Policy Analysis | October 2014

Trends Related to Funding Transportation in the States

Sujit CanagaRetna

On September 10, 2014, Sujit CanagaRetna, Fiscal Policy Manager at the SLC was invited to testify before the Louisiana Transportation Task Force. After his testimony, members of the Task Force requested that he provide information to the following questions:


Question 1: Additional details on Louisiana’s Interstate and Highway Lane Miles as presented in the Louisiana page of the 2014 SLC Comparative Data Report on Transportation (Quick Facts ‐ Chapter 2).

Response: As mentioned during the testimony, the SLC’s Comparative Data Reports are prepared annually by legislative staff in four different SLC states. The Transportation report is prepared by staff with the Kentucky Legislative Research Commission. When contacted, the staffer that prepares the report and he indicated that the information on the lane miles was obtained from the Federal Highway Administration’s (FHWA) Highway Statistics Series, 2012, table HM 60:

http://www.fhwa.dot.gov/policyinformation/statistics/2012/pdf/hm60.pdf

The 129,759 in total highway lane miles listed for Louisiana in the SLC Comparative Data Report matches the number contained in the FHWA source document. The FHWA link to this report for all 50 states is included above. The Kentucky staffer added that since the information in this table covers lane miles, a 100 mile stretch of a four-lane highway would count as 400 miles.


Question 2: Additional details on a point made during the testimony that most states were highly dependent on the federal aid program for their highway and bridge construction projects. It was noted that the average state secures 52 percent of its highway and bridge capital outlays from the federal government. In addition, there are wide variations in this category with a state like Rhode Island relying on the federal government for more than 100 percent of its outlays and New Jersey relying on the federal government for a mere 35 percent of its outlays. Information where Louisiana and other SLC states stood with regard to this statistic is presented below.

Response: The information presented during the testimony was based on a report prepared by the American Road and Transportation Builders in 2013. It was also used in testimony before the U.S. Senate in September 2013 and the link to the information may be viewed here:

http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=575ffb78-25ee-4283-b214-466dfb16131b.

Page 5 of the report indicates that the federal reimbursement as a percent of total state capital outlays (includes construction costs, preliminary engineering and right of way expenditures) for Louisiana amounted to 47.5 percent. As a point of comparison, the amounts for the remaining 14 SLC states are presented below:

SLC State Federal reimbursement as a Percent of Total Capital Outlays
Alabama 67.7%
Arkansas 62.3%
Florida 38.6%
Georgia 61.8%
Kentucky 48.9%
Louisiana 47.5%
Mississippi 64.8%
Missouri 65.2%
North Carolina 48.0%
Oklahoma 63.0%
South Carolina 79.3%
Tennessee 61.8%
Texas 47.0%
Virginia 56.7%
West Virginia 60.9%
SLC State Average 58.2%
U.S. Average 51.6%

As indicated, South Carolina is the state with the most reliance on federal funds (79.3 percent) with Florida being the least reliant (38.6 percent). The SLC state average was 58.2 percent, higher than the U.S. average of 51.6 percent.


Question 3: One of the points made in the testimony related to the erosion ‐ due to inflation ‐ of the value of the federal gas tax. Since it was last raised to 18.4 cents in 1993, by 2013, the federal gas tax had lost 38 percent of its purchasing power; it is estimated that by 2024, it would have lost 52 percent of its purchasing power. Task force member inquired whether there was comparable information for the erosion in the state gasoline taxes.

Response: There is information on this query in a report (December 2011) prepared by the Institute on Taxation and Economic Policy (ITEP), a non-profit, non-partisan research organization, based in Washington, D.C., that focuses on federal and state tax policy. The following link provides on the topic for all 50 states: http://www.itep.org/bettergastax/bettergastax.pdf.

