Vermont Legislature SmartTranscripts:

[Speaker 0]: You're live.

[Speaker 1]: This is Senate Transportation. We are it's Friday the thirteenth, and we are here with the fiscal officer from the Agency of Transportation, and we're here to talk about kids.

[Speaker 0]: Absolutely, thanks committee. Candace Omquist, CFO for AOT. I get into the presentation, I just wanted to talk about the changes that were requested to the White Book regarding FY '26 budgeted amounts, correct? Great, okay. No. I heard from Megan that the committee was interested in having FY '26 budgeted figures for all areas

[Speaker 1]: of the each of the some of them have to create consistency, some of them don't.

[Speaker 0]: Yes. Yes. So the ones the ones that do are those that don't, program projects in defense. Okay? Like the DMV doesn't have projects in defense. Our division of administration doesn't have projects in Bpens. So every every tab that doesn't have f FY '25 actuals or an FY '26 budget, you'll know that that's not in Bpens. But current the way that it's yeah. So DMV DMV,

[Speaker 1]: what it is is not consistent. Sure. The DMV's got '25, '26, and then going into '27, and they do and a bunch of these, it's all over the map. And Senator Perchlik, I think correctly pointed out when we did a few budgets yesterday, it's hard to judge what's going on with Outlook. So if we could get consistency with that, that's what I think. Wait, can

[Speaker 0]: I just ask though, what is VPNs? VPNs is our project information navigation system, thinking of. And it is what all of our high maintenance engineers use to their program estimates.

[Speaker 2]: Okay, so it would include, is there any maintenance? Would maintenance be using that?

[Speaker 0]: Maintenance currently doesn't use VPN, but they would like to explore it with me and Jeremy for next year's So

[Speaker 2]: it might even be over time, even if you manually do it this year, goal is to move a lot of those places over to VPNs other

[Speaker 0]: than the DMV. VPNs provides detailed project by project information, which is what Yes, we all And it's not just highways that uses VPNs, there are other divisions in this book, rail, aviation, public transit buildings and rest areas.

[Speaker 3]: But rails, I was just thinking, oh, then rail would have it, but rail doesn't have it. You go to rail, right? Because rail

[Speaker 0]: is in they only Oh, ones that

[Speaker 3]: have BPIMS don't have it.

[Speaker 0]: Exactly. So the ones that are not in BFINS, we use the same format as the adaptive reports, are mandated by finance and management. So that was like the previous black book. That's why we include FY 25 actuals, the budget, the BAA, if there is one. So this this theoretically is doable, but it does require a change to beacon. So I'm I'm just wondering, is the goal standardization with adaptive? Meaning that you would like '25 actuals, 26 budget, and twentysixty eight columns, so three columns rather than one? I think,

[Speaker 1]: Senator Perchlik can speak for itself. I would think from my point of view, it's hard to look at something quickly and say, oh, why did that drop so good? It is a flag for a change if you see a quick drop or a quick up. And without the year before, it's hard to get that. And it's just not consistent between so

[Speaker 0]: Okay. Senator Perchlik, you have

[Speaker 3]: I I thought just I put '26. Okay. Actual.

[Speaker 0]: Actual or but because we're in '26 that way.

[Speaker 3]: Budgeted. Right. We wouldn't have actuals. Yeah. So just the budget.

[Speaker 0]: Okay. We don't

[Speaker 3]: need one five and we don't need the VA, stuff like that. Okay. So I thought it would be easy get to it, but maybe since you're just printing this from a report from a

[Speaker 0]: software I know. It's it's not as easy as we would like because it requires a technical, like IT change to a system. Right. But we will do our best, absolutely.

[Speaker 3]: Right, you could also give us like Excel sheets and say here are the budgeted items for each of the data and we can handwrite them in there. I mean, that would be good enough for me for this year. Okay. But this is like next year, could put it out and add it there for each one.

[Speaker 1]: Great. I would just say if I look at paving. Yes. And you look at '27 and then '28 Yep. It creates a I and I look in the out here. You immediately go when you see '27 to '28, what's going on there, and it makes you look at the matches up. If you had the budgeted for '26, it it's just a flag and and the flags aren't consistent here.

[Speaker 0]: I get it. But we're Yeah.

[Speaker 1]: And and I hear your functional it's a functional issue within the agency and the systems that are created to do that. It you know, it you know, that was where they requested. And I don't think anybody wants to make you but they you you

[Speaker 0]: can't. They'll they'll get it.

[Speaker 1]: But if if it if it's not a killer.

[Speaker 0]: We may need to do the Excel that Senator Perchlik talked about, but we'll make it standardized in the report for next year's white book. I just have to talk to IT folks about what's doable this year.

[Speaker 3]: But when

[Speaker 4]: we have somebody from paving in and get something like this, it usually has the previous year's budget. We put this year. Right.

[Speaker 1]: All those things.

[Speaker 3]: Yeah. These people come in and handwriting or if they give us a sheet by desk if it's all punching.

[Speaker 0]: Thank you, many. Sorry to derail us for the first five minutes or so. Okay, I am ready to talk about our approach to the FY '27 budget. This screen.

[Speaker 1]: The chair is yours.

[Speaker 0]: All right. So I'd like to start by talking about this $33,000,000 hole that was discussed both last session and in September and also in December. So last year, I was in this committee presenting a five year outlook of state and federal funds that AOT forecasted. And at that time, last session, I had forecasted a $30,000,000 hole. As we were going throughout the summer and dialing in our estimates, I presented at the Joint Transportation Oversight Committee a $33,000,000 hole. And that is what we started this this session with. Can I just ask? Yes.

[Speaker 2]: Okay. So I have been trying to use the correct terminology for what you're describing, and I don't know. So can I tell you what I think is the correct word and you tell me what's wrong? Is this considered a deficit?

[Speaker 0]: It would. It would be a deficit if we did not fill it with FY '27.

[Speaker 2]: Okay. Yeah. Is it also considered, are we Will this affect our rating, for example? Like if we don't properly fund certain projects over time, does that have a ratings impact?

[Speaker 0]: So theoretically, if the FY twenty seven budget did not address the $33,000,000 hole that was forecasted over the past year, then we would dip into the transportation fund budget stabilization reserve.

[Speaker 2]: And that is what would

[Speaker 0]: okay. Yes.

[Speaker 2]: Okay. Thank you. There have just been a couple of different like, someone asked me genuinely, like, what does that mean? Like, what when you say $33,000,000 hole, it what does that actually mean? Is it a deficit? And I was like, I think it's a deficit, but I don't know if is there any other term that's, like, not correct for that? Like I we're not defaulted on anything?

[Speaker 0]: I'd say the the the five year outlook that the agency has historically produced is really just to provide more information to the legislative committees to show this is what we were working with at the start of the budget season. Okay. So this this was our challenge. I see that.

[Speaker 1]: I'm just gonna say that you correct me when I'm wrong. I think of it as a steady state gap. Oh. Because you really don't create a deficit unless you spend money and it's not But for us to maintain steady state towards the agency's goals of where the goals that that we would like to be, which is not perfect, but our goals on where we and how many roads we want in this and how many bridges we wanna it's a gap to to reach our goals.

[Speaker 0]: I would agree with that.

[Speaker 3]: And I've

[Speaker 4]: been calling it a revenue shortfall. Oh. That's correct either. But I mean, it's it's a situation created by lack of revenues, for short fall revenues. Is that Should I change my lingo there too?

[Speaker 0]: You guys can use whatever terminology you like. I I would say it's expenditures at a point in time with revenues at a point in time. So the, like, the agency sees it as something to have to respond to. Even though Vermont doesn't have a balanced budget statute, the governor would not propose an unbalanced budget.

[Speaker 3]: We could also just not spend the thirty six months. Yeah. We could just not draw draw down without the money. We're not requiring it. Mean, we we wouldn't want to do it. But we don't want to.

[Speaker 1]: But it's in relationship to what we've set for goals for Broad deficit. At at what point and we set the goals based upon what will cost us more in the future. We don't keep these roads in. We've gone through a fairly elaborate process to get to the point where we say, here's what we need to do to not cost ourselves more money in the future, And so if you built a budget based upon what the goals are, here's where we would be. But what you're doing is you're saying, this is my you're really creating a bigger hole in the future by not spending this amount of money.

[Speaker 2]: Well, I appreciate that the technical term that you started with was hole in the budget. I'm gonna use that.

[Speaker 3]: Or a gap. Gap for a hole over.

[Speaker 0]: The starting point Or

[Speaker 3]: called the drawdown federal fund, this is kind

[Speaker 0]: of what I screen. Yes, I'd agree with all of that. Thank you. So the starting point from September, the $33,000,000, we knew about some of it last session. We talked about it in this committee last session and the the house was well aware and it I think it was even spoken about on the floor there.

[Speaker 3]: Even prior, she knew it was coming.

[Speaker 0]: I've heard it referred to as the bulge. But that was before my Okay. So that of the 33,000,000, 12.5 of the 33 can be attributed to the fact that we used 12,500,000.0 from the cash fund to balance the FY '26 budget. And that was from a prior year budget funds that had been set aside for Is

[Speaker 3]: it the capital cash?

[Speaker 0]: Yes. Well,

[Speaker 3]: there's a

[Speaker 1]: really general fund money. Right. We got put into a fund that we call it a cash, but it was really general fund surplus from

[Speaker 3]: the year before. Right. But it's not there isn't a transportation cash. You guys don't have any.

[Speaker 0]: Correct. So this was just a transfer from the cash fund, which in turn had received a transfer from the general fund. Okay. So we also knew about reversions that we had to take at year end. So last year when we were here, we talked about reversions being 4,500,000.0. And by the end of the legislative session and how revenues came in, that number flipped decimal places to 5,400,000.0. So these were the reversions taken at year end to balance the f y twenty six budget to zero.

[Speaker 3]: From the T Fund?

[Speaker 0]: From the T Fund. Yes.

[Speaker 4]: We reverted them from where? To the T Fund or from the T Fund to the

[Speaker 0]: From T Fund division appropriations to the bottom line of the T Fund.

[Speaker 3]: Okay. So you're just gonna, like, within your different departments and

[Speaker 1]: programs, reverted it. Yes.

[Speaker 3]: So you had it at the bottom one.

[Speaker 0]: Yeah. So we we also have a listing of all the reversions taken at year end. Oh, that's funny. Yes. In the white book. I will say since we're talking about reversions as an aside, finance and man we have historically done reversions at year end to balance to expected revenues based on authority given to the secretary of administration. We have heard from finance and management that their preference would be that we not take reversion reversions for this fiscal year or any future fiscal years, and we fall in line to what other agencies and departments do when they have a shortfall in their general fund or their education fund, which is to rely on their reserve and then propose reversions in the BAA so that there's legislative attention on those revisions.

[Speaker 3]: And that's the way we do it for those.

