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Contents

1. Introduction ....................................... 1

Description of the Project ......................... 1

2. Establishing the State’s Context ..................... 3

Considerations Guiding Vermont’s TAMP and 

Investment Strategies ............................. 5

Asset Management Portfolio: Performance Metrics 

and Customer Service Levels Driving Future Budget 

Allocations ...................................... 9

Basic Funding Needs ............................ 10

3. Financial Plan .................................... 15

3.1 Background ................................. 15

Vision for Asset Management and 

Financial Planning ............................ 16

3.2 Revenue Sources ............................. 17

Federal Revenues ............................ 17

State Revenues .............................. 17

Revenue Trends and Uncertainties .............. 19

3.3 Funding Needs ............................... 26

Past Funding Needs .......................... 27

Projected Funding Needs ..................... 29

3.4 Funding Gaps ................................ 39

Funding Gaps—Projected Revenue Sources and 

Funding Needs for Bridges .................... 41

Funding Gaps—Projected Revenue Sources and 

Funding Needs for Pavements ................. 41

3.5 Financial Challenges to Delivering the Plan ...... 43

Vehicle Miles Traveled......................... 43

More Fuel-efficient Vehicles ................... 44
ii

Delays can be Costly ....................... 44

Dependence on General Fund ............... 44

Future Federal Funding ..................... 45

Customer Service Levels .................... 45

Additional Risks to Achieving the TAMP 

Objectives ................................. 45

3.6 Use of the Financial Plan by VTrans .......... 46

Communicating Lowest Cost of Ownership to 

External Stakeholders ...................... 46

Asset Management Catalyzing Internal 

Alignment and Prioritization ................. 46

Driving Budget Recommendations ........... 47

Driving Right Mix of Projects ................ 47

Developing Tools to Communicate Value of 

Asset Management and Tradeoffs ............ 48

Reinforcing the Link between Performance, 

Risk, and Asset Management ................ 49

Organizational Alignment to Support Risk and 

Performance Based Asset Management ....... 49

Highlighting the Importance of Data .......... 50

Applying the Highway TAMP Financial Planning 

Experience to Other Modes ................. 50

Enhancing Understanding and Influence Internal 

Processes .................................. 51

Expanding the Adoption of Asset 

Management ............................... 51

Corridor Level Thinking ...................... 51

Conducting More Risk Prioritization 

Exercises .................................. 52

4. Updating the Plan ............................... 53

5. Benefitting from the Efforts: 

The VTrans Approach .............................. 54
Report 6: The Vermont Experience iii

6. Lessons Learned .................................. 55

7. Suggestions for Peers .............................. 59

8. Endnotes ......................................... 62

FIGURES

Figure 1. Structure Count by Age ....................... 6

Figure 2. Pavement Condition Over Time (unweighted) .... 7

Figure 3. Condition of NHS per Federal Rule ............. 8

Figure 4. Major Revenue Sources ....................... 18

Figure 5. Vermont 2016 State Revenue Forecast .......... 18

Figure 6. Historic Gasoline Consumption in Vermont ...... 19

Figure 7. Vermont’s Vehicle Miles Traveled in millions

from 2000 to 2014 ................................... 20

Figure 8. FY 2017 VTrans Budget Allocations by 

Program Areas ...................................... 22

Figure 9. Funding Needed to Meet Performance ........ 29

Figure 10. The Funding Gap in Millions Based on the 

10-year Financial Plan ................................ 40

Figure 11. Overall Asset Sustainability Index for 

VTrans for the TAMP Period ........................... 40

TABLES

Table 1. VTrans Highway Assets, based on 2016 data ...... 3

Table 2. NHS Condition Data (Based on VTrans’ PCI) ..... 7
iv

Table 3. FY 17 Budget Tracking of VTrans Expenses 

for Bridge, Pavement, Roadway and Traffic and 

Safety Projects .................................... 22

Table 4. VTrans annual and total revenue source 

projections in dollars for the 10-year TAMP period 

(2018 to 2027) .................................... 24

Table 5. Transportation Needs for 2014, 2015 and 2016

as reported in VTrans 2012 Section 40 Report ......... 28

Table 6. Projected Total ($) and Annual Funding Needs 

($) for the 10-year TAMP period (2018-2027) ...... 32-33

Table 7. VTrans 2015 through 2017 Bridge Budget ..... 35

Table 8. VTrans Projections for Revenue Sources and 

Funding Needs for Bridges for 2018 through 2027 ..... 36

Table 9. VTrans Projections for Revenue Sources and 

Funding Needs for Pavements for 2018 through 2027 .. 42
Report 6: The Vermont Experience 1

1. Introduction

Description of the Project

This case study describes the Vermont Agency of Transportation’s (VTrans) experience during the development of the 

first 10-year financial plan associated with its Transportation 

Asset Management Plan (TAMP). The case study shows the 

VTrans efforts to meet the state’s requirements and agency 

objectives for management of transportation assets, while 

also meeting Federal transportation asset management plan 

requirements. 

The effort to meet Federal requirements centers around the 

Moving Ahead for Progress in the Twenty First Century Act 

(MAP-21) and the subsequent Fixing America’s Surface 

Transportation (FAST) Act. The FAST Act retains the initial 

MAP-21 requirements for state transportation agencies to 

develop and implement a 10-year risk-based transportation 

asset management plan for the National Highway System 

(NHS). The objective of this plan is to improve or preserve 

the condition of the assets and the performance of the 

system. It encourages states to include other assets in the 

plan, and reduces the requirement and oversight of such 

assets. Title 23 U.S.C. 119(e)(2) states, 

“a State asset management plan shall include 

strategies leading to a program of projects 

that would make progress toward achievement 

of the State targets for asset condition and 

performance of the National Highway System 

[NHS] in accordance with section 150(d) 

and supporting the progress toward the 

achievement of the national goals identified 

in section 150(b).” 
2

The VTrans financial planning effort is aligned to support the 

aspects of Federal transportation asset management (TAM) 

requirements which states, “FHWA considers the best evidence of plan implementation to be State DOT funding 

allocations that are reasonably consistent with the investment strategies in the State DOT’s asset management plan; 

and this approach takes into account the alignment between 

the actual and planned levels of investment for various work 

types (i.e., initial construction, maintenance, preservation, 

rehabilitation and reconstruction).”

This case study discusses the experience of VTrans, while it 

was developing its 10-year asset management financial plan. 

It describes the process followed, the factors guiding the 

plan, the challenges faced, key provisions of the plan, lessons 

learned by VTrans, and guidance to peers from the VTrans 

experience. The components of the VTrans TAM financial 

plan projections discussed in this report are based on various 

assumptions that may change over the 10-year TAMP period. 

It is also noted that the version of the financial plan reviewed 

for the purpose of this study is currently in a draft form and 

may undergo further revisions following the completion of 

this report.
Report 6: The Vermont Experience 3

“Meet the required 

customer service level, 

in the most cost effective 

manner through the 

management of assets 

for both present and 

future customers.”

Table 1. VTrans Highway Assets, based on 2016 data

Highway System Assets Description

Interstate System* 640 lane miles

State System 2,327 lane miles

Class 1 TH 139 lane miles

Small Culverts (less than 72” dia.) Approx. 46,000

Guardrail 1,000+ miles

Traffic Signs 70,000 + signs

Highway Lighting 1016 fixtures

Traffic Signals 159 signals

 *not including ramps

2. Establishing the State’s Context

Since 2002, VTrans has 

made asset management a 

priority. In 2001, the Vermont Legislature passed a 

bill[i] requiring the state to 

develop an asset management plan that, “established 

systematic goal and performance driven management 

and decision making to operate, maintain and upgrade 

transportation assets cost effectively.” The bill required 

VTrans to address pavements, structures, facilities, construction and maintenance equipment, vehicles, real estate, 

materials, corporate data and information, and ground and 

water transportation facilities and equipment. It also required 

VTrans to develop deterioration rates, and determine the 

annual funds required over the long-term to fund infrastructure maintenance at the recommended performance levels. 

This VTrans plan [ii] was presented to the House and Senate 

Transportation Committees on January 15, 2002. The requirements of the bill set in motion a focus on asset management 

within the agency that continues to this day.
4

In 2006, VTrans began implementing its “Road to Affordability” [iii] initiative which supported asset management 

principles of preserving and maintaining existing assets. It 

directed the agency to focus only on project elements that 

were functionally necessary to carry out the core purpose of 

a transportation project. It directed VTrans to keep within 

project scope and not add elements to a project using state 

and Federal non-earmark funds. 

The Road to Affordability initiative was intended to focus on 

financial planning and instilling a strategic outlook towards 

day-to-day management activities. It required VTrans to

a. focus on preservation of existing assets and on traveler 

safety,

b. optimize financial resources by focusing on a practical 

number of large projects, and 

c. set realistic time tables for these projects and for new 

roadway segments while balancing the funding to 

reflect a focus on system priorities. 

The Road to Affordability initiative was thus driven by asset 

management priorities. With these requirements, for several 

years VTrans has been developing an approach that minimizes the asset lifecycle cost and extends the useful life by 

“selecting the right treatment, for the right asset, at the 

right time.”

With assistance from the Federal Highway Administration 

(FHWA), VTrans conducted a Transportation Asset Management Gap Analysis in 2014, to identify major gaps within 

the agency for implementing a 10-year TAMP. The agency 

formed a TAMP Working Group to develop individual plans 

for various transportation assets. At the time of preparing 

this report, the agency had expanded this effort to six task 

force groups focused on developing a knowledge base in 

several different topic areas, such as, customer service levels, 
Report 6: The Vermont Experience 5

data management, customer outreach/education/training, 

AM processes, life cycle planning, financial planning, etc. 

Although MAP-21 does not require states to address assets 

beyond bridges and pavements, VTrans intends to include 

in its overall TAMP strategic asset management plans for 

specific assets when they are developed by the respective 

asset stewards. The inclusion will also depend on the maturity of the data and the associated management processes. 

The agency’s current thinking is that a formal, first generation of the VTrans TAMP that will be submitted to FHWA 

may only address bridges and pavements.

Considerations Guiding Vermont’s TAMP and 

Investment Strategies

The age and resulting rehabilitation needs of bridges and 

pavements guide the strategies for investment and asset 

management planning for VTrans. The Director of the Asset 

Management & Performance Bureau for VTrans, Mr. Chad 

Allen, explains that Vermont has bridges rebuilt after the 1927 

floods that are over 80 years old and are nearing the end of 

their life. Other Interstate-era bridges are around 50 years old 

and in imminent need of major repair or rehabilitation, whereas some bridges rebuilt after the 2011 floods will have several 

decades of useful life before needing major repairs. 

Figure 1 (see next page) shows the number of structures 

that are in good condition based on VTrans‘ maintenance, 

preservation, rehabilitation and reconstruction efforts. 

Mr. Allen notes that however, on a timeline, a plot of the 

number of structures that require investment looks like a 

roller coaster, with large numbers of bridges coming up 

periodically for major rehabilitation and replacement. These 

aging bridges will require the agency to continue to invest 

in reconstruction and major rehabilitation. The agency will 

have to balance the new construction needs of these bridges with preservation and maintenance of other bridges to 

avoid deterioration due to delaying treatments. Additionally, 
6

 

Figure 1. Structure Count by Age

it will have to find ways to distribute and “flatten” the 

investments required so as to address the needs of all assets. 

Vermont’s 640 miles of interstate were built to have 

20 years of pavement life and 40 years of subbase life. 

