so that's a bummer for my part. I missed that we had I wanted to hear more about how we can support the towns better with what we have. And maybe that means efficiency Mhmm. In that word, but it's not translating what we got.

[Sen. Wendy Harrison (Clerk)]: Go ahead. So before we go to the next report, because we're finished.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Correct.

[Sen. Wendy Harrison (Clerk)]: You're I guess two things. I can't find it on the on our website, so that's a vegan thing. So, I'm sure it's there. No, I'm sure it's there. It's just I don't know which one it is. Is VTrans going to do anything differently based on this report?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: So, we're still evaluating the recommendations, and, you know, we'll we'll have to look at what any of the recommendations would cost or or, you know, resources to implement. At this time, we're not proposing anything or just evaluating at this point.

[Sen. Wendy Harrison (Clerk)]: So I would think that most of the things that you would do would be internal. I mean, would be policy things that you wouldn't necessarily need. You don't need legislation to do most of these things.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Don't know about most or some, but yeah, some of them we would definitely need legislation for. Some of them we could certainly do. Right? We could build a single website without legislative approval. If we wanted to take the money that's traditionally going to a grant program, whether it be a class two payment program or a structured program and turn it into formula aid, we would need legislative approval for that.

[Sen. Wendy Harrison (Clerk)]: Okay. But you wouldn't need approval to give the towns more time to respond.

[Sen. Richard Westman (Chair)]: Correct.

[Sen. Wendy Harrison (Clerk)]: I

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: think that's true.

[Sen. Wendy Harrison (Clerk)]: Yeah. So I'm still going to advocate

[Sen. Patrick “Pat” Brennan (Member)]: for that.

[Sen. Richard Westman (Chair)]: Thank you.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: And I think Joel is probably going to come in at some point, he can talk specifically to the municipal assistance grants. And certainly we can have somebody come in to Senator White's question about the Better Connections grant and discuss the details of those programs.

[Sen. Richard Westman (Chair)]: Thank you.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah, because I thought we put in place all this stuff so that you would get like, this this list is only really truly available for certain towns. Like, this full list is my understanding. Yeah. Because full full I I mean, you can apply. Right. But you get higher priority based on certain planning and zoning decisions your community has made, which are more accessible to communities with larger staffs, for example. Like, know Hartford is almost always getting these grant programs because we have, like, five people who can do it, and we have a cohesive DPW staff.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yep.

[Sen. Rebecca “Becca” White (Vice Chair)]: But that doesn't mean so just having it be available isn't the same as people actually being equally able to access it. So I guess I misunderstood the point of this because I thought that was true.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: And that's the nature of any grant program, that was part of the challenges identified with the key findings is that municipal capabilities and capacities will definitely impact the ability to continuously or consistently submit well written, well thought out grants.

[Sen. Rebecca “Becca” White (Vice Chair)]: Orkie, but I'm saying you keep even if you do submit one, you're still less likely to get it than other communities based on how we set up priorities.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. I I I don't I I don't know the the scoring.

[Sen. Richard Westman (Chair)]: It's I

[Sen. Rebecca “Becca” White (Vice Chair)]: thought was the point of what we were doing before was we want towns to have smart growth so you get better access to grant money based on those things. But I guess that was beyond the point.

[Sen. Wendy Harrison (Clerk)]: I appreciate

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: your time.

[Sen. Rebecca “Becca” White (Vice Chair)]: No. And thank you for the work.

[Sen. Patrick “Pat” Brennan (Member)]: Yeah. And the roads, there's

[Sen. Richard Westman (Chair)]: the whole.

[Sen. Wendy Harrison (Clerk)]: Yeah, and just to, if I can talk to

[Sen. Rebecca “Becca” White (Vice Chair)]: you, just, The guys

[Sen. Richard Westman (Chair)]: who talk to you back and forth, I always tell.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah, well, she's purple, but I always think it's our pick.

[Sen. Wendy Harrison (Clerk)]: Yeah. Just, some of the requirements are legislative requirements. Yes. And that's okay. And I think that is our purview and that we should look at those and update them periodically and understand if they're working. But then others are just the ways that the system could be really improved. Mean there's a lot of opportunity for improvement and it's not all just VTrans, it's towns also and it's regional commissions, but if we could have a good idea of what levers to press on those, I think it would be helpful. Maybe the full report has that. I I just haven't

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: mean, I'm doing a high level presentation. I will say in general, lot of these grant programs are,

[Sen. Richard Westman (Chair)]: and I

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: think to your point, Senator, is they were targeted for very specific tasks, and so if communities aren't invested in those very specific tasks, then yeah, they're going to be less likely to get a grant for that specific initiative. There isn't meant to be parity across the state on the amount of money you receive. I think a lot of these grant programs, whether at the state or federal level, were designed to support specific initiatives that towns have either an interest or capability to pursue.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah. And I I think the point I'm trying to make is, like, I don't think Hartford is more pro bike lanes than every other community at Windsor County. But because we spent years putting it in our town plan, we get that money. And so we become a place where people can bike, and then unfortunately, the surrounding communities are not able to get access to that money. So I guess that's my point is but I hear what you're saying. It's like we did we did all the work, so I understand why. But it does create, like, these interesting corridor deserts of support for some May of these I ask one other just because it came up in the news yesterday? Apparently there's now a push by multiple municipalities to no longer maintain roads,

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: to to release their ownership of roads Okay.

[Sen. Rebecca “Becca” White (Vice Chair)]: Give it back. And I'm wondering if that came up at all with the town Highway 8 discussion if you were seeing communities prior it was just it was like a break I was surprised to see that. That's a tactic that towns have taken when they say we're just not getting enough money, so we're gonna maintain fewer roads.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yep.

[Sen. Rebecca “Becca” White (Vice Chair)]: Did you hear that at all?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I I I don't know the story you're referencing.

