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All States Received More Highway Funding Than They Paid in Taxes

Federal transportation spending is becoming increasingly disconnected from the user fees that drivers pay to fund the system. This has damaging long-term consequences for U.S. transportation infrastructure. A new study from the Government Accountability Office titled All States Received More Funding Than They Contributed in Highway Taxes From 2005 to 2009 explains how, during those years, states received extra transportation funds from Washington. The extra funding occurred because more transportation funds were authorized by Congress than were collected and because since 2008 the fund has been augmented with $30 billion from the general fund. 

For years Southern and Western states growing in population have complained that their tax dollars subsidized road construction in Northeastern and Midwestern states.  These states claim to be donor states because they receive a lower percentage share of funding than they contribute. However, these states still received more total funding than they contribute. One reason for this excess funding is that from 2005 to 2009 the Equity Bonus Program provision of the Safe Accountable Flexible Efficient Transportation Equity Act: A Legacy to Users (SAFETEA-LU) provided $44 billion in bonus funds. The program provided some funding to 49 states and the District of Columbia (Maine was the only exception), and half of the states received at least 25 percent more funding than their core (funding before the equity bonus) level. While equity funding has been a part of transportation funding since the Intermodal Surface Transportation Efficiency Act of 1991 (ISETEA), funding amounts increased notably in SAFETEA-LU. 

Federal transportation expenditures also included a large number of general fund bailouts. Money from the general fund, which might be used for programs not funded by user fees was transferred to the Highway Trust Fund to ensure that the fund remains solvent. Transfers to the Highway Trust Fund have become a near annual event at the rate of $7 to $8 billion per year. 

The state that received the lowest funding level, Texas, still received $1.03 for every $1.00 it contributed in gas taxes; other states received substantially more. Eight states plus the District of Columbia received more than double in funding what they paid in taxes. Rhode Island and Vermont received approximately three times as much in funding as they paid in taxes while Alaska received five times as much and the District of Columbia six times as much respectively in funding as they paid in taxes.

States Return per Dollar of Contributions to the Highway Trust Fund Highway Account



State

Amount

State

Amount

Texas

$1.03

Montana

$2.71

Arizona

$1.07

Vermont

$2.95

Indiana

$1.07

Rhode Island

$2.96

New Jersey

$1.08

Alaska

$4.99

South Carolina

$1.08

District of Columbia

$5.85

The report details the current challenges best when it says,

The infusion of general revenues into the Highway Trust Fund affects the relationship between funding and contributions, as a significant amount of highway funding is no longer provided by highway users.

Reason has written previously on the need to maintain a stable relationship between highway user fees and highway expenditures. The studies include:

Funding Transportation and the Future of the Highway Trust Fund

Restoring Trust in the Highway Trust Fund

Baruch Feigenbaum is Transportation Policy Analyst


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