[Speaker 1]: Where are the reversions in here?

[Speaker 0]: Give me a second. Right in the front. So in the agency of transportation summary, it's gonna be page ten and eleven. I have two different ways to report reversions.

[Speaker 3]: Okay, so you have carry forwards and reversions. Yeah. And

[Speaker 0]: these reversion amounts look a lot higher than the 5,400,000.0 because it includes reversions that were needed at year end to close f y twenty five. So this 5.4 is just what was carried forward to balance '26.

[Speaker 1]: Which you don't have to agree or disagree, which puts upward pressure on that '33. Well,

[Speaker 0]: I I would say that this 5,400,000.0 is part of the '33. Like, it was part of the

[Speaker 1]: Well, '33 was predated when we had to do the reversions. And the way the the that a lot of the reversions were characterized is we aren't cutting projects. We're moving them off to the next year. So it has increased the pressure on the queue of projects to do.

[Speaker 0]: The fact that we fell so below consensus at the end of the year, absolutely. But I I did update the figure from last session to September. So the September outlook included this.

[Speaker 3]: Yeah. Yeah.

[Speaker 1]: I get perfect, but but it does increase pressure. It it is an upward pressure on whatever gap that we have.

[Speaker 3]: Sure. If it's for a project in particular. So what's the difference between the the less than 10 and most on 11? Page 11 is little easier to understand than less than 10.

[Speaker 0]: Yes. I mean, page 10 gives you all of the funds that the secretary of administration has the authority to carry forward. So that is not only transportation fund, it includes general fund for which we we have some general fund for one time sources. And it also includes Clean Water Fund, ARPA, and TIB Capital. We have we have some very small amounts from the Capital Special Fund. And yep, that's it.

[Speaker 3]: And then about page 11, it's those things plus other ones or?

[Speaker 0]: Page 11 is just TF and TIP. Or no, sorry. It's just TF.

[Speaker 3]: And there's no duplication between the two?

[Speaker 0]: What is reported on 11 is included in 10. Okay. So 11 has everything. Well, 11 has transportation fund, which

[Speaker 1]: is what I'm talking about.

[Speaker 3]: And 10 has some, so it's not, not everything in 11 is something. Everything in 11 is a 10, but not everything in 10 is a 11.

[Speaker 0]: That's it. Sorry. Yes. That's correct.

[Speaker 3]: But overall, there's $17,000,000 of

[Speaker 1]: proverbans here. From the transportation fund. Yes.

[Speaker 5]: And you're thinking of five.

[Speaker 3]: Yeah. To help build the

[Speaker 0]: A good a good portion of that was from FHWA reimbursements for the July 23 administrative costs for the flood. The way that we receive FHWA reimbursement for those administrative costs means that in order to get funds back in the TF, we have to take a reversion. It's not an automatic administrative process.

[Speaker 2]: I always thought reversions are closely like you had to go through the e board for them because it was staff. It's got nothing to do with reversion. It's nothing to do with the lay off side of things. It's only to do with the financial side. Right. Yeah.

[Speaker 0]: And like I said, AOT has historically taken reversions at year end, but that that is unique to AOT. Absolutely. Oh, okay.

[Speaker 1]: Yeah. We did make some rescissions in the pool in September. Yes. Which did deal with with the snow.

[Speaker 2]: Okay. Yeah. You guys are on a

[Speaker 0]: prose. So

[Speaker 4]: Well, no, we're doing it.

[Speaker 2]: We're originally Oh, Wendy.

[Speaker 1]: Oh, we got a hand for Wendy.

[Speaker 6]: Yeah. I I I think you guys asked my question, but I still don't quite understand. So in the capital bill, when we have, I believe we call them reversions, they're projects that didn't get done that we don't expect to get done. So this looks like projects and just operating costs.

[Speaker 0]: Yes.

[Speaker 6]: Okay. And so are these the reductions, are they what we will need to do? Well, will we need to have this type of funding in the future?

[Speaker 0]: Yeah, I'm

[Speaker 6]: not saying it well. And I think this is what the chair meant is, are we just postponing a need?

[Speaker 0]: Oh, okay. I understand. We do have an extensive closeout process. I implemented a process two years ago now when I became the CFO where I basically interview all the division directors and managers that hold budgets. And I'm I'm committed to not making cuts in the reversion process that then just need to be backfilled in a future budget. And that's the approach that we've taken for the past two years, but and and we'll continue to do that approach to find this reversion proposed in BAA, but it will be a little less important this year perhaps because we're not taking reversions on July 15 when when finance and management is attempting to close the books.

[Speaker 6]: Okay, that's very helpful. So these reductions will not require spending in the future?

[Speaker 0]: I'd say that there's nothing like, we didn't propose a BAA. Right? So if- if we had taken cuts at fiscal twenty five closeout that needed to be backfilled in the next fiscal year, I probably would have come here with a BAA request. So nothing that was cut is proposed to be backfilled.

[Speaker 6]: Great. Thank you very much.

[Speaker 3]: But I would say this is not correct, some of these things like the $19,000 you were reverting from the transportation board, this is like just money they didn't spend that you were like, well, we don't need it, so let's revert it to the bottom line. Absolutely. But like the $8,000,000 reverted from project development, some of that is that person projects that were maybe postponed, that would be probably, because they were in the book, but they're probably gonna get done in the future. That 8,000,000 or something closer to it is likely to have to get funded.

[Speaker 0]: So the 8,000,000 taken from the the program development highways division still allows us to complete projects in '26 based on '26 estimates.

[Speaker 3]: Right.

[Speaker 0]: So you could theoretically say, okay, if we didn't take the 8,000,000 cut, then highways would reexamine what their delivery schedule was going to begin twenty fifth.

[Speaker 3]: Just to clarify the question about do any of these things need to be spent? And I would say pro like the program ones are probably going to be spent. I mean, they can reevaluate and just pushing that. They'll be spent likely at some point that they were programmed at one point. I mean, some of them might get cancelled. Right.

[Speaker 0]: And in the example of highways, Jeremy and I basically had a conversation and he said our '26 budget can support Right. What we put forward Right. In the white book.

[Speaker 3]: Because I'm not interested.

[Speaker 1]: But the difference in maintenance and operations where there's shows up as 5,000,000. We did less cutting on the side of the road and trees. We a lot of those things are we didn't the work and we don't plan on doing the work and we didn't spend the money, so that's

[Speaker 0]: I'd say for maintenance in particular, it was almost all FHWA reimbursements from the July 23 flood costs. So if it would be helpful for me to prepare a chart of the 17,000,000, here's where that reimbursement is, and here's where other items are beyond

[Speaker 1]: the fall when we did we did the truing up with in in JTUC, there was a piece of maintenance that we did less things in maintenance. Yes. In the rescission plan. Yeah. In the rescission. But in program development, we had things scheduled to be paid. There were things that the projects weren't moving as fast, So we we pushed their funding off to the next year. Absolutely. And it it and one can argue about how that fits, but one might argue, looking at this and say, you had the money in this year, but now you have to find it in the future. So there is some,

[Speaker 0]: it's a push me pull you kind of thing. There definitely were projects that were pushed in the recession plan,

[Speaker 3]: In any year, like if it's a mild winter, maintenance might not use their full budget enough, and you could pick it up to the bottom line and just put it in the next year's budget, have that available.

[Speaker 0]: Yeah, so these are the conversations that we have leading up to close out. IoT Finance actually is already doing our first draft forecast of how we might close out this fiscal year. But

[Speaker 1]: we did in maintenance in the fall, we did say there's certain things that we're just not gonna do, which said JTOC, would you mind? I I The JTAG committee approved the plan, and then the plan went to Yes, Joint

[Speaker 3]: and Joint Pistols, yeah.

[Speaker 1]: Yeah, but the JTAG presented the plan to Joint Fiscal and then Joint Fiscal approved the JTAG.

[Speaker 4]: So go ahead. Just as an example,

[Speaker 3]: so I went to the

[Speaker 4]: on page 10, it's 81,000, whatever, 2,000. It's a maintenance it lines up with the maintenance and operations bureau on page 11.

[Speaker 0]: Yes.

[Speaker 4]: So how would I so I see where the amount the only amount I see that matches is the carry forward for 25. 2,125,000. But over here on page 10, where you're requesting, as part of this, fill the gap, 292,288.

[Speaker 2]: What line are you on, Pat? I

[Speaker 4]: don't know. It's not lined, but it's halfway down the page.

[Speaker 0]: Oh, see. Okay.

[Speaker 3]: The reverse.

[Speaker 0]: Oh, yeah. Yeah. Yeah.

[Speaker 3]: So I'm

[Speaker 4]: just trying to, for '26, it just says amount 2,000,150 million. So is that what we have left in maintenance after '26?

[Speaker 0]: So the amount requested for carryforward on page 10 is going to match the amount in the carry forward memo sent to finance and management on August 1 with limited exceptions. Finance and management did not reject anything in our carry forward memo, but there were a couple of one time debt IDs that they approved later. But I also I I've noted that here on page 10 because you can see there's a difference between the August 22 and the December 8 distributions. Oh. But I'd say

[Speaker 4]: Where do you put in that? Oh, I see your date. Okay. Yes.

[Speaker 0]: So I'd say if there are any questions about numbers between page 10 and page 11, I can research those offline.

[Speaker 4]: Well, just, I don't want to do that. I'm just trying to learn how to read it So

[Speaker 0]: the the year end what we consider the year end reversion amount is on page 11. Year reversion amount, July 17, 20 '25 columns.

[Speaker 4]: Yep and that was the 20, that was the last re verdict, that's not his current re verdict.

[Speaker 0]: The 20,000,000 then that's in the right hand column is the carry forward. I did a deep dive on reversion you cared for.

[Speaker 4]: Yeah, it's not that crucial. Wanted to learn, make sure I was reading it right basically. So

[Speaker 3]: this is at the top of that page 11, it says it's the FY '26 territory. I assume those dates are from '24 to '25. That's in the whole bunch reversions. That looks like it's FY '25 dates, but it's a, you know what I'm saying? It's the FY '20 carry forward and then it ends at $17.25 it could be followed out of FY25. So you took the '25 reversions, what you think is going

[Speaker 1]: to be carried forward in '26?

[Speaker 0]: Right, so we take reversions and then on August 1 we report to finance and management the amount that we'd like to carry forward, which is in that last column on page 11. So let's just go with that number, the $20,000,008.61, $3.24, and 2¢. I'm gonna match that to the middle of page 10, and I'm I'm sorry, there aren't lines. It's a folded line. The number is $20,000,008.67 $4.80 and 2¢. And the reason why there's like a $6,000 difference between what's on page 11 and what's on page 10, because that $6,000 was encumbered for future travel. So encumbrances are not reported, but I can also reissue this page with the encumbrance. So, the amount that we're starting with in the amount column on page 10 matches what we requested for carry forward on August 1. And then you go through to the other columns.

