The NCSL Blog


By: Ben Husch

Last week, the Federal Highway Administration (FHWA) formally released the Notice of Funding Opportunity from the Surface Transportation System Funding Alternatives (STSFA), a new program that was included in last year’s Fixing America’s Surface Transportation (FAST) Act.

Dollar bill in gas tankThe program provides funding to states to help them develop alternatives to the gas tax that utilize a user fee structure to help fund the nation’s systems of highways, roads, bridges and mass transit through the Federal Highway Trust Fund (HTF).

The competitive grant program will provide a total of $15 million to states in 2016 and $20 million per year thereafter, through 2020.

It’s no secret the HTF faces a long-term sustainability problem. With a federal gas tax rate of 18.4 cents per gallon, last increased in 1993, it took $70 billion in general fund transfers to ensure that last year’s FAST Act would not lead to an insolvent HTF.

The weaknesses of a per gallon gas tax are well understood—as vehicles become more efficient, they will require less gasoline per mile. At the same time younger generations are driving less than previous ones. Although these weaknesses are only starting to be felt, planning for how states and the federal government will fund our nation’s surface transportation system in the future is happening now.

For 2016, FHWA will accept three types of applications for STSFA awards from either a state or group of states applying for funding:

  • Full new demonstration projects.
  • Extensions or enhancements of existing demonstration projects.
  • Required pre-demonstration activity leading directly to a planned future demonstration project in the near term (less than 18 months from award).

Furthermore, an application must address a number of items including how the project addresses implementation, interoperability, public acceptance, protection of personal privacy, the use of vendors to collect fees and operate the mechanism, market-based congestion mitigation impacts, equity concerns, ease of compliance and the reliability and security of technologies used.

Proposals may also address the flexibility and choices available for user payments, administrative costs and ability to audit and enforce compliance. Additionally, cost sharing or matching is required, with awardees providing a 50 percent share. Although other federal funds may be leveraged for the deployment, it cannot be considered as part of the STSFA matching funds, which must come from non-federal sources.

For those states that receive an award, FHWA anticipates substantial federal involvement with STSFA recipients during the course of these projects, which will include oversight, technical assistance, and guidance to the awardee.

NCSL has long been a proponent of federal grants to states to help incentivize them to explore alternative funding mechanisms to surface transportation investments.

Ben Husch is the director of NCSL's Natural Resources and Infrastructure Committee.

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.