Latest Round of Federal Grants Allows Six States to Test Highway Funding Alternatives

The Federal Highway Administration (FHWA) on October 6 announced the latest recipients of federal grants to enable testing of alternative methods of transportation funding. The $95 million Surface Transportation System Funding Alternatives program was established under 2015’s FAST (Fixing America’s Surface Transportation) Act.  

FHWA selected seven proposals from six states—California, Colorado, Delaware, Missouri, Oregon and Washington—that will split $15.5 million in grant funding:

  • With a $1.75 million grant, the California Department of Transportation (Caltrans) will explore mechanisms to collect revenue at pay-at-the-pump charging stations.
  • The Colorado Department of Transportation will use a $500,000 grant to investigate data collection mechanisms.
  • The Delaware Department of Transportation, in partnership with the I-95 Corridor Coalition, will receive $975,000 for a project to study equitability and privacy issues in a multi-state region.
  • The Missouri Department of Transportation will conduct public outreach on concerns related to equity and data security issues thanks to a $2.77 million grant.
  • The Oregon Department of Transportation is involved with two grant-funded projects. ODOT will use $2.3 million on a project to initiate improvements in the state’s existing mileage-based road usage charge program, OReGO.
  • ODOT will partner with the Western Road User Charge Consortium on another project that will launch a pilot to connect California and Oregon’s per-mile road user charging systems and to ultimately expand the concept regionally. That project will receive $2.59 million.
  • The Washington Department of Transportation, in partnership with the Washington State Transportation Commission, will conduct public outreach with users regarding a method for assessing and collecting fees as part of a project that will receive this year’s largest grant--$4.6 million.

Acting FHWA Administrator Brandye L. Hendrickson explained why finding funding alternatives is imperative in a press release announcing the grants.

“To ensure the U.S. road system is the best in the world, we can no longer rely solely on the federal gas tax and the Highway Trust Fund,” she said. “New sources of funding for the design, construction and repair of our nation’s roadways have never been more necessary, and these grants will help open the door to new financial innovations.”

California, Delaware, Missouri, Oregon and Washington were all also on the list of states that received grants during the first round of funding awarded in 2016. The guidelines for this year’s funds were similar to those for the first awards: States were required to provide 50 percent matching funds, applicants had to be state departments of transportation and in projects involving multiple states, one state was required to serve as the lead.  

Section 6020 of the FAST Act laid out the objectives for the grant program, which included:

  • To test the design, acceptance, and implementation of two or more future user-based alternative revenue mechanisms.
  • To improve the functionality of such user-based alternative revenue mechanisms.
  • To conduct outreach to increase public awareness regarding the need for alternative funding sources for surface transportation programs and to provide information on possible approaches.
  • To provide recommendations regarding adoption and implementation of user-based alternative revenue mechanisms.
  • To minimize the administrative cost of any potential user-based alternative revenue mechanisms.

The federal legislation also outlined the various issues states receiving funding could address with their projects, including:

  • the implementation, interoperability, public acceptance, and other potential hurdles to the adoption of the user-based alternative revenue mechanism;
  • the protection of personal privacy;
  • the use of independent and private third-party vendors to collect fees and operate the user-based alternative revenue mechanism;
  • market-based congestion mitigation, if appropriate;
  • equity concerns, including the impacts of the user-based alternative revenue mechanism on differing income groups, various geographic areas, and the relative burdens on rural and urban drivers;
  • ease of compliance for different users of the transportation system; and
  • the reliability and security of technology used to implement the user-based alternative revenue mechanism.

The law said projects could also address:

  • the flexibility and choices of user-based alternative revenue mechanisms, including the ability of users to select from various technology and payment options;
  • the cost of administering the user-based alternative revenue mechanism; and
  • the ability of the administering entity to audit and enforce user compliance.

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