[Speaker 3]: You say requested, you requested that the finance and management. Right.

[Speaker 0]: And then if this the way that this is presented in the workbook also isn't helpful, we could do something different. This is what we did last year, so we followed suit. But my understanding is before that limited information was presented to the committee on this reversion, so I'm happy to do it in a different format.

[Speaker 3]: Page 11, I think, is pretty clear. Page 10, there's no title for this. Yes.

[Speaker 1]: Page 10, I find more difficult.

[Speaker 3]: Yeah.

[Speaker 1]: Yeah. Okay. Yeah. I could see that. 11, you pretty much get the area and the number. But 11 is more

[Speaker 3]: important than 10. Think Yeah. Like, you've got a lot of data here we don't need. I can give you the number and the journal ID number.

[Speaker 0]: I'm gonna end next page for ten minutes. Well, you didn't know you were that Brennan on the case.

[Speaker 3]: Yeah. I know. I think Alright.

[Speaker 0]: You're ten

[Speaker 3]: could be taken away. Then maybe

[Speaker 1]: it's eleven's just a one line the final product and the number we've got to deal with. 10 gets us there, but I can't even see, you know.

[Speaker 3]: And maybe you would just say within one line, say this is not the T fund, but if there's other funds, here's just the number reverted and carried forward. Yes.

[Speaker 0]: Sometimes we don't have that information by July 17, but we're producing this in January, we'll just add it to the same shape. Absolutely. Okay, great. Wow, so sorry.

[Speaker 3]: We never look at it. When

[Speaker 4]: we looked at it, we're like, oh, you look at

[Speaker 0]: this page. I think page 10 is too much in the financial bleeds.

[Speaker 4]: Yeah. Yeah.

[Speaker 0]: My apologies. Agreed.

[Speaker 1]: I can't Without context.

[Speaker 0]: You need page 10. I will keep page 10. We,

[Speaker 1]: on the other hand, are more what's the bottom line in the Sure.

[Speaker 3]: Yeah. Yeah. No. 11 is great.

[Speaker 0]: Okay. Back to our $33,000,000 We added twenty minutes. Okay. That

[Speaker 1]: was helpful.

[Speaker 0]: Okay. Great. Other components that we did talk about in September and December of the $33,000,000 poll, the starting point, the $7,800,000 revenue downgrade in July 25, and that was 04/27. We also had a $7,500,000 downgrade for '26, and that's why we had the rescission plan. The additional the additional amount that we haven't talked about, 7,500,000.0, that was my best estimate point in time for what payroll benefits, internal service fund costs received from finance and management, the central garage statutory transfer. We have statutory increases for our town highways appropriations and backfilling the town highways non federal disasters appropriation with transportation fund rather than pilot special fund. So overall, and I will note here before we move on the 12,500,000.0, the reason why I've highlighted it in pink here, I'm just gonna do that. That includes other transfers as well. And we did talk about one of them yesterday, the

[Speaker 2]: debt

[Speaker 0]: servicing. So I did I did a little research after our discussion yesterday. And the starting point of that bond from 2015 was actually 2.6. So we've been paying both debt service and principal since 2015.

[Speaker 1]: So since I'm not in your position, when is the next contract negotiation?

[Speaker 0]: I believe there's a current contract union, current contract negotiation, but I also am not part They of that

[Speaker 3]: just they just the union just voted to accept it.

[Speaker 1]: Just voted to accept it. So here's my question. When you built your budget, it wasn't accepted. And of course you don't want to build numbers into a budget that tips off the state's position versus the union contract. So is there a hole between the budget that was presented and what was agreed upon in the union contract? I'd say

[Speaker 0]: no, because finance and management projects payroll based on the current year that we're in, which is why we have pay act appropriations later in the fiscal year. So you could say that when I was projecting the payroll benefits, I was using annualized costs from '26, building it into the '27 budget.

[Speaker 1]: But if I have a contract with the employees and it increases benefits or increases some cost, how does the 26 number going into the '20 seven number, with that increased cost that the contract might create, how does that get handled? So

[Speaker 0]: that gets handled in the pay act appropriations.

[Speaker 1]: So the

[Speaker 0]: agency of administration has an executive legislative judicial appropriations that they hold through the year, and then they distribute to all agencies and departments the spring of that year. So it would be next year's pay act. Pay act

[Speaker 1]: It's next year's budget that will get the build up. Okay. Thank you for that, Lamoille. Just

[Speaker 0]: No problem.

[Speaker 3]: Me have to pay. Just confused me.

[Speaker 1]: Yeah. I I forget. You know?

[Speaker 0]: Fun fact. Half of the states in The US do it the way we do, and half do it a different way. Okay, so how did we do on projecting the $33,000,000 poll? Pretty well, I'd say, I mean, pretty spot on. You can see here our 27 budget proposes $21,000,000 of reductions and $12,000,000 of additional revenue from the use of an indirect cost rate for fiscal twenty seven. And that equals $33,000,000 What you're seeing here is a summarized view of what's known as the ups and downs or attachment B. And that's something that I would historically be willing to chat about with Senate appropriations, but I could also come in here and go through the ups and downs. So I have- it's summarized in major categories here. The divisions will be ready to speak to how they're thinking about their '27 budget. Over in the House, the House Transportation Committee asked the division directors to match their budget presentation to this chart. And I think that was a challenging task for them because what's going on in this chart is right here on the first row, I have all salaries, position movements, and benefit rates increases. And that's across all DEBT IDs. So if you ask Dan Delabriae, for example, Okay, Dan, why is there this $2,600,000 reduction in rail? Is going to say I don't consider it a 2,600,000.0 reduction because I have some of these salary increases in row one. But this is, again, this presentation really is me telling you how I approach the '27 budget and what makes sense to me. So, I saw it as salaries up and we have to take reductions because that is the approach of the agency to meet those increases. I think that's an interesting

[Speaker 2]: strategy and I can understand why that's the way you do it, but because you're required to do those increases, but you're not required to do like the projects or like the actual. But it does feel slightly confusing to have those salary increases and then

[Speaker 3]: to be

[Speaker 2]: laying off such a large group of people. So I'm wondering if there was a conversation as well to consider lowering the project amount further to keep those individuals. I think we learned that the actual employees who have been laid off or let go, again, not sure what the right terminology is, the majority of them were not hired positions. Like they were positions, but they weren't people, if that makes sense. There was like 63 or so,

[Speaker 0]: if I remember correctly. I'd have to say that I don't know, I didn't come prepared with the split between vacant and filled, because I'm not the subject

[Speaker 1]: matter expert.

[Speaker 0]: Someone did tell us in the

[Speaker 2]: joint hearing, so that's on me.

[Speaker 0]: It's my division director of administration, Gina Morris. She- I think was doing that. And I think you guys have her on the schedule for next week.

[Speaker 2]: But you do, you prioritize like the increased It's like projects out increased to salary, the staff, like keeping staff, where does that kind of rank and all of that? Like why not reduce the projects more to keep those people?

[Speaker 0]: I'd say that all options were on the table when the division directors were grappling with the increase. I think I could speak for any department, CFO department or agency head, where we start with what's required by the collective bargaining agreement because that is set in stone. Yes. Absolutely, and that's based on the number of positions we have at the time and that may or may not fluctuate, but basically we take the number of positions we have at that time and we apply the latest collective bargaining agreement percentage against it to come up with an idea of what's needed. Okay, thank you. Complex negotiations. So I submitted a memo on what the implementation of the indirect cost rate means. We could spend a whole another thirty minutes on that if we wanted and I'm happy to come back at another time. I will say that the position management savings or the reduction in force included in our '27 budget has received a lot of attention and I'd also consider it a hot button issue, but I'm not necessarily the subject matter expert. So if you'd like to chat about it with Gina when you have her in next week, I'll give her a heads up. I would. Okay, great. So you'll see here this $10,000,000 for the Governor's Initiative is an up. That is because we're investing money in bridges, paving, and maintenance tree cutting projects funded by the administration's purchase and use tax proposal. So I'm just going to flip to that for a second. I'm sure we all heard about this in the governor's budget address and it's been discussed, but the administration has put together a proposal that caps the amount of purchase and use tax that goes to the education fund over the next five years. And the effect of that in twenty seventh is an additional $10,000,000 to the transportation fund. So if we if we think about that for a second and flip back, we basically filled the 27 toll that was projected in September and then reinvested that $10,000,000 in certain areas. And the areas where the $10,000,000 were reinvested are right here. So we have seven bridge projects, non paving projects, and then an amount that's invested into maintenance tree cutting. And that's $678,046 So if we take the maintenance tree cutting out, it's 9,300,000.0 between the rest of these projects and that matches a 52,000,000 federal share. Any questions on That's a question on

[Speaker 3]: the governor's yesterday. So there Yes. You said he was limiting the proposal to limit the amount of money going into the education fund. Yes. Is it doing that by dollars or is it doing it by percentage of the receipts?

[Speaker 0]: I have the number, the language here.

[Speaker 3]: Yeah, so this looks like, you're saying that since you don't have all the language, assume that the amount received from the purchase and use to the education fund will be these numbers?

[Speaker 0]: Yes, so the language submitted by finance and management says will in '27 the purchase of the education fund will receive 41,900,000.0 from What's

[Speaker 3]: the estimate for receipts for purchase of these? The way that was talked about is like a third.

[Speaker 1]: Yes. But it's not really.

[Speaker 0]: So this is the third that's part of the consensus for January 26 for the education fund.

[Speaker 3]: So that's the consensus. If it comes in to be $52,000,000

[Speaker 0]: Then Transportation Fund would benefit. And if it comes in under, then Transportation Fund would not get the full $10,000,000

[Speaker 3]: Okay.

[Speaker 1]: It's all based on, yes. Yeah. So in the use of new revenue available to the T Fund, how would I see your tree cutting projects? It's hard for me to tell what the number is as a piece of that. Sure, I mean,

[Speaker 0]: it's in the ups and downs.

[Speaker 1]: I don't have numbers. I don't

[Speaker 0]: have numbers on this slide. I can resubmit this number or this slide with numbers if you'd like, but all of these projects are in the white book. One of the questions

[Speaker 1]: that HTC- Well, you're telling me to go digging in the white book. Yeah, I bet it-

[Speaker 0]: HTC did ask me if I flagged these projects in the white book in some way, and I I unfortunately had to say no. Yeah. But we can also help you find them.

[Speaker 3]: Well, we can just see if any of them are in our districts.

[Speaker 0]: Yeah, the HTC spent a bit of time staring at this slide and saying, that one.

[Speaker 3]: Hard for sharing. Well,

[Speaker 2]: here's the issue I have with this, is I'm only seeing

[Speaker 4]: Just need to pull a stretch of form.

[Speaker 0]: Exactly. I yeah.

[Speaker 2]: Yeah. I do think it's interesting.