These interstate highways were largely completed in the 

1970s and more than ten percent of them are now due for 

reconstruction. Since about 1995, VTrans has been using 

its Pavement Condition Index (PCI) to evaluate statewide 

pavement conditions. The VTrans PCI uses International 

Roughness Index (IRI), and cracking and rutting measurements to determine overall pavement condition for each 

0.1-mile pavement segment. The values in Figure 2 are 

“unweighted” meaning that there is no adjustment made for 

traffic volumes. The performance expectation is that VTrans 

will limit the amount of very poor pavements to 25 percent 

or less across its entire network. VTrans considers the 

current trend line for pavement conditions, as shown in 

Figure 2, to be good. The trend shows that though there 
Report 6: The Vermont Experience 7

Figure 2. Pavement Condition Over Time (unweighted)

 

Table 2. NHS Condition Data (Based on VTrans’ PCI)

Mileage % Good Fair Poor Very Poor

NHS Total 44.0% 32.2% 17.7% 4.6%

NHS-IS 47.4% 33.1% 14.9% 3.5%

NHS Non-IS 39.2% 30.9% 21.4% 6.2%

Table 2 containing NHS condition data from VTrans shows 

that approximately 3.5 percent of the Interstate is in very 

poor condition compared with 6.2 percent of the nonInterstate NHS. Overall, approximately, 4.6 percent of the 

NHS pavements are in a very poor condition. It is noted that 

are slight increases in the proportions of poor and very poor 

pavements from 2014 to 2015, the system has overall been 

steadily improving since 2009. The agency has maintained 

the percentage of all pavements in good condition at a 

steady 39 percent since 2012. 
8

 

Figure 3. Condition of NHS per Federal Rule (SOURCE VTRANS)

the percentages computed in Table 2 also account for a small 

proportion of invalid data. The VTrans approach for managing pavements takes into consideration their whole-life. 

VTrans has targeted for the purposes of its TAMP that the 

pavements on the interstate and NHS-non-interstate in poor 

condition will be less than 5 percent. The projected investments and funding strategies for pavements are therefore 

based on achieving this target. Details of VTrans’ asset 

management planning effort are further enumerated below. 

VTrans reviewed its NHS pavement condition against the 

Federal performance measures. As shown in Figure 3, when 

measuring the NHS conditions using the Federal performance 

measures, the total NHS in “Poor” condition is approximately 

4.8 percent, and the NHS-IS in “Poor” condition is 3.2 

percent. In general, VTrans notes that its internal metrics 

are more conservative than the Federal metrics resulting in 

VTrans reporting a higher percentage of poor and very poor 

pavements in comparison to the Federal target of no more 

than 5 % poor on the interstate.
Report 6: The Vermont Experience 9

VTrans Customer Service 

Level Areas

1. Safety

2. Asset Condition

3. Mobility

4. Resiliency

Asset Management Portfolio: Performance 

Metrics and Customer Service Levels 

Driving Future Budget Allocations

VTrans believes that it is important to incorporate customer 

expectations on service and sustainability of assets while 

developing the TAMP. It has segmented its highway network 

into tiers based on service levels that are aligned with its 

winter snow and ice control levels of service. The outcome 

of the tiered service level 

approach is that customer 

service level tiers are the 

same for capital improvements as they are for maintenance activities. VTrans is 

developing performance 

measures and service levels 

in four customer service 

areas. These service levels 

will be considered in the agency’s target setting and will 

influence future budget allocations. VTrans’ asset management efforts are guided by the objective of maintaining 

targeted performance levels for its assets in these four 

service areas. The agency is developing an Asset Management Portfolio that lists its assets and performance targets 

for those assets, and indicates the spending levels necessary 

to achieve and maintain those performance levels over the 

next 10-year period. The portfolio is anticipated to include 

bridges, pavements, culverts, signals, signs, dump trucks, 

and rock cuts. 

In 2015, addressing important aspects of sustainability and 

asset resiliency, VTrans worked with Vermont’s Agency of 

Natural Resources on the Act 64 water quality cleanup 

requirements. This resulted in VTrans increasing Federal and 

State funds in the 2017 budget. Approximately $1.4 million 

of funds were directed to municipalities to address water 

quality issues and to make local roads more resilient to 
10

“One of the Agency’s 

strategies is to develop 

an understanding of the 

desired performance 

levels and costs to 

attain affordable and 

achievable performance 

for its transportation 

assets.”

 —CHAD ALLEN

floods.[iv] Activities funded 

will include culvert replacements, and stream bank 

and ditch stabilization. 

Considering Vermont’s 

geological conditions and 

mountainous terrain, the 

state has to also address 

the risks relating to rock 

falls. A 2015 inspection by 

VTrans categorized 221 rock 

slopes as high hazard slopes. These high hazard slopes have 

to be stabilized. The desired performance target established 

by VTrans in 2012 was to minimize the risk of rock falls within 

25 years, which required a 4 percent reduction per year at 

an annual cost of nearly $2.7 million. During past budgetary 

cycles, rock slope remediation projects were often the 

first projects cut from a proposed budget. The Agency is 

attempting a more financially sustainable approach, wherein 

the overall network rock fall hazard rating score is reduced 

by 1 percent per year at an annual cost of $1.25 million, for 

the next 10 years.

Basic Funding Needs

VTrans projected the funding needs for 20 years based on 

analyzing historic expenditures, system and asset conditions, 

asset deterioration based on projections from management 

systems, and life cycle planning of assets. VTrans has a high 

level of confidence in the first 10 years of the 20 year 

projections that are included in the TAMP. 

The average annual funding requirements to address the 

asset management needs governed by all of VTrans’ strategic considerations as projected by the agency are detailed 

below. The estimates include minor lane additions to address 
Report 6: The Vermont Experience 11

Asset Sustainability 

Index is the ratio of 

the funds needed to 

deliver the plan to the 

revenue forecasted to 

be available for the

plan period.

truck climbing lanes on rural roadways, and where appropriate, adding sidewalks and shoulders in village and urban 

areas. The annual funding amounts shown do not include any 

major capacity increases. The costs reported in this section 

are based on an annualized cost calculated by summing the 

anticipated expenditures over a 20-year analysis period and 

dividing by 20. In later 

charts addressing annual 

projections, the numbers 

vary. These annual numbers 

closely reflect VTrans’ asset 

sustainability index for each 

year of the 10-year TAMP 

period. These annual numbers over the TAMP period 

are subject to change depending on factors such as 

premature asset failures, flooding, fire and other impacts of 

climatic events, and loss of buying power over time. Annual 

costs projections for some of the categories are:

1. Highway Safety: $19.0 million. Vermont has over 

13,000 crashes annually. This investment is for 

safety initiatives designed to reduce the number 

of major crashes, serious injuries, and fatalities. 

The investments encompass Highway Safety Improvement Program(HSIP) and National Highway Traffic 

Safety Administration(NHTSA) allocations, the 

operating budget for the Office of Highway Safety, 

and a $17 million annual budget for traffic and 

safety design.

2. Pavement Surface Condition: $115.0 million. This is 

for cost effective treatments to preserve and maintain 

the network performance to established VTrans performance measures. 
12

3. Composite Pavements: $85.4 million. About 9 percent 

of Vermont’s network miles are composite pavements 

(asphalt on concrete highway segments). The agency 

has established a long-term goal of reconstructing 

these sections over a 20-year period. This investment is 

to address many of the distresses, including reflective 

cracking from the slab beneath, and differences in 

settling because of roadway widening. 

4. Reconstruction of State Routes: $46.5 million. Over 

50 percent of state routes in Vermont are farm to 

market roads intended for horse and wagon. Large 

vehicle traffic volumes on these routes are accelerating 

surface and base deterioration. Over a 20-year period, 

VTrans plans to reconstruct 5 percent and rehabilitate 

20 percent of the state highway system with the 

greatest needs. 

5. Reconstruction of Interstate Routes: $17.7 million. The 

majority of Vermont’s interstate system was constructed in the 1970s with an estimated 20 years of pavement 

life and 40 years of subbase life. The pavements are 

reaching the end of their life with increasing challenges 

to maintain slopes, sinkholes and deteriorating segments. This annual funding aims to systematically 

reconstruct and rehabilitate the interstate over a 

40-year period. In the 20-year plan, Vermont is projecting to reconstruct 12.5 percent and rehabilitate using 

reclamation 37.5 percent of its interstates.

6. Lifecycle Improvement of Bridges: $152 million.

VTrans is basing its current bridge needs on a 2012 

legislative report recognizing this as an area to refine in 

the future. Using the most recent information available, 

VTrans has developed a plan for all its bridges based on 

bridge age, condition, and improvement needs. The
Report 6: The Vermont Experience 13

needs are based on the strategy to do major preventive 

maintenance every 15, 30 and 45 years, rehabilitation 

every 60 years, reconstruction every 80 years in the life 

of long structures, and replacement every 50 years in 

the life of shorter structures.

7. Infrastructure Maintenance: $93.4 million. VTrans 

currently spends 55 percent of its maintenance appropriation on personnel costs. This leaves approximately 

an average of $42 million for non-personnel related 

items. In addition, there is an estimated average annual 

funding gap of $18 million required to meet its maintenance needs. The total maintenance cost over a 20-

year period is anticipated to vary between $60 million 

(in year 1) and $126 million (in year 20). The amount 

reported represents the maintenance cost annualized 

over the 20-year period.

8. Culverts: $23.9 million. This includes the necessary 

repairs to keep small culverts (6 ft. and less in diameter) in good and fair condition, and replace poor and 

critical culverts based on the 2015 data. These repairs 

represent needs that cannot be addressed by regular 

maintenance funds.

9. Signals: $3.7 million. This projected need is based on a 

10-year replacement cycle annualized over the 10-year 

period and then extrapolated over 20-years.

10. Signs: $1 Million. VTrans has recently invested heavily 

in sign replacements and is currently in a maintenance 

cycle for most of their sign assets. There is an anticipated jump in investment from $1 million to $7 million 

in year 20. VTrans will need to keep track of this asset’s 

condition in order to correlate actual asset deterioration with future anticipated investment needs. 
14

TAMP Rule: 

Definition of Financial Plan

Is a long-term plan 

spanning 10 years 

or longer, presenting a 

State DOT’s estimates 

of projected available 

financial resources and 

predicted expenditures 

in major asset categories 

that can be used to achieve 

State DOT targets for asset 

condition during the plan 

period, and highlighting 

how resources are 

expected to be allocated 

based on asset strategies, 

needs, shortfalls, and 

agency policies.

11. Rock Slopes: $2.7 million. Although VTrans’ goal is to 

achieve a 1 percent annual reduction in the total rock 

fall hazard rating score for all “A” ranked rock cuts, 

the actual need is defined as an annual reduction of 

4 percent at a cost of $2.7 million.

12. Town Highway Program: $48.6 million. This includes 

grants and other annual appropriations of state aid to 

preserve and maintain town highways based on town 

highway mileage and classification. This program also 

includes funding for Federal and non-Federal disaster 

declarations.

13. Stormwater Runoff: $7.9 million. Vermont’s Agency of 

Natural Resources estimates that there will be significant costs to address unregulated storm water runoff 

from the road network. 

VTrans has crafted an asset 

specific investment plan to 

anticipate needs associated 

with current storm water 

legislation and resulting 

environmental compliance 

initiatives. 

VTrans is also considering 

the funding needs of all the 

assets in the TAMP. In addition to funding constraints, 

VTrans’ ability to deliver 

the projected program and 

projects in its asset management plan will directly 

influence the final TAM 

Financial Plan.
Report 6: The Vermont Experience 15

3. Financial Plan 

3.1 Background 

The Federal risk-based asset management plan rule addressing the 10-year TAMP states that, “a State DOT shall establish 

a process for the development of a financial plan that identifies annual costs over a minimum period of 10 years. It states 

that the financial plan shall, at a minimum, include:

 The estimated cost of expected future work to implement investment strategies contained in the asset 

management plan, by State fiscal year and work type:

 The estimated funding levels that are expected to be 

reasonably available, by fiscal year, to address the costs 

of future work types. State DOTs may estimate the 

amount of available funding using historical values 

where the future funding amount is uncertain;

 Identification of anticipated funding sources; and

 An estimate of the value of the agency’s pavements 

and bridge assets and the needed investment on an 

annual basis to maintain the value of these assets.”

