MONTPELIER, Vt. For the second year in a row, motorcoach operators filling up in Vermont appear to have retained their diesel fuel tax exemption.

Although Vermont is among those states facing a huge budget gap, both this year and next, and is looking for new sources of revenue, coach operators in the Green Mountain State appear to have been given a reprieve.

The diesel fuel tax exemption for coaches was kicked around by Vermont legislators during this years session, with one key senator estimating the state could generate $500,000 in new revenue for the state treasury by removing the exemption.

However, the issue is not expected to come up for a vote this year.

Sen. Richard Mazza, chairman of the Senate Transportation Committee, said the exemption has been on the books in Vermont for years.

"We tax virtually everything in Vermont," said Mazza, a Democrat. "I think farm vehicles are exempt. It (the exemption) is something were looking at. The economy is pretty tight all over the country. We have more private buses than ever before. We have some large companies with a lot of buses. So were exploring possibilities how much it could raise and why was the exemption there in the first place?"

Mazza, who has been a state senator since 1984, speculated the exemption may have been approved when major line-run operators, including Greyhound and Vermont Transit, had fixed routes to Boston and New York City.

The issue was raised a year ago but after discussions no action was taken, Mazza said. More discussions were held this year but again no action. Next year is up for grabs, however.

At an informational hearing Mazza held a few weeks ago, Vermont motorcoach operators said the proposal to remove the fuel tax exemption would be bad for them and the state.

Randall Charlebois, general manager of Premier Coach in Colchester, Vt., testified that because of the weak economy he expects a 30 percent drop in tour bookings this fall during the height of the foliage season.

However, Charlebois said he was more concerned about the hit his company would take if the state lifted the 26-cent tax exemption that buses get on every gallon of diesel used on Vermont roads. He estimated the proposal would cost Premier Coach about $25,000 a year.

"You're in a tight economic position like everyone else and the last thing you want to know is where you can come up with another chunk of change," said Charlebois.

With just a few weeks left in the Vermont legislative session, Mazza said there doesnt appear to be enough time to tackle the issue this year.

Asked what the odds were of removing the exemption this session, Mazza replied: "Highly impossible. I dont think we can do it. Were not situated to have enough testimony at this point, but it will be an issue that we will continue to discuss."

Mazza said tour bus operators would need plenty of advance notice for a change that would impact their operating costs. "They would have to adjust their prices to reflect contracts and bids. They take people to Disneyland and ballgames. In all fairness, if this was something that was to be enacted, we would have to give them plenty of lead time."

Mazza said he plans to find out how many other states offer a similar exemption. Vermont is believed to be the only New England state with the exemption.

There are estimates that motorcoaches help generate up to $150 million per year for the state. Ending the fuel tax exemption could scare some of that money away, industry executives say.

Carl Lageunesse, president of the New England Bus Association and an executive with Peter Pan Bus Lines, said he didnt know what the impact would be of removing the exemption, but he hoped that adding costs to motorcoach operators "does not become a trend."

Michael Belyea, legislative director of the Vermont Chamber of Commerce, came away from the legislative hearing on the issue with this impression: "Nobody thought it was a good idea. Ever since the gas (fuel) tax was created in Vermont a few decades ago, motorcoaches have been exempted. It had little to do initially with the traveling tourism industry, and more to do with how to collect those taxes. Motorcoach operators cite it as a benefit for traveling in Vermont. We, being in the hospitality industry, were somewhat concerned with the possibility of that (removing the exemption) happening, and we did testify to that effect."

Vermont's diesel fuel tax is 26 cents per gallon, which truckers and other diesel users pay, but not motorcoach operators.

Meanwhile, in neighboring New Hampshire, coach operators are fighting a legislative proposal to increase the 19.6-cent per gallon fuel tax by 15 cents per gallon.

And, Massachusetts is considering hiking its fuel tax by 19 cents a gallon, to 42.5 cents, making it one of the highest in the nation.