[Speaker 0]: Well, I'm gonna hold back.

[Speaker 3]: And these are being delayed, not canceled?

[Speaker 0]: These are being pushed forward. They been in the white book regardless, but for fiscal years beyond '27. So we basically moved 16 projects forward in the white book.

[Speaker 3]: You mean forward as we mean?

[Speaker 0]: Forward into '27.

[Speaker 4]: As a result of the $10,000,000 difference.

[Speaker 1]: Well they would have happened.

[Speaker 3]: If we take the $10,000,000 from purchasing use, you can do these projects a year earlier than you would have been there.

[Speaker 0]: Exactly. Yes. In the absence of the administration's proposal, you would have seen these projects in the white book in '28 and '28.

[Speaker 5]: And

[Speaker 2]: then that would have pushed out the other projects to to to to to

[Speaker 3]: to

[Speaker 1]: and I will need to go through the numbers. Then if I look at the paving, the first four are all in your state, and they all follow the higher match rate.

[Speaker 0]: I'd say direct questions to Jeremy's team.

[Speaker 1]: That's not for you to comment or anything. I'm just saying in the tree cutting appears to be on the ear sink, which would be $90.10 also.

[Speaker 3]: What's that?

[Speaker 4]: You're working on it now. Yep. And Probably

[Speaker 1]: it puts some. Yes, which draws down the money now and puts the pressure on why we see the big gap between between 27 and then going into 28.

[Speaker 0]: I just have one slide. This is helpful, thank you. Of course.

[Speaker 3]: Yeah, this slide is interesting. So

[Speaker 0]: one final slide here, I just wanted to talk about adjustments that we made to the twenty seven gov ref budget to account for the January 26 forecast. So the January 26 forecast compared to the July 25 forecast has a 1,500,000.0 t f down in '26. And as I discussed earlier, we will we will not be attempting to fill that down with reversions at year end. We have discussed with finance and management that our plan is to dip into the stabilization reserve at the end of this fiscal year. And then our '27 budget fully funds the stabilization reserve back to its 5% maximum balance. There was also a small downgrade to TIV between both '26 and '27 and the TIV fund balance can accommodate those that small amount and the TIV fund balance at the end of twenty seven with the budget as proposed will be 2,200,000.0.

[Speaker 3]: Why do you carry an amount of funding?

[Speaker 0]: It was really a question of not wanting to balance the budget on one time revenue this year and then have any of the division directors think that their budget was cut in a future year, like in '28. So I couldn't have recommended that full 2,200,000.0 to be invested towards town highway bridges or highways, rail, aviation, etc. But the division directors would see it as a reduction in future years unless their BEPENS estimates were we're taking that into consideration already.

[Speaker 3]: And have you have you always carried it on obligated balance in that?

[Speaker 0]: Yeah. There's been an unobligated fund balance for at least ten plus years.

[Speaker 3]: So it's kind of like another reserve, it's kind of a Yeah,

[Speaker 0]: because the TIB doesn't have a separate stabilization reserve.

[Speaker 3]: And it is limited, it's what it can do. So your your total stabilization reserve is like I don't think I could do. $16 more than $30,000,000.

[Speaker 0]: No. Not 30. Hold on.

[Speaker 1]: I can

[Speaker 0]: pull it up. 16.

[Speaker 3]: No. 16.

[Speaker 0]: 16.6.

[Speaker 3]: Yep. 30 would be better. That's the worst thing. Right. Okay. So 1.5 is a small part of stable MCT.

[Speaker 0]: And like I said, the '27 budget does bring it back up to the And we've historically always funded it at the maximum as well. So this is the first time going below.

[Speaker 3]: And it's 5% of the prior year appropriation. Right.

[Speaker 0]: Feel like we covered a lot. Thank you. Did. We also went fast at the end, so I'm happy to come back and let me know if you have any further questions.

[Speaker 3]: Is there one sheet that says where the $33,000,000 is? Is that

[Speaker 0]: I'd say that that is page three here. Yeah. And so if you add the 21, which is in green, plus the 12 Okay. That's that's in purple.

[Speaker 3]: I was looking for a $33,000,000.

[Speaker 1]: Yeah. That's it.

[Speaker 0]: The the reason the 12 has to be separate from above is because I want everyone to recognize that it's new revenue because we're implementing the indirect cost rate.

[Speaker 3]: Sure. We figured you stopped doing it. Why weren't you doing it? You were doing it for a while, then you stopped doing it?

[Speaker 0]: It's always been an option. We actually used it as recently as-

[Speaker 3]: We used

[Speaker 0]: it as recently as state fiscal year '22. But before '22, the last time we used it was 2004. So it's it's always an option.

[Speaker 3]: And you don't use it some years because because you want more of the money to go to projects.

[Speaker 0]: Right. In in the absence of implementing the indirect cost rate, have federal dollars. Those federal dollars can be used towards projects. Yeah.

[Speaker 1]: Can you just remind me, I've been paving the army years on paving projects, how much did you say was invested from the T Fund in the tree cutting?

[Speaker 0]: Oh, yes. Tree cutting, exact number, $678,046. So 10,000,000 minus that number is the amount of State match.

[Speaker 1]: State match was 7 roughly 700,000.

[Speaker 0]: Yep. Roughly. Roughly. Yeah. So then the remainder, the 9.3 is going to state match for $17.80. And

[Speaker 3]: when you said this, maybe you said this, forgot. Position management savings, is that vacancy savings? What is position management?

[Speaker 0]: This line specifically refers to both the reduction in force taken in the fall due to the Rescission Plan and the reduction in force contained within the '27 budget. This number is not vacancy savings.

[Speaker 3]: Okay. So, position management savings means elimination of position. Is that the euphemism?

[Speaker 0]: It's what we were instructed to use throughout the budgeting process while we were discussing this as ideas.

[Speaker 3]: But of the $7,000,000 it's all about the savings because those positions will be there, not if you're vacancy or changing classification or redacted.

[Speaker 0]: I'd say part of this too, Senator, is a timing issue. If I were testifying on the budget maybe two weeks after the governor's budget addressed, then maybe I could have called this line reduction in force instead. But there was a timing issue where our leadership was still working with the labor relations work. And I also didn't want to change this presentation from what I talked about in the house. Except for the date. I did put 15,000. The only change.

[Speaker 3]: And then, Wendy, what is it? Is it between the 10 millions coming in and these reductions for the state match for the projects these are projects that were so we had some projects that were moved forward in the book but those the ones that were deducted that stayed matched, those are projects being pushed out in the book?

[Speaker 0]: So this line, line four, is not necessarily tied to specific projects, but it's T fund that would have been available for projects that that was not due to the $33,000,000 whole starting point. So basically, when we're creating the budget, I am working with all division directors. We have a budget committee that also helps me assign targets to each division. And the target that Highways was starting with was 5,300,000.0 lower for projects. But they did not start their prioritization process until receiving the target essentially.

[Speaker 3]: But they don't have to push a project out. That was just kind of like chart writing their pencil on the No,

[Speaker 0]: it is very likely that they pushed a project out as a result of

[Speaker 3]: the Now we've been saying for rail and it should line six and seven.

[Speaker 0]: Yes. I will note that for rail, it it does look like 2,600,000.0, but there is a $1,000,000 TIB investment in rail. So Dan is also going to think that the net to his budget is less than this when you when you chat with him.

[Speaker 1]: Well, yeah. Last year they applied for the grant to do the Husik to Rutland piece. It was built into the budget. They didn't get the grant, so we didn't have to make the match, but they made that application again. So that 2.8, a good chunk of that that could probably be found right there. These are

[Speaker 0]: this is exactly why I'm chatting with the directors because they know what's going on with grants in their area.

[Speaker 3]: Some of it's like that, but some of it could be like, this project, we can't get done by this time anyway, we're we can save that money. See.

[Speaker 1]: Right. Well, he just came in and that was Oh, you

[Speaker 0]: already had a tiered budget discussion with dad?

[Speaker 3]: Yeah. Yeah.

[Speaker 2]: It wasn't that a lot.

[Speaker 1]: So this one ended up came in yesterday and or the day before sometime this

[Speaker 2]: week. Yesterday.

[Speaker 1]: Yeah. Okay.

[Speaker 2]: Because we had had Amtrak, so

[Speaker 0]: I think

[Speaker 1]: But but he I didn't we figured out they built into the budget the application for the grant because they need the spending authority if the grant does come through. Didn't get that. That is the biggest single grant he applied for. It's about pretty near the same number as that. Got it. We're right in the

[Speaker 0]: ballpark. Yeah.

[Speaker 1]: I think

[Speaker 0]: He was a good example then because I could have chosen any director. I happen to choose one of them that has already been in this committee. And we like rail quite a bit.

[Speaker 2]: We have a train right next to you,

[Speaker 1]: my dear.

[Speaker 0]: Love it. I just took a train trip for. I know.

[Speaker 1]: I'm not pulling up my schedule. Your next

[Speaker 0]: swim and boots are online.

[Speaker 1]: They're online?

[Speaker 0]: They're all here. I can have them on here. So

[Speaker 1]: is it Jana?

[Speaker 0]: No. You have an old agenda.

[Speaker 1]: Thank you.

[Speaker 0]: Gina is not feeling well today, but she's been rescheduled tonight.

[Speaker 3]: That's perfect, though. Right? So

[Speaker 0]: Can I have a Did

[Speaker 1]: you wanna add anything more, or are you ready to be for your dentist?

[Speaker 0]: No. I I could stay here, but thank you. Thank you. And

[Speaker 1]: This was helpful. Wonderful. Can I just ask how easy is it for you by category, say, interstate projects, to pull out a line and say, here's what we spent on interstates in paving versus versus other state highways, you know, in the pavings and separating the two? Can you just run a system to do that? Or

[Speaker 0]: I'd say that we have that in the budget on a page. If we have time, can we take a look at that? Because it might get a

[Speaker 1]: Where which page are we?

[Speaker 0]: Because I We're on page seven of the white book. Page seven. Yeah. So within program development, we have different rows for paving interstate, state highway, roadway. Is that what you're talking about? So

[Speaker 1]: in programmed so I've got paving, but that's interstate bridge. I can't separate in paving, but is the paving for interstates on a consistent over a year over year basis versus all the stuff that's in ninety ten match versus an eighty twenty match. So Route 2 or or Route 12 or Route 100, those are all 80 twenties. We treat interstates differently than we treat the other. I

[Speaker 0]: I'd say that we can we can work on something, but it would probably be the the folks that are coming in to testify on paving or interstate bridges rather than my finance bureau, but I can give

[Speaker 1]: Well, I when when when the if you could carry back to Jeremy and if he's listening someplace, because quite frequently they do, it would be nice if we could separate those out and have a few years to compare to.

[Speaker 0]: Okay. Thank you. Right. Thank you. Thanks, Kimeti.