[Sen. Richard Westman (Chair)]: Okay.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I will say disinvestment is something that's gaining popularity nationally. And I think there should be, with limited resources, some look at how much value does that road have. Chairman of the local select board here, I get it. If it's a class three with one house, should it be a class four or a legal trail? I think that level of consideration is something that we would support just because we need to do that as well. Think last year you posed the question, do we pay too much? So that's something, you know, disadvantage is something we need to look at not only at the state level, but the town level.

[Sen. Rebecca “Becca” White (Vice Chair)]: Yeah. It would be interesting to see. I think it was Morrisville, but it might have been Morse Town, so I don't wanna

[Sen. Richard Westman (Chair)]: yeah. I don't They're one in the same.

[Sen. Rebecca “Becca” White (Vice Chair)]: Okay. I don't know which one's the municipality, but I guess the municipality is considering. Did you call it disinvestment? Yeah. I think that that is another question is are we truly not giving enough money to meet the needs now so people are pulling back and what does that cause of consumption?

[Sen. Wendy Harrison (Clerk)]: And when we talk about that, let's also talk about there are some towns who want to take over state roads mostly because of the ability regulate what happens on the roads more than the paving. They're not eager to pay the pavement.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. But

[Sen. Wendy Harrison (Clerk)]: that's a whole conversation.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. Mean, St. Albans down last year, right? They took over. So

[Sen. Patrick “Pat” Brennan (Member)]: Yeah.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: K. Lost a line. All all questions answered for the nutrition team? Okay. I hope you could address anything later. So the second was, and I think we were in here with some testimony last year, trying to understand what is a good approach for some of the payback provisions. And this really stems from IIJA. So pre IIJA, the payback provisions were very clear, there was consistency between our grant agreements, state statute, and the federal CFR. IIJA relaxed some of the payback provisions, and so this report is in effect trying to help us get to a place that provides transparency and consistency for those payback provisions. So again, same sort of format, I'll discuss some of the key findings and then the recommendations. So currently there's some ambiguity and or inconsistency between the payback provisions in the state statute, the grant agreements that we actually execute, and potentially the CFR. Again, process challenges for municipalities, especially as we discussed, smaller towns that either are less sophisticated or just have less resources in general, especially on the federal side, and that's principally what we're talking about, is those programs that have federal money. Understanding the administrative burden that comes with that money, and some of the project risk, because typically there's a little bit bigger projects, and understanding those project risks when you apply for the grant is one of the findings. Some of the other program findings is that if projects languish and then ultimately get canceled, there's a significant program inefficiency in that because essentially those funds are encumbered, and if Town A, for instance, sits on a project and can't pursue it for any number of reasons, that means Town B doesn't get that funding. So certainly there's that identified issue. The consensus is not there yet on what we want to do as far as what the payback provisions are. What was identified is that we do need to have a consensus and there needs to be very clear milestones on what the payback provisions will be, and then there will need to be supported education and transparency on that so that towns can walk into a grant application fully understanding what they're signing up for and not have the ambiguity of legalese rule the day, basically, which is a little bit where we're at right now. The other piece to this was recognizing that trying to make sure the town is ready for this grant, and that's largely in the scoring process to make sure they're in a position to be successful. So the recommendations were for standardized payback language and the triggers, that's a little bit of a moving target because every surface transportation bill could alter that language, so we could be stuck in a cycle where every four or five years, or five or six years, depending, we may need to alter what that payback language looks like. Enhance early project vetting and scoping, kind of do a scoping plus effort, and again, that's the sole intent to make sure that the towns are actually ready to pursue construction on a project, actually implement prequalification and commitment mechanisms. So, one of the thoughts there would be to require some advanced scoping to even apply for a construction grant. Obviously the downside there is it's another step, but in theory that could yield some benefit in the long run. Formalize education and training and technical support. This is similar to one of the recommendations in the previous report to actually have an education component to this. Again, see very clear milestones for when the town would be liable for payback, whether it be right of way, engineering, etcetera. And then institutionalize the transparent consultation and appeals. So right now, the appeal process is pretty onerous. The way the statute reads is the town can appeal to the keyboard, and essentially, I believe the way the statute reads is that the keyboard has to issue a decision within thirty days. Now, with the keyboard being a quasi judicial entity, there's a lot that has to happen in that thirty days. And I won't get all of those steps, but you have to have full discovery, you have to have a hearing, the keyboard needs to deliberate, then it's your decision. And anybody who's been through a full discovery of a project, that's a fairly onerous and time consuming process. And so aside from all of that being done in a very condensed timeframe, we just had one last year where essentially the town appealed a week or two before Thanksgiving, so obviously the seasonal timing of that was not great. But what it actually did is it to some extent, by consolidating and condensing the timeframe, you reduce the ability to communicate, try to negotiate, because everyone's got this arbitrary deadline. So, trying to institutionalize a much more transparent appeal process that is workable to a productive outcome, not a timely outcome necessarily.

[Sen. Wendy Harrison (Clerk)]: That's interesting. So, I was on the T Board, I think this is a new law, We never had anything.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I think it's been there for a while. What we're seeing is with the dramatic increases in inflation, these are now becoming more of an issue. Pre-twenty twenty two, projects being canceled and payback being an issue was almost nonexistent. So, with the passage of IIJA and the corresponding inflation increase, we're seeing a lot more projects canceled, so depending on when you were in the keyboard, very likely none of this ever occurred.

[Sen. Wendy Harrison (Clerk)]: Right, and I was on for seven years, but that was before 2022. Interesting. So, my other question was, what is the extent of this problem?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I don't have prior numbers. I'll just say I have seen basically hounds either appeal or come to me for a reconsideration in the two or three years I've been in this position, half a dozen.

