States receive most surface transportation funding through a group of nine formula grants collectively referred to as the Federal-Aid Highway Program (FAHP; funded at $55 billion in fiscal year [FY] 2024). The federal share of project costs under each of these nine subprograms is set in statute. With a few exceptions, the federal share is generally 80%.
The Infrastructure Investment and Jobs Act (IIJA) required the Federal Highway Administration (FHWA) to establish a pilot program that allows states to set the federal share of costs for individual projects, as long as the federal share of total project costs covered by the pilot does not increase.
FHWA recently published a Notice in the Federal Register establishing the Federal Share Flexibility Pilot Program (pilot) through FY 2026. Up to 10 states may participate in the pilot; applications are due March 29, 2024. This Issue Brief provides an overview of the new program.