[Speaker 1]: Okay. Thank you. Just it's, like, 4,700,000.0 going towards the interstates.

[Speaker 3]: 10,000,000?

[Speaker 1]: Of the 10,000,000 on this sheet Oh. I and when I run through and so I'm just interested in our general paving budget. How much is interest Yeah. Can we sort out how much is running? Of the $148.09? Yeah. How much is running after the ninetyten bench versus the eightytwenty bench?

[Speaker 3]: One part, you'd be welcome to do the ninetyten, but on the other part, that makes it less smaller roads to go through towns to get paid. Yeah.

[Speaker 1]: Just think it's an interesting exercise to figure out. Alright. Think at this point, Who gets first? Should we start with Patrick?

[Speaker 0]: I'm guessing, yeah.

[Speaker 1]: Are you there? Oh, dinner you or Patrick? Do you do you want it started?

[Speaker 7]: Sure. So for the record, Patrick Murphy, state policy director for the agency of transportation. I just you know, the folks from UVM Transportation Research Center have been invited to provide some additional analysis for some of the answers maybe to questions that have come come up in the most recent few meetings that we've had. So I know there was an interest on part of the committee to to get some of those things addressed. So here we are today. Just kick it over to the the two folks we've got here, Greg Roengold and Claire Nelson, to introduce themselves and and walk you through some of the questions that have come up.

[Speaker 3]: Great. So

[Speaker 5]: we, Patrick filled us in and a few questions, I guess that have come up, we put together a few additional slides of additional slides from what we showed last time we were we are here. We can start there or we, I don't know if there are specific questions at the top of your mind. We could start there as well.

[Speaker 1]: I think it might be helpful if you started with your slides and then I'm sure we'll have questions.

[Speaker 5]: Alright. So Claire will, we'll go through the slides.

[Speaker 8]: Sounds good. Hi, everybody. It's good to see you again. For the record, Claire Nelson from the UVM Transportation Research

[Speaker 0]: Center. Let me know.

[Speaker 8]: Can you guys see this here?

[Speaker 1]: Yep. Yep.

[Speaker 8]: Perfect. Okay. And is it showing in, like, presentation mode to you, or is it the full slide?

[Speaker 3]: It's in presentation mode.

[Speaker 8]: Like

[Speaker 3]: Okay. We can see the next slide. Yeah.

[Speaker 0]: Okay.

[Speaker 3]: Here you

[Speaker 1]: go. Here you go. Does that work?

[Speaker 0]: I don't know why it does this all the time.

[Speaker 8]: Anyway, we'll go with this for now. Great. So we're here to give you some, kind of overview of what we talked about last time in addition to some updated analysis on a Vermont, mileage fee. Last time we came in, we presented our rate setting methodology to you, which landed us at a recommended rate for BEV pleasure cars of 1.4¢ per mile. It seemed like, from what Patrick told us, there weren't a lot of additional questions about how we came to that specific rate and more questions about the inflation adjustment question that we brought up and just some additional little nuances. So, we're gonna mostly dig into that today, but if I start talking and you don't remember what we talked about last time at all, please please feel free to interrupt me, and I can backtrack a little bit more.

[Speaker 1]: Yeah. Great.

[Speaker 8]: So to start off our conversation, obviously, everybody in this room knows that inflation is a a big issue for declining purchasing power of revenue dollars. This graph here is showing historic revenue since the last historic motor fuel tax and then the flat PHEV and flat BEV fees that people pay at registration. So, basically, any fuel related taxes in the state of Vermont. It's showing this since our last gas tax increase in 2013. So, on the x axis there, you have 2014 until 2025. The big blue chunk is the historic revenue. We can see it hasn't been increasing, and we did some We kind of backtracked and looked at if in 2013 the motor fuels taxes were indexed to inflation, what would that look like? That's that kind of green dotted line. Basically, what we found is it would be about a 20% T Fund revenue increase over the past ten years if in 2013, when the gas tax was last changed, those excise taxes were indexed to inflation. This is equivalent to about $225,000,000 or a quarter of $1,000,000,000 of revenue for the T Fund. So, you know, inflation's a pretty big issue. This is basically the chunk that's missing from this gas tax not having been increased over the past ten ish, eleven ish years. So, last time we shared, some information about you know, that's that's looking backward.

[Speaker 5]: Yeah. That sheet was

[Speaker 1]: going Yeah.

[Speaker 3]: On that, do you happen to know what the price per gallon would be with that inflation? So have you done that?

[Speaker 1]: That's a

[Speaker 8]: that's a great question. I don't have the number off the top of my head, but this is about a 4% annual, increase. So I can I can get that number to you, after this? I just don't know it off the top of

[Speaker 1]: my head.

[Speaker 3]: Yeah. I can do the math with, you know, solar. But yeah. Yeah. It would be good to know if it's like yeah.

[Speaker 8]: Yeah. That's like like what it could be. Yeah.

[Speaker 3]: Yeah. What would what would price per gallon difference be in '25 had we done it?

[Speaker 1]: And this is just the percent per gallon at the pump?

[Speaker 8]: Yeah. So the can you clarify your question a little bit?

[Speaker 1]: This is not the wholesale tax on gasoline. This is just the amount at the pump.

[Speaker 8]: Yeah. This is the amount that's going to the the T fund at the pump, yes. So it doesn't include sales taxes on, like, fuel from distributors, if that's what you're talking about?

[Speaker 1]: Well, we have the wholesale excise tax that has a floor and a base is percentage.

[Speaker 8]: Yes. So, is including both that 11¢ per mile flat state Vermont fee, and in addition to the MFTA, which is that floor and ceiling one. For context, the MFTA hasn't It's only It's basically been a flat rate over the past eleven years. It's only changed once for a six month period, I believe, in 2023. So, even though it is a percent of the price of gas, it has remained almost entirely constant since it was introduced.

[Speaker 1]: Okay.

[Speaker 8]: Okay. Great. I'm gonna so this was, you know, our our peak at what could have been historic revenue. But we also, more importantly for introducing a mileage fee program, we wanted to look at future revenues. So, this on the y axis here, this is revenue adjusted to $2,023,000,000 or $20.23 dollars. So, not only is it showing, it's basically including the decline of purchasing power of revenue dollars over time. So this is our revenue projection for, you know, no policy change, no mileage fees introduced whatsoever, and we can see revenue is obviously going to decline.

[Speaker 3]: So I think this is part of our, what showed on the other graph, but this reduction is also because we're facing, the model says that we're gonna have less gas sales because of its emerging oil.

[Speaker 8]: Yes. So that's actually that's an amazing transition. This these are our assumptions about electric vehicle adoption that we wanted to share with you. I don't know if we fully clarified this last time. No. So

[Speaker 1]: No. It it also includes because vehicles are getting more efficient, so there will be less gallons used also.

[Speaker 8]: Yes. Yeah, absolutely. I don't have a specific slide that's calling out the trend in fuel economy that we assumed, but it is in our mileage fee report. If you're interested, there is a graph that shows our assumptions about fuel economy increases between 2025 and 2050. I can tell you that oh, go ahead, Greg.

[Speaker 5]: I was just gonna say in a slide or two too, we're gonna show the different

[Speaker 3]: Yeah.

[Speaker 8]: Yeah. So basically, what we wanted to highlight here is that our assumptions about EV adoption are in green, and these are relatively modest compared to other state assumptions about EV adoption. For example, the Vermont Climate Action Plan did some modeling using their pathways report and the LEAP model. They assume much more aggressive EV adoption up until the year 2050. Our assumptions are pretty far below that with only reaching 18% EV adoption. This is not take so, basically, our EV assumptions are accounting for the fact that there's been rollbacks in federal policies incentivizing EV adoption, such as the multi pollutant rule, advanced clean cars, and advanced clean trucks. So, our model basically accounts for the fact that these policies no longer exist, and that's part of the reason why we are showing lower EV adoption assumptions up until the year 2050.

[Speaker 2]: Thank you, Mr. Chair, and I apologize for coming in late to your presentation. I'm really you're here to help clarify some stuff because I had some questions about a specific graph during Patrick's testimony that I hope we can go over as well. But this is very helpful because we had kind of debated this conversation around EV adoption a bit without you being present. So I had not understood that your projection had included the advanced clean cars and clean trucks changes that we have already done as a state. So that's really helpful. One thing I just want to put on the table, a comment and then a question for you, is increasing the fuel costs for EVs is going to have an impact. Increasing the cost of owning an EV is going to impact people's adoption of it. So our policy decision to index the mBUF and raise the cost is going to have an impact on adoption is my assumption. I'm wondering if you did any projections to the question about what so did you use and did you look at in the future if we do EMBA, will that reduce if people get EVs? Like, that will that change the financial path?

[Speaker 8]: That's a great question. Our short answer is no, we did not do that analysis. For a little bit of context I can give you, you know, people pay so much money every year in EV ownership on the scale of like 5,000 to $10,000 the increase that we would be seeing due to implementing a mileage fee as opposed to the current EV flat fee is on the scale of $80 So, just very different scales of costs. If you looked at that as a percentage of overall annual EV ownership, it would be very small, closer to like 0.01%, whether or not that's a meaningful enough increase, either perception or in actual dollars, for people to change their decision making habits around EV purchases is not something that we've analyzed.

[Speaker 2]: I'm intrigued that you see that because in the $80 piece, because you also have the household fee cost breakout that you do in your entire report. And if I look at the rural electric vehicle driver, a household with two EVs, it looks like they're going to see a $222 increase. So I guess that that is different than $80 and it's

[Speaker 8]: I should have clarified. What I meant was about on average $80 a vehicle. However, that's across the average on the state, and, you know, rural drivers tend to travel more, so they'd see slightly bigger cost increases. Apologies for that. Didn't mean to say everyone would see an $80

[Speaker 2]: No, no, no, it's very helpful.

[Speaker 5]: I think two other points are worth mentioning with regard to that too. So one thing is, especially as gas prices continue, if they continue to increase like they are switching from internal combustion engine vehicle to an EV is still going to save you a ton of money on operating costs, Because the gas tax is a relatively small portion of what you pay at the pump. And so you still have all these savings from avoiding the federal gas tax, in addition to, you know, several dollars and just per gallon of purchasing gas. So this, but you're right in that, of course, any people respond to prices, no matter what it is that they're purchasing or using it. So any increase in cost has some marginal effect. And I think that's not something we've been tasked to look into. We have done research using Vermont data, how drivers respond to prices in the sense of like, do people drive fewer miles as the price of driving increases, whether that would be from an increase in fuel prices, or perhaps taxes and stuff like that. You know, it's I think something that we could potentially look into.

[Speaker 0]: Yeah, no, I

[Speaker 5]: mean, at prior, we'd have to look at research done elsewhere or conduct some sort of new study here to look at how prices might affect adoption of vehicles, but that's not something we've done specifically in Vermont.