[Sen. Wendy Harrison (Clerk)]: Okay, are there going to be new ones, do you think? I mean, you're saying it's primarily from the IIJA.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Well, what IIJA did is the federal government relaxed the payback provisions, created this discontinuity between the grant application, state statute, and the federal CFR. So, again, not knowing what the next reauthorization bill is going to say, right now, at the very least, I think we need to define clearly and have some level of consensus as far as when you need to pay back what. Because right now none of the documents that reference each other are consistent.

[Sen. Wendy Harrison (Clerk)]: Okay, so do you need legislation to do that?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Potentially, yep. Because right now, and again, I'll paraphrase, I believe the state statute says payback shall be done essentially consistent with the federal CFR. Our grant applications, I believe, again I'm paraphrasing, basically say you will pay back, which was fine, pre IIJA, because all those things are consistent. Post IIJA, they're not. Now, there are still certain milestones even within IIJA, right? It's not a free for all. So, right of way and things like that still need to be paid back, but it did open up a bit of a gray area within preliminary engineering and construction as far as when you need to pay back the grant agreement if you terminate the project.

[Sen. Wendy Harrison (Clerk)]: So last question. So, can you, in your language, just say payback per the federal requirements?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I think we could.

[Sen. Wendy Harrison (Clerk)]: Because that might make it a lot easier. And then, we don't have to make a

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: difference.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah, I think we could. I think then, and this is where I'm like, one of the report notes was not to get lost in the legalese of the CFR, and anybody who's ever read that spun around on their head. So, taking volumes of CFR and distilling it down to, okay, here's a very discreet milestone, this is what your obligation is, but here's another discreet milestone, here's what your obligation will be. All in the background that the federal law effectively changes every five years.

[Sen. Wendy Harrison (Clerk)]: Yeah, I'm just saying that might be easier. It's challenging for you, but it's going to be complicated no matter what. And if we try to have our legislation change every five years, that seems not good.

[Sen. Richard Westman (Chair)]: So,

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: those are the recommendations. Think from our perspective right now, we want three outcomes. One, we don't want the state to be financially liable. When the Feds say you need to pay something back, the towns need to be held for that standard. So, we can't use T fund to pay back the federal government when a town cancels a project. We want this to be as administratively light as possible. We don't want to put a bunch of effort into administering this program. And for my own personal or my sort of recommendation, there needs to be some acknowledgment that if a town spends money and cancels the project, that is money that another town didn't get. And there just needs to be that acknowledgment, that compassion for one town is, in effect, taking money from another

[Sen. Richard Westman (Chair)]: town. Okay. I'll have it. Go ahead. Well, was gonna we're gonna move on because we're running late.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Well, I I can wait as one Go ahead.

[Sen. Patrick “Pat” Brennan (Member)]: Topic a little bit.

[Sen. Wendy Harrison (Clerk)]: Oh, yeah. I was just gonna ask

[Sen. Rebecca “Becca” White (Vice Chair)]: for to senator Harrison's point earlier about do what do you need in legislation to make these recommendations happen? Are you seeking to do stuff in the TBIL or DMV bill this year, or maybe this is a future conversation?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: This is a future conversation. Both reports didn't provide specific actionable things that we're ready to move on. Under any circumstance, we still have some work to do with VLCT, VAPDA, the RPCs. Nothing is in the T Bill to act on these reports. There's nothing in the Governor's recommend to act on these reports. We still have some more coordination to do. We don't get these much in advance of the legislature yet, so we we can't bake that into our budget.

[Sen. Rebecca “Becca” White (Vice Chair)]: Well, I appreciate the report, and I won't run the damn hit letter then to try to stuff. I'll wait for future information, so thank you.

[Sen. Richard Westman (Chair)]: Very good. Thank you.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: I wanted to hear.

[Sen. Patrick “Pat” Brennan (Member)]: No. Mine was just about payback on to the feds on Cirque Highway and Grids Away and stuff that we purchased, but that's a long story.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. That's a very long story.

[Sen. Patrick “Pat” Brennan (Member)]: That's We could wait on that.

[Linda Ladd (Financial Director, VT Dept. of Corrections)]: Do a whole half hour break on this?

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. Yeah. At least. Yeah. The whole property disposition plan and yeah. Thank you all.

[Sen. Wendy Harrison (Clerk)]: Thank you. So it looks like Salt Sheds and Bite Vet are 80% of the cancellation.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: I think that's true.

[Sen. Wendy Harrison (Clerk)]: Yeah. That's at the end.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yeah. That's transportation alternatives program. Yeah.

[Sen. Wendy Harrison (Clerk)]: That's good to know.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Yes, John. We we heard

[Sen. Richard Westman (Chair)]: I heard is he first.

[Sen. Patrick “Pat” Brennan (Member)]: We heard years ago on that because they got it. Once they get into it, they figure out how to start. Yeah. Yeah. So

[Sen. Wendy Harrison (Clerk)]: it really is planning kinda local. I found the evidence of one before.

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: I think you need to

[Sen. Richard Westman (Chair)]: turn it on for me. Yeah. So we're going to move into the next section, and this is Kit Carrs. And John, you're on the screen, and I think you're first.

[Jonathan Slason (RSG Consultant)]: That is correct. So thank you, chair. For the record, my name is Jonathan Slason from RSG. Okay. Getting the screen situated here. RSG was retained by the agency of transportation and particularly the DMV to conduct this legislative support study that focused on legislation that was part of the transportation bill last year about low volume vehicle manufacturing and and the the goal of inspecting, registering, and getting a VIN for these types of vehicles. With us in the room, we have many representatives of the DMV, and so we might go to them at any q and a that I can't answer. Alright? And with that, then I'll just dive in. I've got a handful of slides. Mindful of the time, I will move as fast as I think we we need to, and then but feel free to interrupt.

[Sen. Patrick “Pat” Brennan (Member)]: Alright, you can see that.