According to the rule, FHWA considers the best evidence of 

plan implementation to be State DOT funding allocations that 

are reasonably consistent with the investment strategies in 

the State DOT’s asset management plan; and this approach 

takes into account the alignment between the actual and 

planned levels of investment for various work types (i.e., 

initial construction, maintenance, preservation, rehabilitation 

and reconstruction).

The financial planning effort thus necessitates the development of investment strategies to support the implementation 

of the 10-year TAMP. 
16

The Snelling Report 

titled, “Vermont Roads 

and Bridges: To Fix or 

Abandon”, concluded that 

there was a strong bias 

for increasing investment 

in preservation of 

roads and bridges. It 

acknowledged that delays 

in preservation would be 

very expensive especially 

in rehabilitating bridges.

In Vermont, over the last decade, there has been an 

increased public understanding of the need for investment 

in bridges and pavements. In 2008, the Snelling Center for 

Government conducted a survey, and convened business 

leaders to get responses 

from across Vermont 

on the preservation of 

Vermont’s roads and 

bridges.[v] The Snelling 

Center report titled, 

“Vermont Roads and 

Bridges: To Fix or 

Abandon”, noted that 

when increasing revenues 

to expedite preservation 

and rehabilitation investments, the preference 

was to generate user 

related revenues such as 

fuel taxes and support 

for public debt. This has resulted in the use of bonds and 

some fuel tax increases to close the funding gap and 

address the financial needs associated with bridge and 

pavement assets. 

Vision for Asset Management and Financial Planning

VTrans’ asset management vision is to develop individual 

10-year management plans for all of its assets (including 

those beyond bridges and pavements). With this approach, 

eventually culverts, signals, signs, dump trucks, rock cuts 

and slopes will each have its own asset management plan. 

The financial plan for each asset type will include performance targets planned over a 10 year-period and the 

dollar amounts needed each year to achieve them. 
Report 6: The Vermont Experience 17

3.2 Revenue Sources

The major funding sources for VTrans are,

Federal transportation fund revenues

State revenues

 Fuel taxes (gasoline and diesel taxes, 

and assessments) 

Motor Vehicle registration and other fees

Vehicle purchase and use taxes

Federal Revenues

The overall VTrans annual budget including from the Transportation Infrastructure Bonds (TIB) has dropped from 

$685.8 million in 2015 to $573.6 million in 2016. Approximately 55 percent of the VTrans transportation budget comes 

from Federal funding. About 38 percent comes from fuel 

tax and motor vehicle fees, and the remaining comes from 

vehicle purchase and use taxes. To-date, state and local 

communities have also received over $575 million in Federal 

assistance to properly rebuild infrastructure that was damaged due to Hurricane Irene in 2011. Also, from 2009 to 2012, 

Vermont received close to $251.2 million from the American 

Recovery and Reinvestment Act (ARRA). This influx of ARRA 

funding enabled VTrans to expedite and complete many 

projects. The loss of the temporary influx of these Federal 

funds has a big impact on VTrans’ long-term plans. Figure 4 

(see next page) shows the overall trend in funding from 

2000 to 2016. It also shows an increase from 2010 through 

2015, followed by a decline in 2016.

State Revenues

Figure 5 (see next page) shows the 2016 projections for state 

revenues. It shows the general distribution of the sources of 

revenue for VTrans and provides a glimpse of revenue sources that can be expected in future years.
18

Figure 4. Major Revenue Sources (SOURCE: VTRANS)

Figure 5. Vermont 2016 State Revenue Forecast (SOURCE: VTRANS)

The three major state revenue sources are motor vehicle 

fees, gasoline taxes, and purchase and use fees. Twenty nine 

percent of the state revenue comes from motor vehicle fees, 

28 percent comes from gasoline taxes, and 24 percent 

comes from purchase and use fees. 
Report 6: The Vermont Experience 19

Figure 6. Historic Gasoline Consumption in Vermont

(SOURCE: VTRANS)

VTrans’ concern is that without a corresponding increase in 

gasoline consumption, the revenue generated will not keep 

pace with inflation. Figure 7 (see next page) shows that the 

trend in Vehicle Miles Traveled (VMT) in Vermont is also 

declining. The figure shows that the VMT in 2014 is at its 

lowest point since the year 2000 when the VMT was at a low 

of 6.5 million. While some of the reduction in gasoline consumption can be attributed to increasing fuel efficiencies in 

vehicles, the reducing consumption is consistent with the 

correspondingly declining VMT trend.

Revenue Trends and Uncertainties

Gasoline Consumption Taxes

The pattern and public use of different transportation modes 

is changing in Vermont. As shown in Figure 6, one of 

VTrans’ concerns has been the declining trend of gasoline 

consumption in the state from 2005 to 2013. With the decline 

in gasoline consumption, the corresponding revenue also 

declined. 
20

Figure 7. Vermont’s Vehicle Miles Traveled in millions

from 2000 to 2014

Motor Vehicle Registration Fees

Since 2014, the revenue from the gas tax has remained flat. 

In 2013, the state offset some of the revenue decline through 

adjustments to gas and diesel taxes and to motor vehicle 

registration fees. This assessment on retail gas prices resulted in an increase in revenue in 2014. Overall, the motor 

vehicle registration fees have been a steady source of 

revenue except during the 2008 and 2009 recession. This 

revenue source provides approximately $65 million annually. 

However, there is a concern that since this revenue is dependent on the economy and the related uncertainties, future 

recessions can impact it. Vehicle registration fees make up 

approximately 29 percent of VTrans revenue from State 

sources, and the uncertainty associated with this source 

poses a substantial risk to funding the Agency’s asset management investment strategies and closing asset funding 

gaps. Additionally, there is concern that as more millienials 

choose not to drive, the revenues from vehicle registration 

fees could steadily decline.

Federal Revenues

Approximately fifty-five percent of the VTrans transportation funding comes from Federal funds. Uncertainty in 
Report 6: The Vermont Experience 21

Federal funding is a major risk being considered by the 

agency. The five-year FAST Act does not provide the longterm funding required by VTrans to address its long-term 

transportation needs. 

The Congressional Budget Office (CBO) May 2012 report[vi]

predicts an almost 21 percent reduction in gasoline revenues 

by 2040 due to higher fuel economy vehicles. The expectation is that there will be further reduction in gasoline 

consumption and revenues due to future improvements to 

engines and battery technologies in alternative fuel vehicles. 

The disbursement to states by 2022 from the Highway Trust 

Fund (HTF) is projected to be $589 billion, while inputs to 

the HTF are only expected to be $442 billion. The projected 

shortfall of $147 billion in the HTF is staggering and can have 

significant consequences to Vermont and other states that 

depend on these funds.

Past Revenue Allocations

Figure 8 (see next page) shows the details of VTrans’ 

$616,128,196 budget allocation for FY 2017. The biggest share 

of 45 percent was allocated to program development activities that include, but are not limited to, the scoping, design 

and construction of bridges, roadway, pavements, traffic 

and safety programs. Town highway programs received the 

second largest share of 17 percent, while maintenance 

received the third largest budget allocation of 14 percent.

VTrans tracks the use of both State and Federal funds across 

the fiscal calendar and compares those expenses against the 

anticipated revenue allocations. The current approach of 

addressing asset management investment strategies for 

various work types used by VTrans aligns as practically as 

possible the actual and planned levels of investment. This 

approach is in-line with FHWA’s expectation of the best 

evidence of plan implementation as noted in the Rule. Table 3 

(see next page) shows the summary of the VTrans FY 2017 
22

 

Table 3. FY 17 Budget Tracking of VTrans Expenses for Bridge, 

Pavement, Roadway, and Traffic and Safety Projects

Budget 

Reporting 

Category

As Passed 

(Budget)

Adjustments 

(Carry Forward from 

Prior Year)

Current 

Budget (CB) 

(Budget 

+Adjustments)

Expected 

Budget

CB– 

Expected 

Forecast

Interstate 

Bridges $ 4,791,818 $ 4,791,818 $ 3,972,985 $ 818,833 

Paving $ 22,730,033 ($2,000,000) $ 20,730,033 $ 21,263,953 $ (1,112,980)

Roadway 

Projects $ 2,637,595 $ 2,637,595 $ 3,530,222 $ (892,627)

State Highway Bridges $ 6,023,866 $ 6,023,866 $ 6,514,253 $ (490,387)

Traffic & 

Safety $ 278,478 $ 278,478 $ 493,236 $ (214,759)

Town Highway Bridges $ 2,654,284 $ 271,364 $ 2,925,648 $ 3,032,722 $ (107,074)

Figure 8. FY 2017 VTrans Budget Allocations by Program Areas
Report 6: The Vermont Experience 23

budget tracking effort for selected categories of assets. 

The table shows the dollars allocated to various programs 

(for illustrative purposes, only the traffic & safety, pavement, 

bridge and roadway appropriations are displayed in this 

table). As currently projected, all programs are expected to 

end up with a deficit with respect to the Current Budget 

(adjusted for carry forwards) except for Interstate Bridges, 

which shows a surplus of $818,833. The aggregate deficit 

projected is approximately $2.0 million. 

Table 3 also shows that the Paving program started with a 

carry forward deficit from 2016 of $2 million, while the Town 

Highway Bridge Program commenced with a carry forward 

surplus of $271,364.

Based on these carry forward deficits, the largest projected 

budget deficits are in Paving (approximately $1.1 million) and 

Roadway (approximately $0.9 million). VTrans monitors its 

expenses across the fiscal calendar to ensure that it makes 

the best use of its State dollars and does not leave any 

Federal dollars “on the table”. The Agency expects such 

surpluses and deficits to continue, and where possible, 

considers these gaps while making adjustments to subsequent years’ allocations to meet the longer-term asset 

management strategy needs.

Projected Revenue Sources

States differ in how and which agency within a state 

manages each of the different transportation modes. In 

Vermont, VTrans is responsible for a diverse, multi-modal 

transportation network. The VTrans 10-year TAMP and 

financial plan are thus influenced by and reflect these 

diverse multi-modal responsibilities. This multi-modal 

responsibility is reflected in the 10-year revenue projections 

shown in Table 4 (see next page).
24 Revenue Sources–

Projected Funding (by SFY)

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2027

FHWA annual formula $203,310 $207,488 $211,945 $216,781 $220,917 $225,135 $229,438 $233,827 $238,303 $242,870 $2,230,015 

Federal discretionary $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $150,000 FHWA: unspent from prior years $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $500,000 

Total Funding from FHWA $268,310 $272,488 $276,945 $281,781 $285,917 $290,135 $294,438 $298,827 $303,303 $307,870 $2,880,015 

FTA $15,000 $15,300 $15,606 $15,918 $16,236 $16,561 $16,892 $17,230 $17,575 $17,926 $164,246 FAA $14,124 $4,000 $4,080 $4,162 $4,245 $4,330 $4,416 $4,505 $4,595 $4,687 $53,143 

FRA $8,000 $8,160 $8,323 $8,490 $8,659 $8,833 $9,009 $9,189 $9,373 $9,561 $87,598 Other federal $10,000 $10,200 $10,404 $10,612 $10,824 $11,041 $11,262 $11,487 $11,717 $11,951 $109,497 

Total Federal $315,434 $310,148 $315,358 $320,963 $325,882 $330,900 $336,018 $341,238 $346,563 $351,994 $3,294,498 

Local/Other (VTrans managed) $5,000 $5,100 $5,202 $5,306 $5,412 $5,520 $5,631 $5,743 $5,858 $5,975 $54,749 

State Transportation Fund $249,074 $254,055 $259,137 $271,319 $276,746 $282,281 $294,926 $300,825 $306,841 $319,978 $2,815,182 State TIB Fund $12,269 $12,514 $12,765 $13,020 $13,280 $13,546 $13,817 $14,093 $14,375 $14,663 $134,342 

Total Projected Revenues $581,777 $581,817 $592,461 $610,608 $621,320 $632,247 $650,392 $661,900 $673,638 $692,610 $6,298,771

Table 4. Revenue Sources ($ Thousands)

VTrans annual and total revenue source projections in dollars for the 10-year TAMP period (2018 to 2027)
Report 6: The Vermont Experience 25

The VTrans Financial Planning Process

The VTrans TAM financial planning process started with preliminary revenue projections for a 20-year financial plan. This 

20-year plan was then refined to develop the 10-year projections. The projected revenue apportionments for 2017 were 

used to establish the 2018 baseline values for the 10-year 

TAMP period. Several assumptions were made in projecting 

the availability of future funds. VTrans developed multiple 

scenarios in projecting annual growth in funding sources for 

the TAMP period, ranging from 0 to 5 percent growth for 

different revenue sources. VTrans selected the most likely 

scenario that considered a growth of 2.5 and 2 percent growth 

in some revenue sources, and a lump sum amount in other 

sources. VTrans will closely monitor these assumptions and 

revise the 10-year projections to reflect changes as they occur. 