[Speaker 2]: Thank you. And just one final comment. It is very concerning to me because I think you are correct, more so than the Climate Action Plan's numbers. It is very concerning to me that we are nowhere near what we should be hitting for our climate action goals as it relates to EV adoption based on your projections, and I unfortunately think that your projections are more likely to be correct.

[Speaker 5]: I just

[Speaker 2]: acknowledge that that is a sad reality because it means we are not going to get to any of those climate action goals that we into law. So just as a thought out there.

[Speaker 5]: I just want to add one, it's probably helpful a little bit to clarify our assumptions. See our assumptions where,

[Speaker 3]: you

[Speaker 5]: know, I would put them in the category of like the back of the envelope type of calculation. Okay. So we pulled these from a federal model that includes some state data and federal policy assumptions and California's rules that states like Vermont also adopt. It's, you know, it's a pretty broad, I guess, tool. There certainly is room in Vermont, I think to, to, to do some more refined modeling of the strategies to achieve the climate action goals, specifically regard to transportation. So again, we haven't done much of that work ourselves, but we present this baseline because we think it's, it's probably more reflective of what's going on now. But it's mostly there just as a way to contextualize what revenue impacts might look like as EVs are adopted with some reasonable curve. We use the EPA model also because it allows us to project the fuel economy changes and amount of miles driven per vehicle going forward. And so all those numbers coming from the same model, going to be consistent when we show our various projections, but they are just projections and they're not.

[Speaker 0]: Thank you.

[Speaker 3]: Fact the revenue forecast to slide three. So that's like, we're doing a quick visual guide, like a 60% decrease in revenue over this twenty five years, but only a 15% increase in EV use. So, the rest of that?

[Speaker 8]: So, we're actually this you are beating me to the transitions. I love it. We're actually about to get into that if if we feel ready to move on from the EV piece.

[Speaker 1]: That was, Darren, the question

[Speaker 5]: I

[Speaker 1]: asked earlier about what's the reduction in gallons. Yep,

[Speaker 8]: great. Okay, so we're hopefully about to answer that question. So, here, we're going to show kind of increasing wedges on the chart to show what additional policies that the legislature is considering, what those would mean based on our revenue projections. Again, these are projections. They're not meant to be used as actual amounts of dollars being brought in in future years, but they do provide some relative reference of how much additional money could potentially be gained through these policies being enacted.

[Speaker 3]: That is my question. Like I see those slides where you're building up the different wedges. My question is the bottom wedge. Why do you have a 60% reduction this view? Yeah.

[Speaker 8]: It's a combination of you can go ahead, Greg.

[Speaker 5]: Okay. I was getting yeah, I think I think what you're asking here is right. So this it's a combination of a number of things, EV fuel economy, but the biggest factor there is just inflation, right? So these are in real dollars or constant dollars right so the purchasing power is declining. Okay.

[Speaker 3]: Okay. You do say that so this is in $23 Yeah. Inflation impact. Got it. I didn't read the access.

[Speaker 8]: That's okay.

[Speaker 1]: Thank you.

[Speaker 8]: Great. So that's good reference too for what this, what we're gonna be showing coming up here. So this orange wedge that's sitting on top of the blue is the additional revenue that the state is likely to see if they implement a mileage fee just for battery electric vehicles. This piece of the revenue is really addressing the fact that we're seeing declining revenue in motor fuel taxes from increasing BEV adoption. So, this is what the state is already planning on doing. On top of that, the state has written in legislative language, there's intent to expand the mileage fee program to a statewide program, so this would include BEVs and non BEVs, gas, diesel, PHEV vehicles. This portion of the tax would address the impact of increasing gas and diesel vehicle fuel efficiency on decreasing amounts of revenue from the gas and diesel taxes. The biggest portion of revenue that we see here is this inflation piece, which is what Greg brought up earlier. If these mileage fees were indexed to inflation, here we're using the National Highway Construction Cost Index, which is about a 4% annual increase in costs. This would be the section that would actually address declining purchasing power of dollars over time, and you can see it is the largest portion of declining revenue that the state is facing. So, you know, there's kind of these three elements working together: increasing BEV adoption, increasing gas and diesel fuel efficiency, and PHEV adoption, and then the biggest chunk being declining purchasing power. So, as the state is having conversations about specifically what policies to implement, this is the exact same graph, but just kind of broken out. Again, the dotted sections are inflation adjusted. So, the orange dotted section is showing if a mileage fee for BEVs was inflation adjusted, and the pink dotted section is showing if the statewide mileage fee. So, mileage fees for non BEVs were inflation adjusted. So, you can kind of, I guess, see it a little bit as a choose your own revenue adventure situation. Are there any questions on this additional analysis before we dive into some other stuff?

[Speaker 3]: Yeah, think one of our questions or issues was when Patrick showed slides, he didn't have number seven in. I think if I remember correctly. Right. So we didn't have what the total was if we did it on full EVs and non EVs. No, what

[Speaker 0]: was the original spike then?

[Speaker 3]: Right. That's not a question. I just think that was part of our confusion. The question is what would it be if you did it on both? Yep.

[Speaker 8]: Right. Yeah. So, if you did it on both, basically, you're seeing kind of that top line increasing revenue over the years, and then if you did it just for a BEV, it's just a BEV strictly mileage fee, it's kind of the top of that orange dotted section.

[Speaker 2]: Okay, wait. This is a different chart than the one, so this is where I'm trying. I'm getting confused. So, I'm trying to find the it's not I don't think it's in your actual report. It was in the slideshow. So I'm like, try and find it on the website. Try and find it in here. I don't have it right at my fingertips. So if I'm understanding your chart correctly, the way that I understood the chart was correct yesterday. They are building off of each other.

[Speaker 3]: Yes.

[Speaker 2]: So that's what you're explaining. So we don't, yeah, we don't get the, we don't reach that top 90,000,000 or maybe the access is different. Now, I'm sorry. So I just guess my main question is, I believe that we need to index the gas tax in addition to the EV as well at the same time.

[Speaker 8]: So this this chart is not showing the impact of indexing the gas tax.

[Speaker 1]: Do if we went to mileage based For every we did it for everybody on language base. This does not include gas.

[Speaker 2]: And you had a different chart that just showed if we index the gas tax separately.

[Speaker 8]: Yes. Yeah. So that that is in our report.

[Speaker 2]: So where would that line be on this chart? Like, we just if

[Speaker 0]: we didn't do

[Speaker 2]: any of the MBUF

[Speaker 8]: and we

[Speaker 2]: indexed the gas tax, where would it fall on this chart?

[Speaker 8]: So I can I actually have a chart that I can I can pull up that has that? What about

[Speaker 1]: your chart number two? Yeah. But their chart number two is looking bad. Not gonna be.

[Speaker 5]: Yeah, I mean, since our focus, what we're tasked with is looking into the mileage fee things, most of these charts about that, but I think Claire's gonna pull up, we, we did look at the impact of just adjusting the indexing the gas tax inflation. And I guess why Claire's pulling it up. I would also just mention right where we've constructed scenarios. We've constructed a scenario right with one assumption of changes in BMT and one inflation assumption and all these things. Of course inflation could be higher or lower. And EV adoption, right, could also be could be greater or lower. And those are going to shift things around. So when you're looking at these things too, and this is what Claire was mentioning about the projections, there's, you know, there's obviously a lot of uncertainty, but the idea is to illustrate the impact of the different components and different policy choices that you have.

[Speaker 2]: Yeah, and I think what I'm trying to grapple with just from your report, now

[Speaker 0]: that I've had it explained to

[Speaker 2]: me once, had the language introduced, is I the points of agreement that I have you're gonna get to. I agree with your selection of the National Highway Costs, Constructive Cost Index, whatever that acronym is. I agree with your creation of the rate. I think that that's a the formula you're using is good. But I don't agree with the policy choice between MFLOF being indexed and the gas tax not being indexed. That's where I disagree. And I don't think that's a recommendation of your report though.

[Speaker 5]: No, we're just trying to show you all the components.

[Speaker 2]: That was the decision AOT made to put not include that's not a policy choice your report is suggesting. That was a policy choice made by AOT. I guess it's my point, but whatever. Yeah.

[Speaker 5]: So I think what- Yeah.

[Speaker 2]: Versus Versus the maximum highway, that was a recommendation. And so the actual rate, just to be clear.

[Speaker 5]: Yeah.

[Speaker 8]: So there's a Yeah. There's a couple of elements here. I'm not sure if the AOT has a specific stance on whether or not we should index the gas tax to inflation, that's really up for Patrick and them to comment on. In our report, we were just analyzing what potential revenue would be under a variety of policy scenarios. And for the actual indexing, I just want to comment that we're not saying for sure that the National Highway Construction Cost Index is the best option for the state of Vermont. It's the one that we chose to do for our analysis because it had been mentioned, and we felt that it aligned, which we're actually, we're gonna get into that in the next couple of slides However, it's really up to the legislature to decide what they think is the most appropriate measure of inflation to apply to the state of Vermont. And we have about two or three slides coming up, are walking through the different inflation measures, what states use them, and when they would be most applicable to a specific state's budget. So we're going to dig into that in a second.

[Speaker 5]: And I want to clarify one other thing about our current role here has been to provide specific recommendations on setting the rate itself. Other, you know, some of these other things we're talking about are, we're trying to give you all the best numbers and facts and information we can, but we're not making recommendations about what you

[Speaker 1]: should be. That is the question.

[Speaker 3]: Yes, sorry to drag you into other follow-up questions, but the issue, so there was a graph, it wasn't Patrick's graph, it was Patrick showing us your other graph from this policy brief. It's called the mileage, Vermont Mileage Fee Rate Setting brief, doesn't have a date on it, I don't see, but in there on the second page or third page maybe, second page, there's a Vermont revenue projection graph with, that seems kind of different. Seems to be saying, it's a graph of the same thing, Vermont revenue projection, but the trend lines are different than the trend lines in your page eight graph. So that's my confusion. I don't know if you know what other graph I'm talking about.

[Speaker 2]: Yeah, found it. It's on-site, thank you. You're talking about this. Bingo. I just found it again. Yeah. Because it says

[Speaker 8]: Can you tilt your screen down a

[Speaker 2]: tiny bit

[Speaker 0]: so I can see?

[Speaker 3]: This.

[Speaker 8]: Okay. That should be, the exact same trend graph. We did send an updated version of the policy memo that reflected a better measure of current day revenue, but the trends should be roughly the same. So, I think the main difference with this was that there was a this

[Speaker 1]: is a

[Speaker 8]: wedge chart, and that was just a line graph. So if you were to put in wedges this is showing, just accumulating revenue, so they're building off of each other. It's slightly different but should be overall same top line, same bottom line of current revenue, roughly same here, let me share my screen again.

[Speaker 2]: Okay. That's where it's that's I see. That is a

[Speaker 0]: diff they're they're doing different things. That is rare.