[Jonathan Slason (RSG Consultant)]: Great. Nice. Alright, I'm staring at myself, so like, why? So can we get rid of that? Okay, thank you. So I have 43 that we're here to talk about. I've authorized the report that you all should have received. I've got one printout here. It, directs the DMV to in consultation with stakeholders, which we did, and along with ANR, who you'll hear from, I believe, after, this testimony, to look at the process for issuing VINs and the opportunities to register the particular vehicle types, home built vehicles, kit cars, and ultra low volume motor vehicles. Now, immediately, we found issues with the terminology of these vehicles, and so we'll be mindful of trying to use the Vermont terminology that was set out in that transportation language. However, when we're talking about comparisons nationally as well as with our federal partners, we all have different definitions of said vehicles. So we'll be really mindful of definitions, and please ask me if there's any clarifications required. The goals of the study, we're looking at how other states do similar exercises. And the goal was to identify a cost effective process for certifying the safety of the vehicles and developing a streamlined process for VINs. Frankly, I think we have these processes largely available to us for these vehicle types. However, there is clearly some complications for one particular vehicle type, which I know will be probably the focus of the questions and particularly the next, testimony. So the process itself carried out was research and literature review, looking at federal guidance both from NHTSA, the Transportation Highway Transportation Safety Administration or agency. Excuse me. Don't know which one. And then the EPA as well as other states. Then we conducted some stakeholder engagements. That was why the consultant was hired. We conducted conversations with DMV partners as well as a representative of one of the vehicle types here in the state. There's a manufacturer that we engage with. We tried to solicit additional engagement from a variety of stakeholders, both national and even the Vermont, automotive enthusiasts. But, unfortunately, there was just not an appetite to participate in in these conversations. So we had, I thought, sufficient engagement to really dive in, and I think by the end we all identified really the key issues. Then we prepared the report for you. So task one, the research. To distill this as simply as we can, we reviewed the numerous resources that I mentioned. There was clearly some definition challenges between state and federal levels, as well as mentioned other states. Namely, home built vehicles is not a well defined term. It's kind of a catchall, and we need to be mindful of what we really intend to be defined by that. Kit cars itself is pretty much it is a is a definition that's widely understood as to not being the whole manufactured vehicle, but it's a subset of parts. But with the intent that there is somebody making something, whether it's a chassis and a frame typically, and they sell that part to somebody who will then build the rest of the components from other purchased parts. Now the challenge is whether they're using new manufactured parts or taking parts from salvaged vehicles. That's when you start to get in some gray area. There were provisions that were passed in the 2015 National Transportation Bill, the FAST Act, that attempted to create for the first time federal guidance, particularly around specialty vehicles and those that were manufacturing low volume numbers of vehicles. And this was where this there's a 500 number and a 325 number. And the three twenty five number is what we're really centered around here in Vermont because we've put that into our statute, you know, our legislation that authorized this study. In the federal, guidance, there are available waivers or exemptions from certain federal processes exempt for those low vehicle manufacturers. Now that's mainly around safety. Where we run into challenges is the compliance with two entities. When we look at compliance of vehicle acceptance, we have safety and emissions. If I could just boil it down to be most simple. The safety side was really given some ability to pass and be exempt from crash tests and some very other expensive, efforts for low volume manufacturers. The emission side was not given the same degree of waivers. So we have situations here in Vermont that the Clean Air Act prohibits the use of engines that are not certified. That is the process where either a state like California, which currently has the ability, the authorization to certify their own compliant engine designs, as well as the EPA. These are the only two entities in The United States that have the authority. Now we know that there's some changes at the federal level, which may preempt California from doing those those special certifications. But regardless, today, at this point, we have two entities, the EPA and California. Vermont is a state that follows the California protocols. So the Clean Air Act has then said, you have to use certified engine designs. There are two entities that approve those designs, EPA and California. There are other guidance that the Clean Air Act provides, which provides us this difficulty, but a situation about switching of engines. And when is an engine going to be replaced? And when can you replace certain configuration, certain parts of a vehicle to be still in compliance with it with its original certified design? This is where there's definitely a rabbit hole we could go down and spend a significant amount of time, and I also anticipate that it's gonna be the emphasis of the testimony after us. So I'm gonna stay high level now, and we can dive into Q and A if we wanna go there. Safety inspections, as I said, are self certified. These are for vehicles across the country, and they do not present a significant barrier. The existing state safety inspection process, which I know is a topic of conversation, we currently annually certify our vehicles for the safe operation on our roadways. And that is the requirement that we would impose on any of these vehicles, whether it's kit car, home built, specialty, low volume manufacturers, whatever you call it, it would be on an umbrella of mass produced as well as specialty produced. We inspect them annually for those purposes, whether they're safe to operate on Vermont roads. Vermont does already assign limited VINs. So the authorization that was asked is tell us how to do this. We already do it. Primarily, it's in a response of fixing an error or solving a problem. A vehicle comes to the DMV. Either it's may have been put together with some some older parts. It might have a VIN that was illegible at the moment, and we need to reconcile what was the original VIN, what was the intent. Sometimes you don't have those parts, and and therefore, there is a process that the DMV follows to provide a limited assignment of VINs. Now, VINs in a state, every state has the same ability to to apply VINs for a for a vehicle. They are typically not recognized outside of that state that has been issued. And that's federally or accepted nationally standard is that every state has their own BINs for these circumstances that arise, but it's not widely accepted, if not even preempted excuse me, exempted in the state's codes that they often don't recognize another state's name.

[Sen. Richard Westman (Chair)]: Go ahead.

[Sen. Wendy Harrison (Clerk)]: Thank you, sir.

[Sen. Rebecca “Becca” White (Vice Chair)]: Thank you. That was so as you were describing that process, was like, but I don't think it is so you can't drive it in New Hampshire?