VTrans has based the 10-year financial plan funding projections on 2012 dollars. The actual costs over the 10-year period 

will change as inflation and other cost factors change.

Revenue Projection Assumptions

The revenue projections used by VTrans for the 10-year TAMP 

period as shown in Tables 4 do not account for any high 

priority earmarks. In developing these 10-year revenue 

projections, VTrans has assumed that the revenues from 

various FHWA programs will grow annually at 2 percent. 

These programs include, National Highway Performance 

Program, State Transportation Program, Highway Safety 

Improvement Program, Railway and Highway Crossing 

Programs, Congestion Mitigation and Air Quality Improvement Program, Metropolitan Planning Program, and National 

Highway Freight Program. VTrans assumes for its 2018 

baseline that it will have an obligation limit equal to approximately 97 percent of the 2017 total apportionment of $210 

million in Federal funds for the highway mode. This obligation 

limit assumption is applied for FHWA revenue sources for 

each of the ten years of the TAMP period. VTrans expects 

that the annual increase of 2.0 percent will be a little more 
26

than the amount required to adjust for the loss in value of 

money in future years. It further assumes availability of 

$15 million dollars of Federal discretionary revenues and 

obligated unspent revenues of $50 million from the prior year 

from the FHWA funds for each year of the TAMP period.

In projecting the Federal Aviation Administration revenues, 

VTrans assumes that these will drop from $14 million in 2018 

to $4 million in 2019 and subsequently grow annually at 

2 percent for the remaining plan period. In projecting revenue 

amounts from Federal Transit Administration, VTrans assumes 

$15 million-dollar in 2018 and assumes that the revenue from 

this source will grow annually at 2 percent. Revenues from 

the Federal Railroad Administration are projected to grow at 

2 percent per year from 2018 from a base value of $8 million. 

Other Federal funds (base value of $10 million) are projected 

to increase by 2 percent for the plan period.

VTrans assumes that revenues from all local and state sources, i.e., VTrans managed Local revenues, State transportation 

funds, and State bonds, will increase annually by 2 percent, 

with additional incremental increases of 2 to 3 percent every 

third year, resulting in an average annual increase of approximately 3 percent during the plan period. 

This financial plan shows a total of $6.3 billion in projected 

revenue for the period 2018 through 2027. It shows the total 

Federal funds for all modes to be approximately $3.3 billion, 

of which, the total Federal highway funding is approximately 

$2.9 billion. The plan also shows approximately $3.0 billion 

of state and local funds managed by VTrans. 

3.3 Funding Needs

The projected funding needs capture the investment 

required to support the agency’s strategies to achieve and 

maintain the asset condition targets it has established for 
Report 6: The Vermont Experience 27

the plan period. Historically, these projections had a shorter 

term. With the requirements of the 10-year TAMP, VTrans has 

projected the funding needs for a 10-year period from 2018 

to 2027. The goal is to develop a financial plan that will 

support the 10-year funding required to sustain, preserve, 

and improve the condition of the assets. Sustainability is 

measured by whether strategies and investments achieve 

and maintain asset condition targets for at least the 10-year 

period of the TAMP.

Past Funding Needs

Historically, VTrans projected its funding needs on the basis 

of the cost to preserve, maintain and operate the existing 

transportation network for a shorter period—typically three 

years. The VTrans asset management philosophy of providing 

the right treatment, at the right cost and at the right time, 

guided the projection of the funding needs. It prioritized 

maintenance and preservation over new capacity. VTrans 

does a total-system data collection every two years. Aligned 

with the data collection, once in two years, the pavement 

funding need is reevaluated. The 2014 through 2016 funding 

categories and needs projections are shown in Table 5 (see 

next page). 

VTrans has consistently questioned its priorities and its 

performance targets. For pavements, VTrans has two long 

standing performance benchmarks that have been used to 

communicate pavement performance to the Legislature 

and other stakeholders. As shown in Table 6 (see page 32), 

VTrans has communicated the need for a $115 million 

pavement investment in 2018 to meet two pavement performance targets of 1) limiting percent of pavements in very 

poor condition to not exceed 25 percent, and 2) achieving a 

travel weighted average (TWA) pavement condition of 70. 

These two performance measures compete for funding 

within the pavement management system. However, VTrans 

has found that these two measures help to identify the 
28

Table 5. Transportation Needs for 2014, 2015 and 2016

as reported in VTrans 2012 Section 40 Report

Transportation Needs 2014 2015 2016

Highway Pavements and Safety $ 252,000,000 $ 252,000,000 $ 252,000,000

Bridges (including Town 

Highway Bridges) $ 152,000,000 $ 152,000,000 $ 152,000,000

Maintenance & Buildings $ 73,504,251 $ 74,974,336 $ 76,473,823

Town Highway Aid Programs $ 54,977,244 $ 54,977,244 $ 54,977,244

Rail $ 56,150,000 $ 50,300,000 $ 48,454,500

Aviation $ 5,845,000 $ 12,842,000 $ 6,090,000

Public Transit $ 27,485,565 $ 27,485,565 $ 29,485,565

Park and Ride $ 4,000,000 $ 4,000,000 $ 4,000,000

Transportation Alternatives $ 3,000,000 $ 3,000,000 $ 3,000,000

Others (DMV, Planning, Finance, 

Admin, Rest areas.) $ 70,844,111 $ 70,844,111 $ 70,844,111

Total Funding Needs $ 699,806,171 $ 702,423,256 $ 697,325,243

level of investment necessary to achieve both customer 

satisfaction and asset sustainability.

Recently, there has been some cultural growth within the 

Agency relative to both asset and performance management. Leaders who have committed funds and resources 

to programmatic areas in the past are now asking, 1) what 

is the performance target? 2) what is the right target? and 

3) how were those targets established? 

Figure 9 shows how these performance measures are used to 

determine the annual amount of pavement funds to request 

on a biannual basis. It shows that if VTrans took care of only 

its higher volume roadways then it could achieve its TWA 

pavement condition goal of 70 with an investment in the 

$70 to $75 million-dollar range. However, in order to achieve 

both performance targets the needed annual investment is 

approximately $115 million. 
Report 6: The Vermont Experience 29

Figure 9. Funding Needed to Meet Performance Goals

for 10 Year Analysis Period (SOURCE: VTRANS)

VTrans is currently working on developing a communication 

strategy to share the information about asset management 

in a way that increases transparency and changes the conversation from what percentage of the network is in very 

poor condition to what percent of the network is in fair or 

good condition. This provides more of a proactive context 

for a discussion on pavement investments.

Projected Funding Needs

The funding needs component of the VTrans TAM financial 

plan provides the summary of projected needs for all the 

major program and spending categories. The 10-year projections of funding needs for the TAMP identify the cost to 
30

meet the agency’s asset condition targets during the 10 

years of the asset management plan. The cost projections 

are based on selecting the right treatments, at the right 

time, based on the life-cycle cost to sustain and improve the 

asset’s useful life. This involved projecting the annual cost of 

treatments to achieve corresponding condition targets and 

system performance that aligned with the 10-year TAMP. The 

level of analysis was more mature for some assets and less so 

for other assets. For example, VTrans estimates that its level 

of analysis was very mature for pavements, while it was at an 

intermediate maturity level for bridges, where deterioration 

and forecasting models are in the process of being finalized. 

VTrans has not let this process of improving analysis methodology affect its ability to forecast future funding needs. 

VTrans understands that the plan development is an iterative 

process and intends to update the current projections as the 

models get more mature and reflect changes in updates to 

the plan.

Table 6 (see page 32) shows the projected funding needs for 

all the major categories for the 10-year period of the TAMP 

(in 2012 dollars). The agency estimates that a total of $9.7 

billion dollars will be required over the 10-year plan period to 

make the improvements necessary to maintain the agency’s 

assets in a state of good repair. VTrans understands that it 

will not be able to fund all of these improvements and will 

have to adjust performance and condition expectations so 

as not to exceed available revenues.

Key Assumptions in Projecting Needs

The asset management plan addresses specific long-term 

strategies that are focused on systematically sustaining and 

cost-effectively improving the asset conditions and the 

performance of the transportation system. The strategies are 

based on a twenty-year plan to methodically rehabilitate and 

replace a small percentage of the aging infrastructure each 

year, while ensuring that the existing system components in 
Report 6: The Vermont Experience 31

“good” or “fair” condition continue to be preserved or 

improved, as appropriate. Working within the financial 

constraints to address the State’s aging transportation 

infrastructure, the agency developed a systematic and 

cost-effective maintenance and preservation plan to extend 

the useful life of its assets. In cases, where maintenance and 

preservation were determined to be not effective, i.e., where 

the assets had exceeded their useful life and deteriorated to 

a point where maintenance and preservation are not viable 

solutions, a long-term plan of reconstruction and rehabilitation was considered. These long-term strategies were used 

in estimating the needs. The funding needs projected for 

these long-term strategies for the first half of the 20-year 

plan are included in the 10-year financial plan associated 

with the TAMP.

Realistically, over the 10-year plan period, the agency will 

have to review the impacts of inflation and other costs, and 

update the financial plan appropriately. Also, it will have to 

review the projects delivered and those planned to be 

delivered over the 10-year period, and reflect the impacts of 

schedule changes, cost increases, and scope changes in the 

financial plan. Other factors can also influence the financial 

plan. For example, if Vermont faces a severe winter, then 

snow and ice removal activities will increase and corresponding maintenance budgets will need to reflect the increased 

need. It will also be necessary for the needs for various 

budget categories to be updated to reflect any changes 

to construction material or labor costs. The information 

in the financial plan and its components will continue to 

change, requiring the plan to be reviewed and updated 

appropriately.

