Seven State DOTs Awarded $10 Million to Study Gas Tax Alternatives

When transportation spending was last reauthorized, rather than hike the gas tax to maintain current spending, Congress diverted general fund revenue. A program to study alternative revenue options was created so states could launch pilot projects.

Read Time: 4 minutes

February 25, 2019, 1:00 PM PST

By Irvin Dawid

Low Gas Prices

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One of the great failures of the Fixing America’s Surface Transportation (FAST) Act of 2015 was that it didn't increase the gas tax, the main user fee for the Highway Trust Fund. Instead, it transferred $70 billion from the general fund to maintain transportation spending from fiscal year (FY)2016 through FY2020, according to the Congressional Research Service.

To address the unwillingness and/or inability to increase the federal 18.4 cents per gallon gasoline tax, unchanged since 1993, a new program was created to work with those states who, unlike the federal government, are looking to explore alternative, user-based, revenue options to the gas tax as federal gas tax revenues continue to decline.

On Feb. 12, the Federal Highway Administration announced that it had awarded "$10.2 million in Surface Transportation System Funding Alternatives (STSFA) grants to seven states to test new ways to finance highway and bridge projects."

“These grants provide states with the opportunity to explore innovative new ways to help pay for infrastructure improvements and maintenance,” said Deputy Federal Highway Administrator Brandye L. Hendrickson

The most common alternative is a mileage fee where the motorist is charged a fee for each mile driven. In the chart below, the fee is called either a road user or usage charge (RUC) or miles-based user fee (MBUF), often referred to as a vehicle miles traveled (VMT) fee.

Note that a road user charge should not be confused with road tolling that involves building toll gantries and electronic toll collection as Connecticut is now considering for all vehicles and Rhode Island has already implemented for tractor-trailers.

FY 2018 STSFA Grant Selections


(other partners)



California Department of Transportation (Caltrans)

Exploration of California’s Road Usage Charge Program (RUC) with emerging technologies and services, such as Usage-Based Insurance (UBI), Transportation Network Companies (TNCs), and Autonomous Vehicles (AVs).


Delaware Department of Transportation (DelDOT) – I-95 Corridor Coalition

Use of mileage-based user fees in a multi-state region.  The project addresses the requirements for implementation, interoperability, public acceptance, and other potential hurdles across state lines.


Minnesota Department of Transportation (MnDOT)

Demonstration of the feasibility of distance based user fees through the shared mobility model, such as Mobility-as-a-Service (MaaS) providers.


Missouri Department of Transportation (MoDOT)

Deployment of innovative strategies such as a vehicle registration fee along with other used-based charges.


New Hampshire Department of Transportation (NHDOT)

Exploration of road user charges levied in conjunction with vehicle registration fees.


Oregon Department of Transportation (ODOT) –  Western Road User Charge Consortium (AZ, CA, CO, ID, HI, MT, NV, OK, OR, UT, and WA)

Exploration of Road Usage Charge and Automated Vehicles at both the state level and in a regional interoperable system.


Utah Department of Transportation (UDOT)

Utah will pilot a road user charge program for alternative fuel vehicles including hybrid and electric vehicles.


Courtesy of FHWA Briefing Room

 Note that two of the seven grants are awarded to a coalition of states:

"Patricia Hendren, executive director of the I-95 Corridor Coalition, said this funding will help expand the program, which originated in Delaware and Pennsylvania and has expanded through partnerships in North Carolina, New Jersey and Virginia, " reports Eleanor Lamb for Transport Topics (in source article).

Phase 1, a limited MBUF pilot, was completed last July. Phase 2, which began in October, applies only to trucks.

Utah program provides an alternative for hybrid and electric vehicles

"Eileen Barron of the Utah Department of transportation "explained that electric and hybrid vehicle owners currently pay an annual flat fee in lieu of a fuel tax," reports Lamb.

In 2020, the department will give these vehicle owners the option of enrolling in the RUC program or paying the flat fee. She noted that the RUC will be capped to match the annual fee, so people who voluntarily enroll won’t pay more than what they would’ve paid with the flat fee.

"Beginning Jan. 1, 2019, electric cars will begin paying a $60 fee, plug-in hybrids will pay $26 and gas hybrids will pay $10," according to Lee Davidson of The Salt Lake Tribune. "The fees increase a bit each year until 2021, when electric cars will pay $120, plug-in hybrids will pay $52 and gas hybrids will pay $20."

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