[Speaker 3]: Yeah.

[Speaker 2]: Because your chart is building off of each other and this one is not. And that is where I got really confused last time. So

[Speaker 3]: Right. Because it looks like on the on the other the brief chart, it says the mileage P just for electrics index shows an increasing one, but the one they're showing us today is lower, but it's showing the increment.

[Speaker 8]: Yeah. So, we can update that chart in that policy brief too. The mileage fee index assumed that both the mileage fee and the gas tax were indexed to inflation. Can change the labels It on there to indicate did not, at that time, include a specific line for if the mileage fee for BEVs was the only fee that was indexed. So that trend line, which is not present, probably what you're not seeing, is this this one here.

[Speaker 1]: So Yeah. Can now I'm confused. Going from slide seven

[Speaker 8]: Yes.

[Speaker 1]: That has just the gas tax index with the mileage based fees not indexed.

[Speaker 8]: So that is not what this is showing if the mileage fee is indexed and the gas taxes this has no gas tax indexing included in it whatsoever.

[Speaker 1]: This has what? No gas tax.

[Speaker 8]: No gas tax indexing. This is just if the mileage fee is indexed. So gas tax is untouched. But

[Speaker 1]: but that's for all cars based on a mileage fee, and you leave the gas tax alone?

[Speaker 8]: Yes. Okay.

[Speaker 1]: And then in a, that this just has indexing of the mileage fee for all cars.

[Speaker 8]: Yeah. These are the same plot except in this slide seven, it's showing indexing for the statewide, and this is just breaking section into if you were to do it incrementally in the way that the state seems to be intending to do it incrementally. This is kind of the building effects that you would see.

[Speaker 1]: That was the way I understood it when I went through it and I looked at it. I just got confused with all the questions.

[Speaker 8]: Thank you for taking the time to clarify. That's, I'm Okay, glad you're

[Speaker 0]: thank you for going down the road.

[Speaker 1]: No problem. We need to understand these.

[Speaker 8]: Yeah, great. Are there any additional questions before we spend a little time talking about inflation indexes?

[Speaker 1]: I think we should head right into those.

[Speaker 8]: Great, Okay. So, there's a variety of different measures of inflation out there. For our analysis, we used the National Highway Construction Cost Index. This is a measure of how prices change in both construction, basically all construction costs. This includes labor costs for construction in addition to materials and fuels and things like that and equipment. Our recommendation wouldn't be necessarily for a specific inflation measure. Exactly, it would be to look at the state budget and try and identify the budget items that take up the largest percentage of that budget and choose an inflation measure if you are to go down the route of applying inflation. Choose an inflation measure that best captures the changes in costs that are your largest budget items from the T Fund. So, you know, if transportation construction costs are the largest budget item, two great indexes would be the National Highway Construction Cost Index or potentially the Producer Price Index for streets and highways, which is fairly similar to the NHCCI. However, alternative world, if the largest budget items are wages, salaries, administration, then the consumer price index or the employment cost index, which tracks changes in wages and benefits over time, those might be more appropriate measures. From just a quick overview of what other states use and how they've done this, there's

[Speaker 1]: I just have you ever you went back in time, my this is just my sneaky suspicion is that construction index costs have far outstripped the consumer price index. If we looked back in time, then it does calculations.

[Speaker 8]: So for a rough idea, the National Highway Construction Cost Index has seen about a 4% increase every year. The consumer price index has seen about a 2.4% increase every year. So you're absolutely right.

[Speaker 1]: Yeah, that's what I would have thought.

[Speaker 8]: So, other states, this is specifically showing for motor fuels taxes. Mileage fees are newer as of now. No state has indexed their mileage fee directly to inflation, except I believe potentially Oregon. I'd have to double check that though. Mileage fees are newer, so they haven't faced as many inflation pressures gas taxes. But we can see here, most states have chosen to index their Of the 16 states that have indexed their motor fuels taxes to inflation, most have chosen to index it to the CPI. There's a couple of states that have indexed it to highway construction cost indexes, including Minnesota, which has their own, doesn't use the national one, has their own Minnesota highway construction cost index. So, there's precedent for these kinds of choices if you are interested in looking at other states' language that they used when they set rate setting. Just a quick peek at Vermont's, budget. This is showing, the AOT budget based on budget detail reports. These do not include grants that AOT gives out. This is just AOT money that stays at AOT, basically. We can see that most of, the biggest chunk of AOT's budget is infrastructure and construction costs. This would need to be confirmed and obviously expanded on, but what this implies as a first glance is that something like the NHCCI or PPI might be the most appropriate inflation measures if the state moves into a direction of indexing any fees, mileage fees, gas taxes to inflation. Any questions on the inflation conversation?

[Speaker 3]: No.

[Speaker 1]: No, at this time. You'll be We know where you live.

[Speaker 8]: We're happy to come back. If there is a desire for us to have more in-depth conversation about indexing to inflation, it would be great to get a little bit of a heads up so we can get some more materials together for you. Great. Okay. And then the last question that, Patrick had mentioned was coming up in this conversation about mileage fees was about a flat fee alternative to a mileage fee. So, that's just the last thing we're going to comment on here. I'm going to walk through this slide kind of slowly, so stick with me here. So, a flat fee alternative to a per mile rate, we just kind of, at the title of the slide here, we wanted to comment that it's pretty likely to diminish any mileage fee revenue that the state brings in. And in addition, a flat fee is just a slightly different principle than the concept of a mileage fee or a road user charge. Mileage fees generally have the intention of better aligning how much people pay into a system with how much they're using the system. A flat fee just doesn't do that. So, you know, there are reasons that you can decide to implement a flat fee versus implement a mileage fee or to implement a flat fee alternative. That's not really for us to say. It's up to you, but here's some context of based on different flat fees, how much how many drivers are likely to choose that flat fee. That's the middle column. And then the last column here is what percent of revenue is likely to be lost based on that percentage of drivers choosing a flat fee. So, we basically pulled a bunch of different options for flat fees from $140 to $420 These are based on the distribution of how much people are likely to pay with a mileage fee based on the, twenty twenty three DMV mileage data from odometer readings. So, if you kind of look at that distribution and throw down different cut points right in the middle of the fiftieth percentile or way at the tail end of the distribution at the ninety ninth percentile, these are the different fees that you would be charging equivalent to that mileage. We decided just a basic assumption. The percent of drivers who are likely to choose that flat fee alternative, if you put it in place, we assumed it would be anybody who's gonna save money. So, you know, at $140 flat fee, half of the people in the 2023 data drove more than that. So, 53% of those drivers are likely to choose that flat fee alternative as opposed to paying their actual per mile rate. Ultimately, on the far right here, we would see that would be about a 73 percent reduction in the overall amount of revenue coming into the program if that flat fee was set and if every driver who was gonna save money by choosing the flat fee would choose it. As you go down and have more, higher flat fee alternatives, less people drive more than that, so you'd see lower revenue reductions from a mileage fee, from a flat fee alternative to the mileage fee. Does this does this kind of make sense? Are there any questions about this?

[Speaker 3]: Go ahead, Andy. It makes sense, but I think the two things that I'm missing is one, I would say, maybe this would cause people to do try to figure it out, but I'm sure if I interviewed people, eight or nine out of 10 would know how many miles they drive in a year.

[Speaker 8]: Yeah. That's actually the caption at the bottom of this slide is that these are pretty uncertain estimates. We know from the transportation literature that people don't have a great idea of how much they drive.

[Speaker 3]: If they would figure it out, if they know they're going to save $60 or something. But I think the outlook, what it doesn't account for is the administrative cost difference. So you might generate more revenue, you have a lot more cost, so it might be negative.

[Speaker 1]: That was a

[Speaker 3]: task here, I'm not saying it's a problem, that's just another part of the question is what are the administrative savings of having a flat fee?

[Speaker 8]: I can just comment quickly based on what I've from previous AOT reports. The cost, the administrative cost of implementing a mileage fee, I believe, and Patrick, correct me if I'm wrong, was, estimated to be somewhere between three and five percent of overall mileage fee revenue. Does that seem right, Patrick?

[Speaker 7]: Yeah. So if we do estimate about three and a half, maybe to 5%, but you would still have that, those administrative costs, the program would still be in place. We're not talking about a flat fee versus only versus a mileage based user fee. What you're talking about is really a flat fee with a mileage based user fee. And so those costs are, the administrative costs to the state aren't necessarily going to decrease because somebody chooses the flat fee option because you're, we're building this into existing processes. We're building it into the audit, you know, the annual vehicle safety inspection process, which is presumably going to happen anyway. And, you know, people will still have to have their vehicles identified within the registration system as subject to one thing or another, and then have a fee applied. So there's, there's not really any administrative savings on the state end of things. You know, you might argue that some people just out of convenience would rather not deal with a MyoSpace user fee, but again,

[Speaker 3]: it's my other point. But I think there would be administrative savings. That's why DMV gives you a discount to pay three years instead of one year. You have to pay every month. The DMV has to receive that money every month, and DMV has to check to see if that's the correct amount every month and send out a notice if it isn't every month, then there's a carry benefit of the money upfront, which is revenue positive. So I I can't see how it wouldn't save me to trade the fees out on the front of us.

[Speaker 7]: Well, a lot of it a lot of this will be automated within the system that's developed. So if somebody goes in and selects, I wanna pay on a monthly basis, then those invoices will be generated in in an automated fashion. The communication that happens with the vehicle driver will will be more automated and the the true up, the reconciliation really still only happens at at the point of registration.

[Speaker 1]: Well, but that's the administrative side on the state. What this can't judge is if I'm an individual, I gotta tell you that when I look at this and personally think, do I want to pay every month or do I just want to get this over? If the difference is $50, I might just say, I'll eat the $50 and get this over with at the beginning of the year so I don't have to worry about it. And in a chart like this it's almost impossible to figure out how people would deal with that.

[Speaker 7]: I mean, I I don't think this chart accounts for the the those kinds of decisions, but it's to give you a rough idea of

[Speaker 1]: I I think the chart's great in top of starting point, but

[Speaker 8]: So it it seems like you have additional questions about relative to these costs, how much would people pay in a normal in in a just a mileage fee. So I guess maybe if you clarify your question, we actually might have the ability to answer it right now.

[Speaker 5]: I think the, if I understand the questions here, I mean, there's the thing not accounted for, obviously, is that right? Some people like to pay a flat fee for whatever it might be, Internet, phone, unlimited calling, right? Because it's perceived as easier and you don't know how much you're gonna drive. Think people probably, you know, like like to have certainty around things, right? There's risk aversion. And so that's likely something that would happen. I have no idea how much that would be in this case. Don't, there isn't probably very much experience with of transportation stuff here to inform that. But the other question, I guess I'm curious, don't, we haven't obviously done any research on the design of how the administrative side of the mileage fee, but if people are willing potentially to just pay a once a year flat fee,

[Speaker 1]: You

[Speaker 5]: know, I don't, it seems like administrative costs for modest fee could be potentially lower if that is also just done once a year.