[Jonathan Slason (RSG Consultant)]: You could, but you could drive it. Very much. You're not going to register it

[Sen. Rebecca “Becca” White (Vice Chair)]: Okay.

[Jonathan Slason (RSG Consultant)]: In that state and maybe not inspect it in that state Okay. If you do not have a VIN that that state does not recognize.

[Sen. Rebecca “Becca” White (Vice Chair)]: Okay. So, for example, my only understanding of this process is if you have an extreme labeled car that predates VINs. That's like the only example I've seen of this out in the wild. So for this case, you as a kit car manufacturer to use this process, your person would have to live in the state of Vermont if you sold the car to them, or you as the manufacturer would be the one getting the VIN?

[Sen. Richard Westman (Chair)]: No. Okay.

[Jonathan Slason (RSG Consultant)]: You as the registrar of the vehicle and those who are attempting to then inspect, get the vehicle inspected for their use. They would go through. If I were an individual buying a kit car from various manufacturers around the country and assemble it in my garage in Vermont, I would then go to the DMV, and there is a process that they would review all of the receipts that I had collected and said, where do these parts come from? Are any of them stolen? Are any of them manufactured from x, y, and z location? Do I have a correct ownership of them? And the DMV then would go through a process of verifying that it looks generally manufactured correctly, safe to operate, the brake lights work, all the other bits and pieces are there physically, then they would assign a VIN for that purchase. And the intent of KitKar and the legislation that we have is that that car would be mine for the purposes that of my time of using it, running it on the state of in in the state of Vermont.

[Sen. Rebecca “Becca” White (Vice Chair)]: But if I sold that vehicle

[Jonathan Slason (RSG Consultant)]: The VIN would carry with the vehicle.

[Sen. Richard Westman (Chair)]: Yeah.

[Jonathan Slason (RSG Consultant)]: And it's clearly not the intent to sell a large number of kit cars in the state of Vermont. Yeah. That is that is there is a gray area of it's not That was legal. It's not illegal to sell the kit car that I would build. That is correct. You.

[Sen. Wendy Harrison (Clerk)]: Just to follow-up on that, but if you move to New Hampshire, you could probably get a VIN from New Hampshire following that same procedure, but it just would be a different VIN.

[Jonathan Slason (RSG Consultant)]: New Hampshire could potentially honor your VIN, they could also apply a state VIN. Okay. But every state is on their

[Sen. Richard Westman (Chair)]: own rules for that process. Okay, that's interesting. Yep.

