All States Receive More Highway Money Than They Contribute, GAO Study Says

All states now receive more funding for highway programs than they contribute to the Highway Trust Fund via federal fuel taxes and truck excise taxes, said a new study by the U.S. Government Accountability Office.

The idea that states fall into donor and donee categories — with some contributing more to the trust fund than they receive — is obsolete now that the federal government is supplementing trust fund spending with billions of dollars from the general fund, the GAO study said.

In addition, the “infusion of significant amounts of general revenues” into the highway account has broken the “link between highway taxes and highway funding,” changing the “user pay” principle, the GAO said.

Today, billions of tax dollars are provided for highways by taxpayers who do not use the roads, the study found.

The study was requested in May by two senior Democrats on the U.S. House Transportation and Infrastructure Committee: Rep. Nick Rahall (D-W.Va.), top-ranking Democrat on the transportation committee; and Rep. Peter DeFazio (D-Ore.), ranking member on the highways subcommittee.

“Instead of being consumed by the parochial ‘donor’ and ‘donee’ debate,” Rahall said in a statement accompanying the study’s Oct. 12 release, “this GAO report confirms that Congress should be working toward crafting a surface transportation bill that meets the needs of a 21st-century national transportation system.”

It is true that “depending on the method of calculation, the same state can appear to be either a donor or a donee state,” the GAO study said.

Some states receive more or less money in return than they collect for the trust fund via the 18.4-cent-per-gallon gasoline tax, the 24.4-cent-diesel-tax and federal truck and tire excise taxes, the GAO said.

Over the years, however, the federal government has taken steps to equalize the funding, most recently in 2005 with the Equity Bonus Program in the 2005 transportation legislation known as SAFETEA-LU.

Then, after it became clear in 2008 that the Highway Trust Fund was not taking in sufficient revenue to meet its authorized level of spending, Congress began transferring billions of dollars from the general fund into the trust fund.

Between 2008 and 2010 the general fund transfers totaled $29.7 billion, the GAO said.

In fiscal year 2009, for example, because of the general fund transfers the federal government sent back to the states more than $42 billion for highways, although federal fuel taxes and truck fees collected by the states totaled only $30.1 billion, the GAO study said.

In all, between 2005 and 2009 under SAFETEA-LU, each state and the District of Columbia received more money than it sent Washington for fuel and truck taxes, the GAO said.

The rate of return ranged from a low of $1.03 to $1 in Texas to a rate of return of $4.99 to $1 in Alaska. Montana received $2.71 for every dollar it sent Washington in fuel and truck taxes, while Florida’s rate of return was $1.15, New Jersey’s $1.08 and Arkansas’ $1.31.

SAFETEA-LU expired in 2009, and the country hasn’t had a new surface transportation spending plan since.

Congress has passed several temporary extensions; the latest, agreed to in September, expires March 31. Congressional leaders have said they are working on a new plan but have been stymied by their inability to agree on funding mechanisms.

The GAO said in its report, however, that using the states’ rate of return as a “major factor” in any plan poses problems “because funding the nation’s transportation system through taxes on motor vehicle fuels is likely unsustainable in the long term.”

Like other studies of the funding problem, the GAO report pointed out that the revenue stream into the Highway Trust Fund has narrowed, in part because Americans are driving less, cars are more fuel efficient and Congress hasn’t raised the fuel tax since 1993 — meaning its purchasing power has diminished.