Pavement Needs

VTrans has four main budget categories that address pavement needs, Roadway Strategy 1, Roadway Strategy 2, 

Roadway Strategy 3, and Paving. 
32Table 6. Projected Total ($) and Annual Funding Needs ($) for the 10-year TAMP period (2018-2027) 

Projected Funding Needs by SFY (Based on 2016 Dollars) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2027Personnel Services 113,966 117,385 120,907 124,534 128,270 132,118 136,082 140,164 144,369 148,700 1,306,495 

Highway Safety 19,000 19,570 20,157 20,762 21,385 22,026 22,687 23,368 24,069 24,791 217,814 

Roadway Strategy-1 85,386 87,948 90,586 93,304 96,103 98,986 101,955 105,014 108,164 111,409 978,855 

Roadway Strategy-2 46,540 47,936 49,374 50,856 52,381 53,953 55,571 57,238 58,955 60,724 533,529 

Roadway Strategy-3 30,000 30,900 31,827 32,782 33,765 34,778 35,822 36,896 38,003 39,143 343,916 

Paving 115,000 118,450 122,004 125,664 129,434 133,317 137,316 141,435 145,679 150,049 1,318,346 

Bridges 152,000 156,560 161,257 166,095 171,077 176,210 181,496 186,941 192,549 198,326 1,742,510 

Maintenance 60,067 61,869 63,726 65,637 67,606 69,635 71,724 73,875 76,092 78,374 688,606 

Transportation Bldg 3,000 3,090 3,183 3,278 3,377 1,500 1,545 1,591 1,639 1,688 23,891 

Central Garage(eqip) 7,390 7,612 7,840 8,075 8,318 8,567 8,824 9,089 9,361 9,642 84,718 

Large Steel Culverts 3,600 3,708 3,819 3,934 4,052 4,173 4,299 4,428 4,560 4,697 41,270 

Small Culverts 23,905 24,623 25,361 26,122 26,906 27,713 28,544 29,401 30,283 31,191 274,049 

Signals 3,689 3,799 3,913 4,031 4,151 4,276 4,404 4,536 4,672 4,813 42,285 

Signs 1,009 1,039 1,070 1,102 1,136 1,170 1,205 1,241 1,278 1,316 11,566 
Report 6: The Vermont Experience 33 Projected Funding Needs by SFY (Based on 2016 Dollars) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-2027 Retaining Walls 1,058 1,100 1,144 1,190 1,238 1,287 1,339 1,392 1,448 1,506 12,702 Rock Slopes 2,730 2,839 2,953 3,071 3,194 3,321 3,454 3,592 3,736 3,885 32,774 Local Projects 17,229 17,745 18,278 18,826 19,391 19,973 20,572 21,189 21,825 22,479 197,507 Rest Areas 550 567 583 601 619 638 657 676 697 718 6,305 Town Highway Aid 48,619 50,078 51,580 53,128 54,722 56,363 58,054 59,796 61,590 63,437 557,367 Stormwater Assets 7,900 10,300 10,609 10,927 11,255 17,389 17,911 18,448 19,002 19,572 143,313 Rail 34,280 35,308 36,368 37,459 38,582 39,740 40,932 42,160 43,425 44,728 392,982 Aviation 6,000 6,180 6,365 6,556 6,753 6,956 7,164 7,379 7,601 7,829 68,783 Public Transit 37,656 33,421 37,055 38,538 40,122 41,349 42,924 42,121 39,280 46,278 398,744 DMV 28,910 29,777 30,671 31,591 32,538 33,515 34,520 35,556 36,622 37,721 331,421 Total Funding Needs 849,484 871,806 900,630 928,062 956,374 988,951 1,019,000 1,047,527 1,074,898 1,113,016 9,749,748 (Table 6 continued) Funding Needs ($ Thousands)
34

Roadway Strategy 1 is the strategy required for removal of 

concrete slabs under the State Highway System, including 

full-depth rehabilitation. This constitutes approximately 

9.4 percent of the total network.

Roadway Strategy 2 is the reconstruction of the state routes. 

It assumes that over a 20-year period, 20 percent of the 

state highway routes will be rehabilitated and 5 percent will 

be reconstructed. 

Roadway Strategy 3 addresses the rehabilitation and 

reconstruction needs of the interstate routes over a 40-year 

period. It assumes that 75 percent of the interstate will be 

rehabilitated and the remaining 25 percent will be reconstructed over the next 40 years. 

The Paving Strategy specifically addresses pavement 

condition targets. VTrans uses the Deighton Pavement 

Management System to assist in forecasting the pavement 

funding needs required to meet the 10-year TAMP condition 

targets. In this system, strategies are included to rehabilitate 

and reconstruct the network. 

As was observed in Figure 3, based on the Federal rule 

requirements, currently approximately 3 percent of the 

total interstate pavements and approximately 4.8 percent 

of NHS pavements (including interstate pavements) are in 

poor condition (determined per the Federal rule). Based on 

a travel weighted average, VTrans has projected the needs 

to meet its internal targets of achieving, (a) less than 

25 percent of the system in “very poor” condition, and 

(b) more than 70 percent of the system in “good” and “fair” 

condition. As shown in Table 6 (see page 32), these projections indicate a funding need of approximately $277 million 

in 2018 for pavements to meet the agency’s targets. Table 6 

also shows the total projected 10-year funding needs for 

surface treatments to be approximately $1.32 billion and for 
Report 6: The Vermont Experience 35

Table 7. VTrans 2015 through 2017 Bridge Budget

Bridge Budget 

Categories and 

% Split by SFY 2015

% Split 

Computed 2016

% Split 

Computed 2017

% Split 

Computed

Interstate Bridge 

Budget 51,967,015 37% 44,010,852 38% 52,785,722 50%

State Highway 

Bridge Budget 71,810,914 51% 49,164,341 42% 32,251,548 31%

Town Highway 

Bridge Budget 16,482,361 12% 22,956,001 20% 20,021,730 19%

Total Bridge 

Budget 140,260,290 100% 116,131,194 100% 105,059,000 100%

pavement structures to be approximately $1.86 billion for 

the 10-year TAMP period. The agency has not specifically 

established any targets yet to meet Federal requirements. 

However, VTrans is confident that by meeting the more 

stringent, internal targets for customer service levels, asset 

conditions, and system requirements, it will be in a position 

to meet the applicable Federal requirements.

As discussed earlier in the report, over 50 percent, of the 

farm to market roads are in “good” condition. Though not 

designed for heavier vehicle movement, these roads are 

being used by heavier vehicles. About ten percent of these 

need to be reconstructed over a twenty-year period. 

The 10-year funding needs for the town highways are 

separately shown in the Town Highway Aid projections.

Bridges

Vermont is facing the challenge of aging bridges similar to 

other states across the nation. Vermont has many bridges 

that have exceeded the expected life and are in dire need 

of investment. Table 7 shows the 2015-2017 allocations for 
36 Bridge Revenue 

Sources and Funding Needs Projections /SFY

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018–2027

State Highway Bridge Revenue Projections

 $46,577 $47,975 $49,414 $50,896 $52,423 $53,996 $55,616 $57,284 $59,003 $60,773 $533,957 

Interstate Bridge Revenue Projections

 $33,007 $33,997 $35,017 $36,067 $37,149 $38,264 $39,412 $40,594 $41,812 $43,066 $378,385 

Town Highway Bridge Revenue Projections

 $22,999 $23,689 $24,400 $25,131 $25,885 $26,662 $27,462 $28,286 $29,134 $30,008 $263,656 

Total Projected Bridge Revenues $102,583 $105,660 $108,830 $112,095 $115,458 $118,922 $122,489 $126,164 $129,949 $133,847 $1,175,998 

Bridge Funding Needs $152,000 $156,560 $161,257 $166,095 $171,077 $176,210 $181,496 $186,941 $192,549 $198,326 $1,742,510 Large Culverts Funding Needs $3,600 $3,708 $3,819 $3,934 $4,052 $4,173 $4,299 $4,428 $4,560 $4,697 $41,270 

Total Bridge and Large Culvert Funding Needs 

 $155,600 $160,268 $165,076 $170,028 $175,129 $180,383 $185,795 $191,368 $197,109 $203,023 $1,783,780 

Projected Funding Gap for Bridges $53,017 $54,608 $56,246 $57,933 $59,671 $61,461 $63,305 $65,204 $67,160 $69,175 $607,782 

Table 8. VTrans Projections for Revenue Sources and Funding Needs for Bridges for 2018 through 2027Revenue Sources and Funding Needs ($ Thousands)
Report 6: The Vermont Experience 37

different categories of bridges. The total amount ranged 

from a high of $140 million in 2015 to a low of $105 million 

in 2017. The estimated cost of strategies for bridges and 

pavements are shown in the funding needs section of the 

financial plan. 

As explained in the beginning of this report, over the 10-year 

period, a plot of the age of bridges (Figure 1) shows steep 

hills and valleys. The projected bridge investment needs as 

computed by VTrans, which are a function of age, condition 

and performance, therefore also vary significantly from 

year-to-year. VTrans assumes that if the need so estimated in 

a given year is at a peak level, the funding and other resources available during that year will most likely be insufficient to 

meet such a high need. VTrans believes that based on life 

cycle planning and proactive preservation and maintenance 

it will be able to manage the projects planned for yearly 

delivery over the 10-year plan period in a manner whereby 

the needs are flattened out versus fluctuating significantly 

from year to year. To deliver an implementable and realistic 

TAMP, VTrans has projected annual funding needs based on 

such a flattening (averaging) of the long-term needs. It has 

projected a bridge funding need of $152 million for 2018 

(Table 6), escalating annually at 3 percent for a total of over 

$1.7 billion over the ten year TAMP period. The funding needs 

are projected on the basis of many assumptions, and as 

underlying assumptions on project schedules, resource 

availability, and other factors change, VTrans expects 

that the yearly funding needs will also change.

Operation and Maintenance

The operations and maintenance needs include several 

essential costs that are captured under the “Personnel 

Services” category in Table 6. The Personnel Services category includes estimates for personal services, equipment, 

material costs, staff safety training, impact of addressing 

environmental regulations, implementation and updates to 
38

asset management systems, maintaining inventories, and 

the collection, management and analysis of data. The TAMP 

financial plan, also addresses increasing personnel costs. 

It is noted that personnel costs have surpassed the cost of 

equipment and materials over the past few years. An experienced internal workforce brings significantly more practical 

knowledge to the agency. However, the higher salaries and 

compensation for such a workforce contribute to the overall 

administrative cost increases in the agency. These increases 

are reflected in the financial plan by a 3 percent increase 

each year for the plan period. The projected need for 

2018 is approximately $113 million, which aggregates to 

approximately $1. 3 billion over the 10-year plan period.

Capacity Projects

The agency’s focus as detailed in its report titled, “Road 

to Affordability” is to prioritize maintaining and managing 

existing assets. This focus is reflected in the absence of 

major capacity projects in the asset management plan. As 

discussed earlier in this report, any expansion is limited to 

project elements and minor lane additions that are functionally necessary. Based on current planning projections, VTrans 

does not have plans for addition of through lanes to the 

interstate or state roadways or new interchanges during 

the 10-year TAMP.

Other External Factors including Leadership Changes 

The recession between 2008 and 2009, hurricane Irene 

in 2011, and a change in administration in 2006, all had a 

significant impact on VTrans’ ability to deliver on its “Road 

to Affordability” plan. There have since been a lot of internal 

discussions and actions that have resulted in VTrans 

returning to its “Road to Affordability” approach. Overall, 

this approach which entails a focus on preserving and 

improving existing infrastructure has remained a part of 

the VTrans plan. 
Report 6: The Vermont Experience 39

Asset Sustainability

 Index is the ratio

of the funds needed 

to deliver the plan to

the revenue forecasted

to be available for

the plan period.

3.4 Funding Gaps

Comparing the agency’s projections of Revenue Sources and 

Funding Needs, it is evident that Vtrans’ funding needs exceed 

the projected revenues from all sources. Figure 10 (see next 

page) shows the funding gap based on the forecasted revenue 

sources and the projected funding needed to implement the 

draft TAMP. Not taking into consideration any adjustment 

for inflation, VTrans projects a funding gap in every year of 

the 10-year TAMP period, accumulating to approximately 

$3.45 billion (figured in 2012 dollars) over the plan period.