[Speaker 1]: But But it's interesting that of the four states that we heard from, offer more than one way to pay in. That was pretty consistent across the four states. There was an election to do a one time payment in the majority of those. And I So this is really helpful to help us think Just

[Speaker 8]: to comment quickly on that point. So other states' mileage fee programs are it appears to be a little bit fundamentally different from Vermont's, and that Vermont seems to be It has the intention of setting a And correct me if I'm wrong, please, but a mandatory mileage fee for BEVs. Other states who have implemented flat fee alternatives did it with the intention of raising enrollment because they have voluntary mileage fees. And so, they were basically placing a flat fee alternative or a cap on what people pay so that they were more likely to participate in the program because they would be guaranteed some amount of revenue savings. So, with a mandatory mileage fee program, and we have this in our policy brief too, it's a little bit less clear the role of a flat fee alternative, except for individual comfort really of paying a flat fee, which the value of that is not something that I'm here to talk about. That's something I for you guys to

[Speaker 1]: would just say whether it's mandatory or voluntary, you need support from the public for anything you do. And what it would appear to me is that if we're going to get public support, some choice in the way they pay is something that has helped other states get buy in.

[Speaker 8]: So, we've actually done extensive public surveying on mileage fee support, specifically in contrast to flat fees. If you would like for us to talk about that at some point, we have done surveys regionally looking at how people feel about mileage fees and flat fees and gas taxes in Vermont, New Hampshire, and Maine, in addition to a national survey Yeah,

[Speaker 1]: I think we would be interested in that because we know we have to have public support.

[Speaker 5]: Yeah. And so can I, I mean, I think one thing also to consider here, I mean, don't, there's probably not a lot of debate here among that giving people these alternatives would, would make the policy change more acceptable? However, I think the obvious thing to consider along with that the risk is that this flexibility as this plot shows, if you tried to set the flat fee at the median, right, the average cost, you're losing, I mean, we're only adding addressing a small portion of this mileage feed problem, right? Because giving this flexibility means we won't be the wedges we showed you earlier are going to be even smaller. So that's, you know, that's the cost of this. And what I can highlight a little bit about, we'll send you the reports, papers and policy briefs on our perception research and stuff. But when we informed our in the experiments and studies we did people about what the purpose of it, the history of the gas tax and what it's used for. And that's basically set up as a user fee to pay for roads. There was a significantly, a significant increase in support for a mileage fee. And so I think that there's an important part of all this in gaining public support is also educating the public about that the gas tax is this, you know, it was originally set up to be essentially a per mile fee for using roads and ensuring that they're maintained and and that that has sort of gotten away from us as vehicles have become their fuel companies are widely different and all of that. Yeah, anyways, we can share that and we can talk about it more some other time once you've.

[Speaker 8]: And I think, oh, Patrick, go ahead.

[Speaker 7]: I just wanted to share too that there may be another way to get at what you're talking about in terms of allowing somebody to feel like it's a more convenient thing to not worry about it throughout the year, and that's actually what we propose in in our language so that people will be able to still have the ability to to pay upfront in some estimated amount that largely covers their mileage based user fee or maybe even more than covers their mileage fee for the year. And then when you get to your registration renewal, there will be that true up that happens so that, you know, maybe you've overpaid slightly and then you're credited towards the next year's payment, or maybe you're slightly behind because the estimate wasn't quite what it was. And so then you're paying a little bit more at the point of registration, but you're not necessarily having to think about it throughout the year. You're just paying at the first registration where it's due and then you're reconciling at the second when it's due again. Without having to sacrifice as this slide shows the revenue setting a fee that is just the option for a person to select.

[Speaker 3]: Would you require it via an automatic payment, monthly payment for the monthly option?

[Speaker 7]: No. That's what I'm saying. Like, you you will be able to select whether it's a monthly or quarterly when payment. Click on

[Speaker 3]: a full well, the month if choose the monthly payment, will it have have to be an automatic payment?

[Speaker 7]: What do you mean by automatic? Just that it's automatically deb debited to your account?

[Speaker 3]: Or yeah. Either taken from your bank account, checking account, or credit card.

[Speaker 7]: Yeah, no, we have to talk with a vendor about that. I think it's, I don't think it will be that automated. I think it'll be, you'll be sent an invoice if you choose the monthly option, you're sent an invoice, and the automated part of it is the invoice and the reminders, but not necessarily that you're debited from your account.

[Speaker 3]: That's why the will be increased admin from the DMV.

[Speaker 7]: But there may be the possibility for that selection. You know, you would have to proactively select.

[Speaker 3]: I think you're just underestimating the administrative costs.

[Speaker 2]: And I would just say, maybe there's not, maybe there is a parallel tax like this, but I'm not I am not being billed monthly by the state of Vermont for anything that I'm aware of or quarterly. I pay one tax other than when I make, like, a purchase. Like, that it so I don't feel I'm not, like, writing a check every month to pay for some other service from this date of Vermont that I'm aware of. So this is a different relationship. I'm used to being charged a user fee by a company. And if you've ever had a debit card that's gone missing, if you've ever been frauded, you know that the amount of times that you stop subscribing to something because you've changed a card or you've moved a bank. Like that's gonna be a lot of people. If I have any anecdotal experience or maybe you you know, and then who is associated with the car? You know, like, that's gonna be an administrative fee. If I am using the car as Rebecca White and then I like, I own the car and it's in my name and then my partner drives the car a lot and then we get a bill every month that's a different amount, how do I move? Would I be able to move the payment to his account? Like those kinds of conversations are going to come up internally with a family at the very least about who's owning the car versus who's using the car and what account is being debited for what amount. You're going have the same thing with commercial drivers,

[Speaker 1]: I'm sure.

[Speaker 2]: So it just feels like the world of what you are going to be mentally asking Vermonters to now do, that universe is much larger. Because there is some automation tip when I put it in the pump, it's already done. I'm not making a conscious decision about something. Yeah.

[Speaker 1]: I just don't I would just to back up what Senator White just said, I pay quarterly. Hate it. But this chart is really helpful. Just remind me at the base many miles is this based on a year?

[Speaker 8]: So this is that chart was based on the full distribution of how much people traveled in 2023. So if you were to choose a flat fee that's based on the average amount that people travel in that year, which was about 11,000 miles, That would be the $140. It's all basically, if you take those amounts and divide them by the mileage fee, you'll get the you'll get the amount of miles that each one is associated with.

[Speaker 1]: It's a a a like, the 11,000 is what I was looking for.

[Speaker 8]: Yeah. It's I think exact numbers, it's, 10,860 or something, but we can call it 11.

[Speaker 1]: Yep. Gotcha.

[Speaker 8]: Yep. And the other thing that I wanna mention too is that the cost differences that we're talking about relative to what people pay right now are on the scale of $80 a year, or anywhere from as low as $30 a year in savings for some people per vehicle to $100 or $110 a year. So, divided monthly across the year, it's, compared to some other fees, relatively small. So, just for context, as you're having these conversations about family conversations and burden of this kind of fee, I think the actual magnitude of these changes in costs is a relevant piece of that.

[Speaker 5]: I think it's also, I mean, I haven't looked into the administrative side, but I think that it would be instructive and maybe AOT or the consultant that worked on some of this stuff looked at, but like programs like easy pass, the electronic toll payments that's everything except for Vermont has because we don't have tolls, you know those those are relatively small fees being collected. I'm sure over the course of the year it's probably similar in magnitude to the gas tax, but that's all electronic billing. I know my easy pass. It's a monthly thing And so that I think gives you some sense of or that could be points of comparison about what a automated invoicing billing system looks like that's being used to collect, you know, revenue of probably around a similar order of magnitude in that based on the number of states that have these systems that would seem not it's working. But or that there's at least information that could be gleaned from them to inform this.

[Speaker 2]: We should definitely see if there is information about that. But I will say for the amount of constituents I hear from who are frustrated with the easy pass billing system, are barometers because of how they have to use it, I think he would I I think that speaks for itself because we don't have EZ Pass as a state, and I still hear from constituents who are struggling with it, either as payees or they're inaccurately being charged. And I think that yeah. I've heard of people who have an E ZPass who've been triple billed by mistake. You know? Like, there's all these new potential problems. So I do think you're right. I would like to hear from perhaps someone who does the E ZPass system because I actually imagined originally when we talked about EMBA kind of big picture, what, like seven years ago in house transportation, we had talked about could you actually do it through like an E ZPass like system where there were certain like the device itself. Like the device itself is associated with your car, and when you pass through a specific point, that's when it marks your mileage so that you could get drivers. You could have a regional state setup with the other states so that we could then collect the revenue from other state drivers. So we wouldn't lose out on the gas tax revenue of that class of out of state drivers. So when we had really big picture conversations, EZ Pass was very a part of it as a maybe a tool or a mechanism.

[Speaker 0]: So that's just a

[Speaker 8]: couple of comments on that. Yeah, there's some great options that other states have used that you've probably seen. There's RFID tags, which are more similar to the EZ Pass. There's the actual plug in devices. It wouldn't work for people who currently have plug in devices in their vehicle because normally there's only one port, but if the state does decide to expand to all vehicles, odometer readings in addition to the EZ Pass style RFID tags and these plug in devices have been used successfully by other states, and most states have found that adoption of the more administratively expensive options has generally been higher, and other states have typically tried to include some of that cost, and people are willing to pay it in most cases, not all cases, obviously, but I'd be happy to share some of our summaries of what other states have done with additional technologies And

[Speaker 5]: I think our research has also showed that, I mean, people are certainly more, a little more skeptical of

[Speaker 3]: the

[Speaker 5]: devices because the government tracking you sort of thing, even though some of these don't actually track where you are, just kind of like you're in Vermont or you're not. In programs where people are given the choice, once you understand you might be able to save money, then some of those devices could be more popular. Obviously, it's higher administrative costs of those technologies.

[Speaker 8]: And then, the one other comment to that, just quickly. So, another option is to not necessarily get rid of the state gas tax if you move to a mileage fee program. The state gas tax could be kept in place to charge out of state drivers. It could even be increased potentially to have additional taxes for tourists and could be refunded for the actual Vermonters who live here. So, there's some options that the state could explore moving forwards. I think we have I believe that's also in our mileage fee report at the very tail end.

[Speaker 1]: I think at this point, we are ten to fifteen minutes before we have to go to the floor, and this will not be the last time we talk to you. So I'm going to thank you for showing up, and we will be in touch again, and Patrick, you and I should circle back around either today or the beginning of the week to talk about next steps. And at this point, I'm gonna say we're going to go offline.

[Speaker 8]: Thanks so much.

[Speaker 1]: Alright. Thank you very much.