Policy Analysis | November 2011

Federal Highway Trust Fund

Sujit CanagaRetna

Federal funding for highways is provided to the states mostly through a series of grant programs known as the Federal-Aid Highway Program, administered by the U.S. Department of Transportation's (DOT) Federal Highway Administration (FHWA). The program operates on a "user pay" system, wherein users contribute to the Highway Trust Fund through fuel taxes and other fees. The distribution of funding among the states has been a contentious issue. States that receive less than highway users contribute are known as "donor" states and states that receive more than users contribute are known as "donee" states.

The U.S. Government Accountability Office (GAO) in September 2011 released a report assessing the performance of the different states in the distribution of funding. According to this report, every state received more funding for highway programs than they contributed to the Highway Account of the Highway Trust Fund. This was possible because more funding was authorized and apportioned than was collected from the states, and the fund was augmented with about $30 billion in general revenues since fiscal year 2008. Since that year, the Highway Trust Fund has been seriously depleted, requiring authorization of additional funds from general revenues. If the percentage of funds states contributed to the total is compared with the percentage of funds states received (i.e., relative share), then 28 states received a relatively lower share and 22 states received a relatively higher share than they contributed. Thus, depending on the method of calculation, the same state can appear to be either a donor or donee state. The following map displays the SLC member states' rate of return per dollar contributed to the Highway Account of the Highway Trust Fund for fiscal years 2005-2009.

Rate of Return by SLC State

Source: United States Government Accountability Office, Report to Congressional Requesters, Highway Trust Fund, September 2011