These projections demonstrate the constraints faced by 

the agency in its ability to sustain and improve the assets in 

“fair” and “good” condition, while replacing the assets that 

have deteriorated beyond the point where they cannot be 

addressed by preservation and maintenance. 

Asset Sustainability Index

The Asset Sustainability Index is a measure of an agency’s 

ability to deliver its asset management plan. An ideal Asset 

Sustainability Index (ASI) for an agency is 1.0. Figure 11 (see 

next page) shows that the projected Overall ASI for VTrans 

(for all assets) through 2027 is consistently lower than the 

desired 1.0, with a steadily declining trend over the second 

half of the plan period. This indicates that VTrans does not 

have the revenue sources necessary to fund the needs each 

year of the 10-year plan. 

The ASI trends can change 

as investment strategies 

change, other funding 

needs increase, revenues 

change, or funding gets 

redirected from asset 

management activities to 

other agency priorities. 
40

 

 

Figure 10. The Funding Gap in Millions Based on the 10-year 

Financial Plan (SOURCE: VTRANS)

Figure 11. Overall Asset Sustainability Index for 

VTrans for the TAMP Period
Report 6: The Vermont Experience 41

Funding Gaps—Projected Revenue Sources and Funding 

Needs for Bridges

Table 8 provides further detail into the projected revenues 

sources and amounts, funding needs and gaps for the specific sub-category of bridges during the 10-year plan period.

VTrans used the average bridge revenue allocations from 

2008 through 2011 to establish the baseline for projecting 

the future revenue allocations for bridges during the TAMP 

period. Although the agency had received some ARRA funds 

along with other funds to address its funding needs during 

the aftermath of hurricane Irene, VTrans did not consider it 

realistic to plan the implementation of the TAMP based on an 

assumption that there would be a similar future influx of such 

temporary funds. Therefore, the baseline for bridge revenue 

projections excludes such temporary funds. Beyond 2010, 

VTrans merged the bridge maintenance funding allocations 

with the State Highway System (SHS) and Interstate Highway 

System (IHS) projections. This approach to funding bridge 

maintenance is expected to continue and has been adopted 

in projecting bridge revenue allocations for the 10-year TAMP. 

The allocation of bridge revenues beyond 2018 has been 

assumed to grow at 3 percent. Table 8 shows the revenue 

sources, funding needs and the funding gap for bridges for 

the 10-year plan period. The funding gap starts at approximately $53 million in 2018, increasing each year to approximately 

$69 million in 2027. Table 8 shows a total gap for bridges of 

approximately $607 million between the projected funding 

needed and the estimates of revenues for the 10-year plan. 

Funding Gaps—Projected Revenue Sources and Funding 

Needs for Pavements

As shown in Table 9 (see next page), VTrans assumes that in 

2018, it will receive approximately $142 million for pavement 

surface and structure improvements, an approximately 2.5 

percent increase over the amount it received in 2017. Projecting for the 10-year period, the agency assumes that revenues 
42

Table 9. VTrans Projections for Revenue Sources and Funding Needs for Pavements for 2018 through 2027

Pavement Revenue Sources and Fund

Revenue Sources, Funding Needs, and Gaps ($ Thousands)

-

ing Needs and Gap Projections /SFY

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018 –2027

Paving Projected Revenues $113,238 $116,069 $118,971 $121,945 $124,994 $128,119 $131,322 $134,605 $137,970 $141,419 $1,268,650 

Roadway Projected Revenues (Pavement Structure Improvements)

 $28,891 $30,342 $31,809 $36,145 $33,390 $26,261 $32,379 $33,189 $34,018 $34,869 $321,294 

Total Projected Pavement Revenues $142,130 $146,411 $150,779 $158,090 $158,384 $154,379 $163,701 $167,793 $171,988 $176,288 $1,589,944 

Pavement Surface Funding Needs $115,000 $118,450 $122,004 $125,664 $129,434 $133,317 $137,316 $141,435 $145,679 $150,049 $1,318,346 

Pavement Structure Funding Needs $161,926 $166,784 $171,787 $176,941 $182,249 $187,717 $193,348 $199,149 $205,123 $211,277 $1,856,300 

Total Pavement Funding Needs $276,926 $285,234 $293,791 $302,605 $311,683 $321,033 $330,664 $340,584 $350,802 $361,326 $3,174,646 

Total Projected Funding Gap $(134,796) $(138,822) $(143,011) $(144,514) $(153,299) $(166,654) $(166,963) $(172,791) $(178,814) $(185,038) $(1,584,703)
Report 6: The Vermont Experience 43

for paving will grow annually at 2.5 percent, while those for 

structure improvements will likely see some annual variability. 

Overall, the revenues for pavement surface and structure 

improvements are assumed to grow at an average of approximately 2.5 percent annually during the plan period. Table 9 

shows the funding needed and revenue source projections 

required for the systematic rehabilitation and reconstruction 

discussed earlier in this report in addition to the preservation 

and maintenance. The projected needs from Table 6 are 

incorporated in Table 9 to compute the projected funding 

gaps for pavements. The projections in the 10-year plan show 

a total funding gap for pavements of approximately $1.58 

billion. VTrans expects to bridge the funding gap by taking 

into account the agency’s long-term asset management 

objectives and other influencing factors. These will continue 

to address VTrans’ risk tolerance, refinements to assumptions, 

life cycle planning, long-term asset condition targets, system 

performance objectives, customer service level expectations, 

and the long-term financial needs and revenue projections. 

VTrans expects to make further iterations of its financial plan 

and be ready to submit the final TAMP submission to meet 

the Federal requirements. 

3.5 Financial Challenges to Delivering the Plan

Vehicle Miles Traveled

Revenue uncertainties are the biggest concern for VTrans. 

Approximately 28 percent of VTrans’ state revenues are 

dependent on gasoline taxes, which are in turn dependent 

on the VMT, making the VMT an important factor for VTrans 

revenues. The state has seen a decrease in VMT over the 

years. As shown in Figure 7, VMT in Vermont increased an 

average of 2 percent annually, peaking in 2003 at 7.9 billion 

miles. Since then, VMT declined by 820 million miles, or 

10.2 percent, posting its largest decline since 1925. A continuation of this trend can have a substantial impact on 

VTrans revenues.
44

More Fuel-efficient Vehicles

In 2012, the Corporate Average Fuel Economy (CAFÉ) 

Standard was 25 miles per gallon (mpg) for new vehicles. 

It increased to 35.5 mpg in 2016, and is projected to be 54.5 

mpg in 2025. Even a reasonably estimated increase in VMT 

is not expected to offset the reduced fuel taxes resulting 

from new vehicles built to the CAFÉ standards. Consensus 

forecasts in the state project flat gas tax revenue through 

2017. They also project a decrease beyond 2017 resulting 

from improved standards for more efficient vehicles. 

Delays can be Costly

If the revenue gaps continue or get exacerbated, the 

pavements and bridges that are currently being maintained 

and preserved can deteriorate, costing the state millions 

of additional dollars to rehabilitate and reconstructs these 

assets. The agency estimates that it will cost 17 times more 

to perform deck rehabilitation and 50 times more for reconstruction, as compared to timely preventive maintenance on 

the interstate bridges. It also estimates that it will cost 30 

times more for rehabilitation and 66 times more for reconstruction of long structures. Delaying preventive maintenance 

and not treating the assets at the right time in their life-cycle 

can be costly. This can further compound the financial needs 

and add to the existing deferred liabilities.

Dependence on General Fund

Vermont relies on Federal funds to contribute to more than 

55 percent of the agency’s total transportation budget 

needs. The increased dependence of Federal transportation 

funds on general fund revenues, poses risks to transportation 

appropriation levels. The CBO projection of a shortfall of 

approximately $147 billion in the Highway Trust Fund by year 

2022[vii] is a serious concern for VTrans. In the first year of 

FAST Act, several VTrans authorized rail capital assistance 

programs failed to receive appropriations. Such funding 
Report 6: The Vermont Experience 45

issues can impact highway projects and programs, and the 

delivery of the TAMP.

Future Federal Funding 

The FAST bill does not provide sufficient funding to reduce 

the backlog of projects to enable VTrans to make steady 

long-term progress in preserving and maintaining its highway 

assets. The VTrans financial plan shows a funding gap every 

year from 2018-2027 with a cumulative deficit of over $3.4 

billion over the plan period. Additionally, since VTrans is not 

a donor state, it expects that in the future, if the FAST Act 

increases the minimum returns to donor states from 92 to 

95 percent[viii], there can be a further reduction in Federal 

funding to VTrans.

Customer Service Levels

The agency is currently conducting a survey to understand 

customer expectations. Customer service levels have been 

identified by VTrans as an important factor guiding its TAMP 

as described earlier in this report. The survey results are 

expected to influence the project work proposed in the 

TAMP. VTrans also intends to conduct specific risk management exercises to understand and categorize all the risks to 

achieving its asset management and strategic objectives. The 

status of high priority risks will also influence the plan and 

result in some realignment of the budget allocations. 

Additional Risks to Achieving the TAMP Objectives 

Historically, VTrans’ state budget allocations and the 

financial plan development were stand-alone activities, 

not aligned with the long-term asset funding needs. In 

developing the TAMP financial plan, it has been challenging 

for VTrans to reconcile the different categories of funding 

needs with the categories of available resources. Traditionally, as pressing short term needs arise, budgets are reshuffled to meet the needs. This approach complicates the 
46

development of a long-term financial plan. Without a formal 

TAMP financial plan detailing the annual funding needs and 

the revenue sources for the TAMP period, understanding the 

impact of such budget changes on the TAMP and the ability 

of VTrans to meet the yearly and long-term targets, become 

challenging. 

3.6 Use of the Financial Plan by VTrans 

Communicating Lowest Cost of Ownership to 

External Stakeholders

VTrans understands that a well-developed asset management financial plan is a very powerful tool that provides 

the summarized big-picture view of the financial health 

of an organization and its ability to deliver its mission and 

objectives. Transportation organizations in Australia and the 

United Kingdom have used their plans to communicate to 

stakeholders, to demonstrate how they used (and plan to 

continue using) the monies allocated to them cost-effectively 

and efficiently, to maintain and improve their transportation 

assets. They also used their plans to communicate the 

funding gaps, and the implications of these gaps on what 

customers should expect in the services being provided, as 

well as, any accruing and deferred liabilities. VTrans plans 

to use its financial plan to present a long-term view of its 

financial ability to sustain the useful life of its assets cost 

effectively. VTrans also intends to use the financial plan to 

communicate how its asset management strategies will 

result in the lowest cost of ownership for its stakeholders 

and reduce accrued liabilities for the future generation.

Asset Management Catalyzing Internal Alignment 

and Prioritization

VTrans has been using the draft TAMP to catalyze decisions, 

both, horizontally and vertically within the agency, with a 

focus on prioritizing and evaluating risks. The agency personnel involved in the effort explain that the asset management 
Report 6: The Vermont Experience 47

Risk tolerance is the

amount of risk an agency 

is willing to take.

work groups have benefited from the TAMP and financial 

planning activities. Group members now have a better understanding of risk-based management and the importance of 

managing high priority risks. They understand the long-term 

implications of delaying treatments, and of the significantly 

higher cost of delaying preservation and maintenance on 

long-living assets. The exercise of developing a financial plan 

for the TAMP has thus served well in educating and training 

agency personnel on (a) the benefits of asset management, 

and (b) the need for long-term financial planning. This education is also expected to facilitate cultural changes within 

VTrans not just as it relates to long-term asset management, 

but also in day-to-day decisions, and the importance of 

preservation and maintenance treatments. 