[Jonathan Slason (RSG Consultant)]: Now we discussed a few different states, New Hampshire just being ranked number one there, but we've looked at a handful of other states. Some of them were recommended by some of the stakeholder engagement that we conducted as to saying how other states participate in this process. It's very standard that states issue VINs for these types of vehicles and these circumstances that are that naturally arise when a VIN is illegible or that we need to fix something. What is not consistent across the different states is how they label and define these different vehicle types. The inspections, some states do not have these annual or biannual inspect inspections. Sometimes the states only pro only allow specialty vehicles if I lump them all in to be used for exempt what am I trying? Exit exhibitions, or they're not general on road vehicles. So every state treats them very differently, and they have different levels of latitude in which they allow those vehicles to be inspected and registered. But the VIN is the first thing. That's kind of the easy answer. Everybody does it. The registration is pretty clear. It's about the definition of the vehicle, and then different vehicles are available for on road or off road or exhibition uses only. But then the inspection process, that's where it starts getting a little bit more nuanced because some states have inspections, some states do not. Some states are California compliant on their emissions, and some states are less interested in understanding how they comply with federal emission standards. So briefly on stakeholder engagement, which I mentioned, you'll hear from some of the other stakeholders that we discussed with in the following set of testimony after the agency. But we have representatives from the Agency of Transportation, including the DMV. We had representatives of the ANR and the DEC. We also, namely Scott Roth, I will call him out by name, of Milton, Vermont. He is a manufacturer of a custom specialty vehicle that's based in Milton, and he was a great source of of information as to how the industry operates nationally and what his goals as a small manufacturing state looked like. And so we brought we had individual conversations with each of these entities as well as several roundtables where we were able to talk freely and discuss the various information that we that we collected as a consultant, but also was trying to confirm that we all understand because this is there's some very difficult conflicting pieces of information that are out there. I think at the end of the day, I would I think it's fair to say that the report, I think, accurately captures what we heard. Also, think, represents what we what we said. So I I hope that the report was was, I think, accepted by those stakeholders. It was shared with all the stakeholders, and nobody voiced a a voiced vote of dissent. So some insights and takeaways, because the next slide we'll be talking about some opportunities for you to consider. Clearly, the definitions of vehicles. We need to improve this. And this would be an opportunity at our the VIN process. It would be a process at the registration stage and clearly the inspection stage. We need to have a consistency across these different levels. What type of vehicle are we looking at? Is it a home built car? We need to be really clear. What does that consist of? We've suggested that it may consist of old or pre pre pre previously used parts, or new parts. It would be a mix of various attributes of vehicles. Kit car would be primarily made of newly manufactured parts, but it could consist of some older parts. When is that a home built versus a kit car? Those distinctions need to be clear. We can talk about then what is a street rod, what is a specialty, which is a catch all vehicle. We could do this in numerous different ways, we did not sketch out the various pros and cons of these. It would be really valuable to get some insight as to what is your appetite as well as the DMV. We're looking at trying to standardize these things and not create too much ambiguity, but also provide the flexibility that people wanna get what they what they want out of this. The difficulty then clearly is the specialty volume manufacturers, and how do we treat those that have an intent to sell. That is a very different intent clearly from the work that we did across the country and different states. States treat manufacturers very differently from those who are building an individual vehicle with not the intent to sell, with the intent to use as a as a personal vehicle. Those the intent is very much an important aspect of this. We mentioned that the application of VINs and the registration of kit cars and home builds is less legally difficult. And so we've said that really it's focused about the low volume vehicles and the manufacturers. We've said that the assignment of VINs, we're able to do it in most of the cases. It's limited in often the numbers, and so maybe the DMV could be provided if we want to do so. Right now, the state of Vermont has not, I think, had a problem with an excess number of vehicles coming to the DMV every year and asking for these VINs. As we said, it's been very much reactionary. But if there's ever a situation where that's becoming a problem, I would expect the DMV would come to you all first and ask for some help. Get car. These are treated as pleasure vehicles in the inspection. This is where there's maybe some opportunities as well. The inspection process probably needs some updating, and that could be what defines a pleasure vehicle versus a specialty vehicle. Is it the difference of mass manufacturer versus specialty manufacturers? There is a process in the inspection guidance for a vehicle class called street rods, and that provides a different pathway for the inspection, particularly the initial inspection of a vehicle. So if you were to come out of state, come to Vermont with a 1940 nine street rod of a replica of a particular vehicle with with existing VIN numbers because it was part of an older vehicle, but it's been all it's been amended. There is a process to take it to a set of inspection stations that has been approved by the state of by the state of Vermont to approve that that vehicle would be roadworthy. That could be a similar process that could be taken for these other vehicle types, home built, kit car. Many other states actually do it in this manner, that not all inspection stations are treated are are created equal in the ability to inspect certain types of vehicle types. Clearly, there would have to be some approval of what that looks like, how are those stations selected, and are they geographically spread around the state to ensure that we're providing geographic equity. There are some other pieces of it that are just specifically noted as just not being well defined So if I were to pull up the the registration page for a new vehicle, sometimes it's not a 100% clear to me, the vehicle that I might have in my possession, which box does it does it satisfy. So there's some opportunities there. And so I've just defined for you how the Street Rod provides us an example about how these some of these specialty vehicles could be inspected, particularly for their first initial inspection. And I think that's the clarity there, that ongoing annual inspections or biannual inspections could be carried out by other inspection stations. Now moving on to the other pieces here. Federal safety standards does not represent a significant issue. The FAST Act exempts manufacturers from going through the NHTSA safety process if you manufacture fewer than 325 vehicles, which can which aligned with our federal excuse me, with our state legislation that you passed last year. The other home built vehicles and kit cars, some of them are on existing chassis and existing frames, so they technically would have had some previous maybe some if they were a mass produced chassis, for example, they already went through some safety review. If it's a kit car, in essence, you're a low vehicle manufacturer at that point. And so you also are individually exempt from the NHTSA reviews. You're not going to manufacture this and sell it as a kit car builder. So it's a self certification for those initial crash worthiness pieces. So NHTSA really has said it's a small vehicle numbers. We're not making you go through the very extensive crash process. And so how do we confirm on the state of Vermont that it's roadworthy? That's the inspection process. I've already mentioned how the EPA and CARB in California, the California Air Resources Board, they are the two legally allowable entities to certify engine configurations. And I wanna maybe just a point of education, and for me, it was a point of education is that these certified engine configurations is not simply the tailpipe emissions or the quantity of c o two or nitrous oxides being produced at the tailpipe. It is the complete emissions of a vehicle, whether it's evaporative and how they how the production of pollutants change during the, process of converting gasoline into into gas, air pollution gas, then it varies across the whole drivetrain and the whole emissions process. And so the location of fuse loads, the location of how far is certain of the fuel tanks to the engines, the locations of how far does the evaporative process through the engine, that is what is being analyzed by the EPA and CARB. So it's not simply as saying, is the engine itself going to plug and play into this process? The engine owns only one small component of the entire catalytic converter, the final tailpipe at the end of the day. So it's the supinots at the beginning of the car to the end of the car. That is what's being tested. And therefore it is very difficult to say that one car produces the same amount of emissions as the other vehicle. So that's what is a certified engine is the complete all of the parts that are part of the burning of fossil fuels. Clearly, electric engines don't have the same configurations, and so if you build your own electric car, you probably wouldn't have any of these same issues. Now what causes there's some now more difficult parts of this is the topic of tampering, vehicle tampering, and engine switching. And Vermont, we only analyze the OBD port, the onboard diagnostic for vehicles that are sixteen years or newer. Before, if the car is older than that, we only do a visual inspection to say, are all the parts here? And we have to refer to some previously compliant design. So it's difficult to do that if you're only looking at a visual inspection. So it's difficult to, maybe even impossible, to fully verify that we have a compliant engine when the vehicle is over sixteen years or older. The issue is that the Clean Air Act has specifically stated in many instances of notices of intent and clarifications of law that it is illegal to have an entity knowingly remove or render inoperative devices or components that affect the emissions controls. Now that also, in most cases, means the installation of an engine from one vehicle to another because it is so difficult to confirm that the whole certified engine design is completely con compliant with the original design. And that is what makes the situation in Vermont difficult here and in many other cases where if we have a a low volume vehicle being made that is sixteen years or newer, and if it is doesn't have an EPA or a CARB certification, we have no way to say we agree as the state of Vermont in our inspection to say that we're certifying a we we agree that this is a certified engine. The OBD helps us verify that. Now if the vehicle's 16 years or older, we're gonna have even a harder challenge by then saying, we we can't physically see all the parts. We don't know everything where it's physically spaced to verify that it's in a compliant design. Now I think there's some question, do we do we care? How does this affect Vermont's liability? The bottom line is is that where does the liability go? As a Vermont inspection, we are saying that it ticks all of these boxes. At this point, our inspections don't it just says, are you complying with the OBD? Or it physically it looks similar enough to a previously designed, but nobody's holding Vermont liable. But it's gonna be the federal government that's gonna say, we inspecting vehicles that are not compliant with federal Clean Air Act. Now many other states do not have that. They they are in that area as well. Is that there is an agreement that no state has said we we certify that the vehicle is compliant with the Clean Air Act. So we're not asking our inspection stations to, and not other states are also not asking the ins their their inspection stations to. So it's somewhat of a self certification issue here that the vehicle owner says that I'm in compliance with the Clean Air Act, or we're just not asking to that level of detail. So the issue really is those older vehicles that don't have an OBD. When you are when you do have an OBD, you have a certified design that you can compare the results of that computer diagnostic test to. So that way, it helps you verify that that things are in the proper order. Mhmm. So these these provisions cover all the vehicle types. The low volume vehicle manufacturers, they must install the compliant engines in that configuration to be compliant with federal with the federal law. The Vermont law doesn't stipulate anything particularly around that. The kit cars and home built cars must also have these compliant engines. They typically use a chassis that was part of a compliant design, so that's what makes manufacturers different from kit cars. So hopefully all of this is clear. I think I've got one two more slides here quickly, and