The table below (from page 13) pulls the information for the SLC states:

SLC State Years Since Last State Gas Tax Increase (as of December 2011) Percent Change in Cost-Adjusted Tax Rate Since Last Increase
Alabama 19 -40%
Arkansas 10 -24%
Florida 0 0
Georgia 0 0
Kentucky 0 0
Louisiana 21 -42%
Mississippi 22 -43%
Missouri 15 -36%
North Carolina 0 0
Oklahoma 24 -45%
South Carolina 22 -43%
Tennessee 22 -43%
Texas 20 -40%
Virginia 24 -45%
West Virginia 3 10%
SLC State Average 13.5 -26.1%
U.S. Average 10.7 -20%

As indicated above, the U.S. average stood at 10.7 years and -20 percent while the SLC average was slightly higher: 13.5 years and -26.1 percent. According to this report, the percent change in cost-adjusted tax rates since the last increase in Louisiana was -42 percent; a number of SLC states saw their rates in between -40 percent and -45 percent.


Question 4: What percent of SLC state transportation budgets are allocated towards administration?

Response: The following narratives describe the outlay of administrative costs to total expenditures for each state transportation department, but the costs and percentages cannot be compared directly across states. This is an important point to make because there are a range of definitional differences in terms of the various expenditure categories. For instance, some state transportation departments list the components of overhead or general administration expenditures, but others do not. In addition, how each state defines these components may vary. For example, states may have different practices for contracting, and whether contractors are included as personnel or as a part of project costs. These variations are important to keep in mind to ensure that it is not possible to make a clean comparison across the states in terms of their administrative costs. The SLC compiled this information by reviewing the financial information in the individual state transportation department budgets.

  • Alabama: In FY 2013, the Alabama Department of Transportation spent $125.9 million on its general administration program, inclusive of departmental transfers, internal and external program support, equipment purchases, land and buildings improvement, and legislatively mandated transfers, totaling to eight percent of the department’s expenditures.
  • Arkansas: For the FY 2011-2012 biennium, Arkansas’s State Highway Department spent $39 million on administration, or two percent of total expenditures.
  • Florida: For FY 2014-2015, Florida has budgeted $89 million for Department of Transportation executive direction and support services, inclusive of salaries and benefits, personal services, risk management insurance, facilitates construction and major renovations, consultant fees, and human resources development. This figure makes up less than one percent of the total department budget.
  • Georgia: In the FY 2015 State Motor Fuel Budget Request, the Georgia Department of Transportation requested $168 million for general operations, 16 percent of the total budget.
  • Kentucky: For FY 2012-2013, the Kentucky Transportation Cabinet appropriated $64.9 million for general administration and support. This figure includes administrative costs, facilities management, personnel services and the debt service on the Transportation Office Building, and accounts for about five percent of the total road fund.
  • Louisiana: For FY 2012, the Louisiana Department of Transportation and Development budgeted $49.7 million for the administration agency, just over nine percent of total expenditures.
  • Mississippi: The Mississippi Department of Transportation spent $153 million on salaries, $141 million on contractual services, and $2 million on travel, or 13.3 percent, 12.3 percent, and 0.2 percent of total disbursements in FY 2011.
  • Missouri: In FY 2013, the Missouri Department of Transportation spent $47 million on administration, amounting to two percent of the $2.4 billion budget.
  • North Carolina: The North Carolina Department of Transportation spent $231.9 million on administration, amounting to five percent of total department expenditures.
  • Oklahoma: The Oklahoma Department of Transportation includes general administration, transit, railroads, waterways, and the Highway Construction Materials Technology Certification Board under the umbrella of administration, which accounts for one percent of the $2 billion budget (FY 2014).
  • South Carolina: In FY 2014-15, the South Carolina Department of Transportation budgeted $41.7 million for general administration and cap reserve, making up 2.5 percent of the total operating budget.
  • Tennessee: Tennessee lists DOT headquarters with expenses of $24.4 million (1.32 percent of total) and the Bureau of Administration with expenses of $57.1 million (3.11 percent of total), both in FY 2014-15.
  • Texas: Texas does not break out its expenses by administrative or operational function.
  • Virginia: In FY 2015, the Virginia Department of Transportation budgeted 10 percent of its $4.3 billion budget to tolls, administration, and other programs.
  • West Virginia: West Virginia’s Division of Highways spent $116 million on support and administrative operations in FY 2013. Support and administrative operations makes up 10 percent of the $1.2 billion budget.