Driving Budget Recommendations

VTrans is in the process of refining individual asset management plans for all its assets. It intends to address customer 

expectations in establishing targets for each of the individual assets. Each plan will address the funding needed to 

achieve that asset’s condition targets. The current financial 

plan focuses on bridge and 

pavement funding needs. 

As the plans for other 

assets get completed, the 

funding needs from each 

of these plans will be 

consolidated into an overall 

agency plan. Based on agency priorities and risk tolerance, 

investment scenarios will be developed to balance the 

funding needs for all assets with the available resources. 

The final projections for all funding needs will be used to 

drive budget recommendations. 

Driving Right Mix of Projects

VTrans has been focused on implementing “the right 

treatments on right assets at the right time”, as stated by 
48

Sustain assets costeffectively with right 

treatments on right 

assets at the right time.

Mr. Allen. The agency 

intends to use the TAMP 

and the resulting financial 

needs analysis to drive the 

right mix of projects. The 

aging infrastructure, the 

farm to market road needs, and the roller coaster like numbers of bridges requiring major rehabilitation and reconstruction—all are at the forefront of the agency’s financial 

decisions. By systematically planning reconstruction and 

rehabilitation projects over a 20-year or longer time period, 

the agency intends to continue to focus on preservation 

and maintenance to the extent possible. This will also 

ensure that life cycle planning activities are supported and 

ingrained into the VTrans culture ensuring that assets in 

good and fair condition are preserved and improved cost 

effectively over their useful life. 

Developing Tools to Communicate Value of Asset 

Management and Tradeoffs

The agency also plans to develop tools to communicate 

more clearly to its stakeholders, what they can expect to get 

from the allocated budget. Using these tools, VTrans expects 

to be better positioned to inform the public and legislators 

not only what the budget buys, but also the impact of the 

tradeoffs that were necessitated to balance the budget. With 

the funding gaps, the tools will clearly communicate reductions to condition targets made, any project work postponed 

to balance the budget, and the impact of any delays. The 

simplicity and transparency in communicating the value 

provided with the budget allocations in the 10-year financial 

plan will serve as an important tool to inform and engage the 

stakeholders. It will provide stakeholders the information to 

appreciate the reason for any reduction in services or future 

deterioration in asset conditions. It will also provide them 

information about any loss in asset value and any deferred 

liabilities. Additionally, if the stakeholders perceive that the 
Report 6: The Vermont Experience 49

agency is doing a good job with the funds allocated and if 

they think that the services planned with the allocated 

funding are inadequate, they will have a clear understanding 

of the options available to them. With a better understanding 

of the financial implications, stakeholders can either accept 

the services and acknowledge any loss in asset value, or 

voice their expectations for better services and support or 

lead measures to raise resources to achieve these higher 

customer expectations.

Reinforcing the Link between Performance, Risk, and Asset 

Management

The TAMP financial plan development effort has also forced a 

discussion within the agency about the high priority risks that 

need to be addressed, and expectations for the performance 

levels, service levels, and asset conditions. The TAMP teams 

have to balance the asset and financial risks of deferring 

treatments in developing and recommending long-term 

funding for the TAMP. Funding needs for multiple objectives 

and assets have to be balanced in the long-term financial 

plan. Well-reasoned tradeoff decisions have to be made. 

Funding shortfalls that result in lowering performance and 

condition expectations can result in the need for more 

expensive future treatments. Similarly, reducing funding 

for certain categories of assets can result in safety risks. 

Examples include, bridge and culvert collapses, rock falls, 

and accidents due to pavement deterioration and shoulder 

drop-offs. The financial plan will reinforce the link between 

performance, risk and asset management, and enable 

VTrans to communicate the relationship and delicate balance 

between these three to stakeholders.

Organizational Alignment to Support Risk and Performance 

Based Asset Management

VTrans created a new Asset Management and Performance 

Bureau to support data-driven risk and performance based 

asset management. This bureau includes three sections that 
50

work closely together to deliver the agency’s asset management objectives. It includes, 1) Performance (Risk is included 

in this section), 2), Budget & Programming, and 3) Data 

Management. This organizational structure reinforces the 

organizational commitment of VTrans to ensuring the linkage 

between performance, assets, risk, and data management.

Highlighting the Importance of Data

Data has been at the center of many VTrans discussions and 

decisions throughout the TAMP development process. It has 

been the common critical element in developing the TAMP 

for each of the assets. All the planning and budgeting 

decisions being made by VTrans rely on data. The 10-year 

future projections are based on historical data and trends. 

The agency relies on data to understand the current asset’s 

location and condition, the historical performance and asset 

treatments, the traffic volumes, and the use, wear, and tear 

of assets. Projections of deterioration and future asset 

conditions also rely on data. For VTrans, obtaining the past, 

present, and projected future financial information associated with each of the assets has often proved to be difficult. 

With data being the backbone of decisions, gaps in data 

while developing the TAMP or a TAMP financial plan, can 

result in an unusable plan. Also, once developed, in order to 

be relevant to decision-making, both the TAMP and TAMP 

financial plans have to be updated to reflect major changes 

to factors that influence these plans. For the plans to be 

good decision-making tools, VTrans thinks that having 

reliable data is important. Towards that end, VTrans initiated 

a process to identify important input data, document their 

sources, formalize the analysis of the data, and develop 

workflows to update the plans when necessary.

Applying the Highway TAMP Financial Planning Experience 

to Other Modes

Two-thirds of VTrans’ budget goes to highway projects. The 

remaining one-third goes to rail, aviation, and transit assets. 
Report 6: The Vermont Experience 51

The agency has benefited from the long-term planning, risk 

prioritization, and tradeoff decisions made in developing the 

TAMP financial plan for highway assets. It intends to use 

this experience to develop long-term financial plans for 

other modes.

Enhancing Understanding and Influence Internal Processes

Engaging in asset management financial planning has generated a better appreciation of the asset needs and the funding constraints. It has organically led to some streamlining of 

internal processes. It also led to agency teams identifying the 

need to document processes and data sources to update the 

plans in the future. The agency is in the process of developing cost information and deterioration models for bridges. 

These will be used to generate investment scenarios and 

treatment options for long-term, cost effective management 

of bridges.

Expanding the Adoption of Asset Management

The asset management plan development effort has catalyzed interest from other asset owners within the agency. In 

the past, the TAMP planning horizon was shorter, the process 

was less rigorous, and the effort was limited to fewer people. 

This made engaging agency personnel in asset management 

more difficult. Now, with the benefits more visible and the 

process more mature, the benefits of the TAMP have become 

part of routine conversations. This TAMP development effort 

has made asset owners who have so far not been involved in 

the TAMP development, eager to start developing asset management plans for their assets.

Corridor Level Thinking

The financial plan has highlighted long-term resource constraints faced by VTrans. It has brought to the forefront, the 

reality of having to work with less than the required amounts 

of funds. This led to more innovative approaches to managing the network. One such innovation is the understanding of 
52

“Corridor Needs.” For VTrans, this is about understanding 

issues at a geographic location along a state maintained 

highway that poses a problem to normal maintenance and 

operations of the highway system. Historically, the VTrans 

Maintenance and Operations Bureau has addressed such 

issues. However, the reality is that such issues cannot be 

properly managed with the limited maintenance resources 

available to the Bureau. To address such corridor needs, the 

agency developed a “Corridor Needs Toolkit” that serves as 

a long-term planning tool. This enables a holistic approach 

to managing and treating the entire corridor. It provides a 

mechanism for the Asset Management and Performance 

Bureau to collaboratively and strategically plan and coordinate treatments with other Bureaus for the entire corridor. It 

allows VTrans to use the maintenance personnel to address 

safety and other urgent needs while planning strategically 

and applying asset management for emerging needs. This 

will also help avoid duplication of work on the corridors. The 

tool will influence budget allocations and help VTrans balance important maintenance and capital improvement 

priorities on the corridors cost-effectively.

Conducting More Risk Prioritization Exercises

Addressing the growing needs of the aging infrastructure 

with the financial constraints demands an assessment of risks 

and prioritization of work. The agency has already conducted several risk management exercises to assess and prioritize 

risks to bridges, pavements, and other high priority assets. 

With safety as a high priority, the agency plans to conduct 

more risk assessment exercises in the future. This will enable 

VTrans to further refine the high priority risks based on 

impact and likelihood. From the financial perspective, the 

results will provide decision-makers a better understanding 

of (a) new risks, (b) the financial implications of timely versus 

delayed risk mitigation, (c) related cost implications, and 

(d) the magnitude of deferred liabilities. 
Report 6: The Vermont Experience 53

4. Updating the Plan

VTrans intends to use its asset management financial plan as 

a decision-making tool. Its perspective is that if kept updated, the plan will provide executives a pulse of the agency’s 

long-term financial plan to manage its assets. It will also 

provide an overview of the agency’s financial ability to 

deliver a planned portfolio of projects to 1) improve, manage 

and maintain the assets in good condition, 2) improve or 

retain asset value, 3) show its financial ability to service its 

customers, 4) convey, in a simple way that stakeholders can 

understand, how the agency is effectively managing the cost 

of ownership, and 5) show the risks and accumulated liability 

of deferred action.

Since asset management is strategic, it is a long-term 

approach to managing these long-living assets. VTrans 

believes that it is important for each year’s strategies that 

address preserving and maintaining the health of its assets 

to thread together and be aligned with providing the longterm cadre of projects and activities that, (a) maximize the 

overall asset value of its transportation infrastructure, (b) 

yield the highest rate of return, and (c) lower the cost of 

ownership for its stakeholders. Though political factors do 

influence agency strategies, there are many non-political 

factors that directly influence future conditions and performance of assets. Management strategies depend on many 

such non-political factors including the budget allocated, 

the treatments planned and completed, the effectiveness of 

the treatments, asset deterioration, and the volume and 

type of traffic. Other external factors, such as, changes in 

technology, availability of construction resources and materials, inflation, snow, fire, floods, and other climate related 

factors, also impact the plan. Any changes to these influencing factors may require some change to the agency’s overall 

asset management plan. Some of these changes may enable 

the agency to do more projects, others may require a shift 
54

in priorities, while yet others may require delays to some 

projects. For example, extreme natural events, such as, 

hurricanes, fires and earthquakes, may require a change in 

strategy to stabilize or reconstruct affected assets that were 

not part of the plan. Similarly, constraints in construction 

material availability may necessitate stock piling material or 

delaying projects. 

An outdated asset management plan and financial plan loses 

value to decision makers and erodes the agency’s credibility. 

An updated asset management plan that is not reflected in a 

financial plan may not be implementable. VTrans recognizes 

that as influencing factors change, updates have to made to 

both the asset management plan and the financial plan for 

them to be relevant decision-making tools.

5. Benefitting from the Efforts: 

The VTrans Approach

Change Management Process: To address the changes that 

can impact the validity of the plans, VTrans plans to dedicate 

some resources to keeping the plan updated. Since these 

documents will serve as decision tools, the updated plan can 

provide valuable inputs to accomplishing the agency’s 

strategic objectives.

Reviews with State Transportation Improvement Programs 

or State Budget: The agency does not expect to make 

updates to the TAMP financial plan with every update to the 

state budget or State Transportation Improvement Program. 

However, the agency intends to review the assumptions in 

the plan and as assumptions change, review the impact of 

the changes. It intends to make internal updates to the 

plan or develop supplements based on the magnitude 

of the impact.
Report 6: The Vermont Experience 55

Update with New Federal Re-Authorization Update: Updates 

to Federal authorizations, or new Federal re-authorizations 

may have an impact on the Federal funding available to 

VTrans. Since over 55 percent of the VTrans’ transportation 

budget is from Federal funding, VTrans expects that the 

plans will need to be reviewed and either updated or supplemented to align with Federal reauthorizations or updates. 