[Sen. Richard Westman (Chair)]: I know

[Jonathan Slason (RSG Consultant)]: we're getting tighter on time. Sorry, one more slide. So the opportunities here, I think we've said that terms could be more explicitly defined. We have a BIN assignment process that could be used for these different vehicle types. There is a question as to whether we want to assign a VIN for a vehicle that may not be able to be inspected in the state of Vermont. There was, I think, a general suggestion in national precedents that if you have a moving vehicle that is eligible or able to be driven, we wanna put a VIN on it. That way, it has a unique ID, but there is a a question to say, why go through the process of getting a VIN and registering something when it may not pass inspection? So I leave that up to you. Are a there are examples out there from different states how to move forward. The state of California probably provides us the most robust example where they do allow a limited number of waivers of vehicles that are not intended for manufacture. And to bring that into Vermont context, 500 vehicles in California would be somewhere around 12 vehicles per year that could be given a waiver by the state by the state of Vermont. That waiver allows the vehicle owner to self certify saying what year do I want to state my engine is compliant for. It could be the year that the vehicle most closely replicates, or it could be the year that the vehicle was technically assembled, or it was the year that the engine was made. You can choose, and therefore, it gets a little bit around the federal stipulation that is it engine tampering if you choose to be prior to any of those certification years. If I were to go to California and said it's the design as of 2026, then I will need to show that I have a compliant engine design for the 2026 CARB certified vehicle. But I could go to California and say I want to certify it for a 1960 vehicle, and therefore it doesn't have a certified design. So that's how California has been walking the fine line as to saying how they're compliant with the Clean Air Act. And has there been any rulings by, have they been challenged on this? I think your next testimony might have more clarity on that. We were unable to have a direct conversation with the SB 100, that's the process in California with the administrators there. They acknowledge that it's been the intent that because it's been primarily non manufacturers and it's been existing certified designs, existing chassis, that they claim that it's been using old certified designs, and it doesn't appear to have been challenged by the federal government at this point.

[Sen. Richard Westman (Chair)]: So oh, go ahead, Pat.

[Sen. Patrick “Pat” Brennan (Member)]: Well, that was kind of my I think you're getting at what I was gonna ask. So you're basically saying if you self testify that your vehicle is using 1960, you went back to 1960, technology here, that that's good enough for your attestation. That is good enough to get a VIN number for it?

[Jonathan Slason (RSG Consultant)]: Get a VIN number, yes.

[Sen. Richard Westman (Chair)]: Let me ask the question a little bit. So if what they're trying to replicate is a car from 1960, '65, someplace in here, and it's new, has anyone gone in and said, well, you know, it's a similarity, but there's been no challenge of those cars that are really, they're trying to replicate to some degree, but not.

[Jonathan Slason (RSG Consultant)]: The law states that they, the owner, is able to say it's a 1960s emissions design, and the state of California has given a waiver for a certain number of those vehicles. And are these waivers for individuals,

[Sen. Richard Westman (Chair)]: or are these waivers for small companies that's done manufacturing? Individuals. Individuals. Yep, an individual has to And an individual can produce as many as five hundred?

[Jonathan Slason (RSG Consultant)]: Three twenty five without running into NHTSA safety rules, But you would be an individual that would have to then claim that your manufacturing vehicles in your garage would not be intent to sell. So, yeah, it would be an adventurous individual to build three twenty five vehicles in the state of California with kit cars and not try to sell them.

[Sen. Richard Westman (Chair)]: Alright. So, but if you're gonna be around here next. We're gonna there'll be more questions. Yeah.

[Jonathan Slason (RSG Consultant)]: Hopefully And then

[Sen. Wendy Harrison (Clerk)]: is not important to you. This is

[Jonathan Slason (RSG Consultant)]: just a can you move aside and somebody else can hit the hat possibly.

[Sen. Rebecca “Becca” White (Vice Chair)]: Oh, well, have another chair too.

[Sen. Richard Westman (Chair)]: If he's not going anywhere, relax.

[Jonathan Slason (RSG Consultant)]: Great. Well, then would you like Yes. Lieutenant Jeremy?

