Since the early 2000s, states have been at the forefront of discussions to explore possible replacements for the motor fuel tax (MFT). States are heavily reliant on MFT revenue as a source for transportation funds. According to the National Association of State Budget Officers’ 2019 State Expenditure Report, “Motor fuel taxes represented the largest revenue source for transportation funds at 39.8%.”
Motor fuel tax receipts are projected to decline as vehicles become more fuel-efficient and the surge of new electric vehicles continues to spark interest among buyers. Given these two major pressures on the MFT, states have begun to actively study, explore and pilot road user charge (RUC) systems as the most likely long-term replacement for declining MFT revenue. Also known as Vehicle Miles Traveled (VMT) or Mileage-Based User Fees (MBUF), these efforts have been supported by the federal government via the Surface Transportation System Funding Alternatives (STSFA) grant program.
Thus far, 14 states and regional pilots (California, Delaware, Hawaii, Kansas, Minnesota, Missouri, New Hampshire, Ohio, Oregon, Texas, Utah, Washington, and Wyoming) have received federal grants to explore alternative funding mechanisms such as road usage charges. Colorado was awarded funds that they subsequently returned.
NCSL is collaborating with the Federal Highway Administration to provide legislatures, states and other transportation stakeholders with insight into what states have achieved so far. Fact sheets are being developed for each state and an in-person meeting will be convened later in the project to bring RUC stakeholders together.