Unplanned Changes to Major Assumptions: The TAMP 

financial plan addresses long-term needs. The financial 

projections are based on many assumptions of investment 

needs and of revenues from multiple sources for a 10-year 

period. The agency intends to review these assumptions at 

least on an annual basis, if not more frequently. It intends to 

make refinements to its strategies based on the impact of 

changes to the plan’s assumptions and projections. Further, 

it plans to formally update the asset management plan and 

financial plan every two years. 

6. Lessons Learned

The complexity and difficulty of developing an asset management plan and the related financial plan can seem onerous. VTrans notes that heading into the development of the 

TAMP and the related financial plan, the team responsible for 

their development felt that it was going to be a hard task to 

complete. On completing the first draft, the agency team 

concluded that it was not as difficult as they expected. Team 

members augment that sentiment by explaining that once 

they started the project, they realized that a lot of the content and data for the financial plan were already available 

and these needed to be refined and compiled. Historically, 

though financial plans have been developed for budget 

allocations, they did not cover a period of 10 years and did 

not have the level of detail needed to support the TAMP 

requirements. Also, assumptions were periodically revised 
56

while the financial plan was being developed. The projection 

and alignment of funding needs and revenue sources is a 

very dynamic and iterative process and an agency can 

expect multiple iterations before a final plan is achieved. The 

sentiment of VTrans personnel involved in the planning effort 

is that they never feel like they have a “final” plan. Rather 

they plan to evolve and improve upon the guidance and 

structure included in their initial TAM financial plan. This 

exercise has helped the team understand that such changes 

are to be expected, and as the financial plan development 

process matures, the team will get more comfortable with 

incorporating the changes, understanding the implications to 

the TAMP, and also be able to make decisions on risk prioritizations and tradeoffs.

Invest Time on Team Makeup: VTrans, like several other state 

transportation agencies, has a lot of data in silos. Without an 

integrated enterprise source for agency data, identifying and 

locating data can be time-consuming. In the VTrans experience, time spent upfront in engaging the right people in each 

of the asset management groups paid dividends. The agency 

also benefited from having the person developing the statewide long-range transportation plan (SLRTP) also organize 

the asset management planning effort. The SLRTP effort 

required identifying various data sources and collecting a 

significant amount of data. However, because of the organization of the project teams, this data served the development of both the TAMP and the SLRTP. Also, because of the 

collaboration between the TAMP and SLRTP efforts, team 

members sitting around the table either had the data or 

knew from where or from whom to obtain the data. This was 

a big timesaver in the TAMP financial plan development 

process.

Facilitation in Documenting Assumptions: VTrans believes 

that expert facilitation can be helpful to ensure the right 

balance between discussions and diversions. As simple as 
Report 6: The Vermont Experience 57

it may seem, the process of identifying assumptions and 

understanding them was one of the more difficult and time 

consuming activities. Often the assumptions were understood by just one person and explaining the details would 

sidetrack the teams into general discussions that were 

tangential to the main discussion. Overall, this proved to be 

a good activity that helped expand the understanding and 

background behind various assumptions to many more 

agency personnel. These discussions also helped the team 

to question and refine the assumptions.

Data Supporting the Plan: Identification of the necessary 

data can be time-consuming. Data that feeds the financial 

plan is a vital and driving component that contributes to the 

credibility of the plan. To ensure consistency and continuity 

of this data feed, VTrans felt that it was important to document the data supporting the plan and understand the 

sources. Having identified the source of the data for the 

plans, the agency is making sure that the source data is 

updated, reliable and accurate for planning purposes, and 

accessible for future plan updates. 

Rigorous Analysis and Right Metrics: In VTrans’ experience, 

the analysis used and the financial metrics developed to 

communicate asset performance measures form the heart of 

the story being conveyed in the financial plan. Knowing the 

right metrics to use to convey the agency’s decisions to 

stakeholders with clarity is important and can impact the 

agency’s credibility. Therefore, it is very important to develop 

good metrics, conduct rigorous analysis, be able to clearly 

explain the metrics, and effectively present the information 

to stakeholders in simple formats.

Automate Data Routines and Use Simple Charts and 

Graphs: Charts and graphs can be useful to summarize 

complex details and present them in ways that are easy to 

understand. Developing the necessary charts and graphs for
58

the plan can be time-consuming. The VTrans experience is 

that in the long-run it is important to automate, to the extent 

possible, the data routines to backfill the charts and graphs 

in real-time with actual financial data.

Modeling and Scenario Planning: This is a future growth area 

for the agency. Early models and scenario planning may not 

be mature, but that should not be a reason to delay developing the plan. VTrans expects that in time, agency personnel 

will develop asset management programming skills, gain 

expertise in developing individualized asset management 

plans, and incorporate customer service levels for specific 

assets. As personnel continue to work on the models, they 

will gain a better understanding of the variables that impact 

the financial plan. Maturity in modeling is also expected to 

result in better scenario planning and improvements in 

condition level forecasts. 

Revenue and Inflation Forecasting to Improve Financial 

Planning: VTrans has become fairly good in this area. However, to assess and refine these skills, VTrans believes that a 

process to compare and refine the forecasting process is 

important. This will mean that in 3 to 5 years, it will be essential to look back, review the forecasts prepared earlier, and 

ask questions such as, “Are we where we thought we would 

be?”, “How well did we forecast?”, “How close were our 

forecasts on revenues and needs?”, “How good was our 

analysis?”, and “Did we capture, prioritize and analyze the 

risks well?”. The responses to these questions will be used 

by VTrans to identify and augment gaps, and to improve its 

financial forecasting capabilities.

Simple, Meaningful, Accurate, Reflecting Agency Processes 

and Tiered (SMART) Performance Metrics: VTrans believes 

that in the future, developing financial performance metrics 

that are SMART will be useful to realistic asset management 

financial planning throughout the agency. The next step of 
Report 6: The Vermont Experience 59

maturity that can be beneficial to the agency is to have 

performance metrics that are simple, meaningful, easy to 

understand, and accurate. They should reflect the agency’s 

business processes so that they can be used at all levels and 

tiers of the agency.

7. Suggestions for Peers

VTrans has been working on its asset management plan 

and the financial plan for nearly two years. Throughout the 

process, the agency sought and learned from the experiences of other states. From its own experience with the plan 

development effort, it suggests the following for other peer 

states that are in the early phases of developing their asset 

management financial plans:

Expect Bumps in the Journey: Starting the plan development may not be smooth. Expect road-bumps throughout 

the plan development process. Expect organizational 

support as well as resistance to the process. Expect gaps 

in data, but do not let that delay the process. 

Involve the Right Stakeholders: Take time to assemble the 

plan. Include personnel involved in developing the agency’s 

strategic and long range plans in the asset management plan 

development effort. Include the leadership team, financial 

officers, subject matter experts from different asset areas, 

construction, planning, programming and maintenance, 

analysts, and data experts.

Align Plan Development and Updates with Other Agency 

Efforts: Try and align the development of the asset management and financial plan with the development of the agency’s 

long-range and other strategic plans. Align updates to the 

plan with other similar strategic plan efforts to have synergy, 

eliminate duplication and redundancy in resource utilization, 
60

and reduce data inconsistencies. If possible, try to include 

asset valuation as a factor in the development of the plans. 

Data is the Backbone: It is important to understand that 

data is the backbone of the asset management financial 

plans. The results achieved from past investment in different 

treatments provide valuable information on recommendations for future allocations. Information on expenditures, 

revenues, future funding projections, realistic past use and 

future allocations to asset categories, major work activities, 

and treatments, are important inputs. Proactive identification 

and tracking of financial data that serves as input to the plan 

makes analysis and scenario planning routine, rather than a 

one-off effort that hinges on the availability of experts or 

specific personnel for access, analysis, and updates. 

Make Data Access Easy: Providing easy access to financial 

data can make asset management financial data analysis 

routine. Financial realities thus take center stage in asset 

management decision making, and strengthening and routinizing realistic tradeoffs. It expands the understanding of 

various asset management strategies and the financial implications of cancelling, delaying, or accelerating the implementation of the TAMP to more agency personnel. With more 

personnel accessing the data and understanding the longterm decisions as-well-as the link to day-to-day activities, the 

potential for institutionalizing asset management increases.

Align Risk Prioritization to Accomplishing Agency 

Objectives: Align and prioritize risks based on asset 

condition and system performance, and link it to achieving 

agency objectives. Base the financial plan on real scenarios 

to serve as a decision-making tool. Developing a financial 

plan for the sake of completing one is a waste of resources. 

Instead, develop a plan that serves multiple users at multiple 

levels of the agency. 
Report 6: The Vermont Experience 61

Plan Preparation is Iterative: The plan is a working document. Once a draft is completed, be prepared to iterate and 

refine the plan as new information becomes available, and 

assumptions and influencing factors change. Also, be prepared to review and update the plan periodically over the 

course of the plan period.

Emphasize Ripple Effect of Incremental Budgeting: In the 

past, budgeters often worked on annual or short term budget allocations with annual incremental increases or decreases based on historic allocations. This coupled with the reality 

that often asset management personnel are not engaged in 

the budgeting process can result in short-term budgets that 

are not linked to long-term, cost effective strategies. These 

short-term budgets can result in selection of treatments 

that may not effectively address asset deterioration. This 

approach over time can cause a ripple effect resulting in the 

need for treatments that are significantly more expensive.

Prioritization and Separation of Roadway Tiers: If an agency 

is not separating the different tiers of roadways to the levels 

required by the Federal regulations, then starting the separation sooner will be helpful in the long-run. The VTrans experience indicated that it helped to (i) look at the long-term 

asset needs, (ii) ensure that Federal requirements were 

addressed, and (iii) look beyond the Federal requirements 

at the overall system performance.
62

8. Endnotes

[i] Asset management mandated by Vermont Legislature (Act 64 

in 2001) and documented under 19 V.S.A. § 10k—Highways. 

[ii] Sec. 24: 19 V.S.A. § 10k, Sections 24 and 25 of Act No. 488 

passed by the General Assembly of Vermont in 2001/2002.

[iii] Policy for Enhancement of Transportation Projects, Vermont 

Agency of Transportation, Policy Manual, effective Dec 6, 2007.

[iv] Vermont Agency of Transportation, 2016 Fact Book and Annual 

Report, Page 8.

[v] Snelling Center for Government: Vermont Roads and Bridges, 

“To Fix or Abandon”, November 2008.

[vi] https://www.cbo.gov/publication/43198, “How Would Proposed 

Fuel Economy Standards Affect the Highway Trust Fund?”, 

Congressional Budget Office, May 2012.

[vii] https://www.cbo.gov/publication/43198, “How Would Proposed 

Fuel Economy Standards Affect the Highway Trust Fund?”, 

Congressional Budget Office, May 2012.

[viii] Final Report, Vermont Transportation Funding Options, 

Section 40, Act 153(2012), Committee on Transportation 

Funding, page 2.
Report 6: The Vermont Experience 63

Nastaran Saadatmand

Asset Management Program Manager

Office of Asset Management, Pavements, and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE

Washington, DC, 20590

(202) 366-1337

nastaran.saadatmand@dot.gov

Stephen Gaj

Leader, System Management & Monitoring Team

Office of Asset Management, Pavements, and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE

Washington, DC 20590

(202) 366-1336

stephen.gaj@dot.gov

Prepared by:

Shobna Varma

StarIsis Corporation

and

Gordon Proctor

Gordon Proctor & Associates, Inc. 

Administrative and Contract Support by:

Greenman Pedersen Inc. 


Office of Asset Management, Pavements and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE • Washington, DC 20590

FHWA-HIF-17-033

ASSET MANAGEMENT FINANCIAL REPORT SERIES