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: Good morning. Lieutenant Jeremy Sherman from Vermont BV enforcement safety. So, really, I think he went through I was part of the study, the DMD representative on it, and he captured pretty much entirely what the DMV focus was. I would simply I I want your questions if you have them, but I would simply state that our process here in Vermont, we have processes for allowing a person, an individual, to get a VIN, and generally DMV and most DMVs across the state is only to fix a problem. We're the only entity in a state that can issue a state assigned VIN. Now as we talk about some of the language here, a label was part of this that is, does this engine conform? And that really can only be issued by the EPA or through a CARB compliant process that that California has in their system. So the DMV does not issue or has ever issued a label certifying when an engine is compliant. It is pretty much on the self certification of an individual that'll bring it, and our only method of testing would be through our inspection process, which currently in Vermont, we have the sixteen year exemption. So the other piece I would clarify is on when we issue a VIN and we issue, let's say, a title to that vehicle. Our process now is we don't give somebody an option to say it's a 1960. It becomes a 2026, and that's our process. Now the VIN number that we assign is a Vermont specific, where we'll actually go out and we will rivet on a a VIN number, a Vermont VIN number, and we will also do a hidden VIN, and that comes from the law enforcement side, is if another state says, hey. This little piece of aluminum foil that you riveted on the car isn't legit, we will have a case in which one of our folks authorized to do this would have gone and attached that, and we would have done some investigation regarding what was the true VIN or what the VIN that was supposed to be on that vehicle. So it's a little bit different than what what processes we're talking about here. And the last piece is a manufacturer has the ability to get a unique VIN number, and that is when you go to your car and it has that public VIN and it has that sticker when you open up the door, those are generally because a manufacturer has a certain world manufacturer identifier that describes what that 17 character VIN is. Now I'm not talking about the really old stuff in which those are stuff we have to figure out, but everything new has a 17 character, and it's designed that way for security and for law enforcement to determine, hey. Was this thing altered? Has it been changed? Changing one of those numbers would mess up the whole bin structure, and we would be able to detect, is it a stolen vehicle? So there's a lot of those components that are built into this. Really, I mean, those are the only pieces that I would add. Our inspection process, if we are attaching it, is we will actually look not only the history of that vehicle, but we're looking at the chain of ownership. We're looking at if there's potentially any issues with that VIN, stolen parts, and we also if it's somebody doing a kit car or a home built vehicle, we wanna know what parts they put into that car, and we want invoices, and we wanna be able to check, did they actually build this? So I think those are the only additions I would have if you have questions.

[Sen. Richard Westman (Chair)]: This is David, is California the only state that's striking it around this? California

[Jonathan Slason (RSG Consultant)]: is the only state that has a specific process to give the emissions waiver. Several states do not ask about emissions, So that's step one. Then majority of states simply require that you have a certified engine design, and there are a few states that allow you to choose whether you choose that certified engine year, the year that the engine was manufactured, or the year the vehicle that you're attempting to replicate. So that is some selection that some states allow you

[Sen. Patrick “Pat” Brennan (Member)]: to

[Jonathan Slason (RSG Consultant)]: choose, but there's, most of the states have restrictions on the use of those vehicles, exhibition use only, shows, those types of things.

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: And here in Vermont, really, antique vehicles or exhibitions, they're only supposed to be during going to a show. Very limited. You get a reduction in your registration costs. Not a large population of folks that have those. It's same with the home built vehicles. I don't have numbers, but I'd say on a yearly basis, we're well under 20 or 30 of these VINs that we might be actually assigning. It's not in the hundreds.

[Sen. Rebecca “Becca” White (Vice Chair)]: Would just say this is the, I don't know what our legislative path is. I think we all heard from the folks who made the cars and we wanted to accommodate them as best we could so they could continue their business model, but it sounds like there's really not a clear pathway to do that is kind of my bottom line understanding of what you're describing, but perhaps I'm misunderstanding, or maybe there is a legislative change that we can make to accommodate it. But it seems like the bulk of your presentations lead me to the answer is no.

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: I would say that the next presentation might add a little bit more to what those barriers are. We have existing processes here with The harder part is the definitions piece, because we're not consistent, And, really, when we're applying a certification as a state, what is the liability to that? What are you know, no other state other than California has gotten that exception. If we take that leap, we potentially could be inserting ourselves in a process that already exists on the federal and state to state level. I would think we would have to get some sort of California consistent process, and I don't know what that would look like. Can I offer up

[Jonathan Slason (RSG Consultant)]: one additional point of clarification? I think it's the distinction of manufacturing, because SB100 waiver in California does say the intent is not for manufacturers. It's those individuals that will be manufacturing their vehicles from kit cars with not an intent to sell. So I think the intent, again, differs here. There is no state that would allow a custom manufacturer to register and inspect, get their vehicles sold in US without a certified engine design.

[Sen. Wendy Harrison (Clerk)]: Okay, well that's that's

[Sen. Richard Westman (Chair)]: about And the right

[Lt. Jeremy Sherman (Vermont DMV Enforcement & Safety)]: that engine design can be a manufacturer, a current manufacturer, like a Chevy or a big one, will will sell somebody an engine in that in that design. But in order to put that in and have it be compliant, as he said in his presentation, all those parts need to be in a certain configuration. And if it's moved just an inch or two, it's no I longer

[Sen. Richard Westman (Chair)]: hear all of this, and and certainly, the card that we've seen, and we might as well just talk about the case that they made six cars. Yeah. And so we really are talking about a very limited number that we would we're looking to at least what we're doing is exploring if if they should stay here or whether or not they should leave and and they are making these are data So, may be I wanted a five minutes and then we'll take this batch up if I'm ready. So, want me to ask?

[Sen. Wendy Harrison (Clerk)]: So, is there a state that's using California certification? So not even like Michigan?

[Jonathan Slason (RSG Consultant)]: No other state has adopted the SB100 program as far as we're aware. Okay. Okay.

[Sen. Richard Westman (Chair)]: Thank you. Right. And and then we're gonna take a five minute break because, the the senator from Washington

[Sen. Rebecca “Becca” White (Vice Chair)]: needs a break.

[Sen. Patrick “Pat” Brennan (Member)]: No. I'm I'm okay right now.

[Jeremy Reed (Chief Engineer, VT Agency of Transportation)]: Okay. Go to the ground for the

[Sen. Patrick “Pat” Brennan (Member)]: of house.

[Sen. Richard Westman (Chair)]: Can we take, feedback here five minutes after