The tables in this section show highway receipts, disbursements, debt status, and other financial information of Federal, State, and local governments. Federal and State highway finance data are for Highway finance data for local governments are for 1993.
The first tables in this section give combined summaries of highway finances for all levels of government. The summary tables are followed by specialized tables showing Federal, State, and local government data separately. While intergovernmental transfers have been eliminated from the summary tables, the specialized tables are not additive without appropriate adjustments for intergovernmental payments. For example, Federal payments to States for highways are reported as an expenditure on the Federal tables, while the States' expenditures of those funds are reported as expenditures on the State finance tables.
Table HF-10 combines, for all levels of government, receipts and disbursements for highways (with local government data and some Federal data estimated). Table HF10 also includes information on gross collections and disposition of highway-user revenue and identifies intergovernmental payments by level of government. Table HF10A revises table HF-10 as published in Highway Statistics, 1993. Table HDF presents total collections of highway-user imposts and distributions of highway-user revenue to highway and other purposes by State. Tables HF-1 and HF-2 eliminate intergovernmental payments and summarize total receipts and disbursements for highways by State in 1993, the latest year that finance data for all levels of government are available. Table HB-2 summarizes the highway debt status of State and local governments.
The Federal-aid highway program is
financed from the proceeds of motor-fuel and other highway-related
excise taxes deposited in the Federal Highway Trust Fund (HTF).
The Federal-aid highway program is a federally assisted, State-administered
program which distributes Federal funds to the States for the
construction and improvement of urban and rural highway systems.
On Federalaid highway projects, a State develops the plans,
lets the contracts, and supervises the construction. The roads
remain under the administrative control of the State or local
government responsible for their operation and maintenance.
Evolution of the Federal-aid Program
Although Federal aid for highways began in the late 1800's, Federal assistance was not provided uniformly to all States with the purpose of developing an integrated network of highways until 1916. In 1921, Federal aid was restricted to a limited connected system of principal roads which became the Federal-aid Primary Highway System. Provision was made in 1944 for the designation of a Federal-aid Secondary System of principal farm-to-market and feeder roads. Also in 1944, for the first time, specific authorization of Federal-aid funds was made for urban extensions of the Primary System, and in 1954, for urban extensions of the Secondary System. In 1973, funding for a separate Urban System program was established. Part of the authorized funding was specifically earmarked for urbanized areas with a population of 200,000 or more.
The Eisenhower System of Interstate and Defense Highways, a dominant feature of the Federal-aid program, was identified in 1944; however, prior to 1956, only modest funds were provided. The Federal-aid Highway Act of 1956, as subsequently amended, provided funding on a 90-percent Federal, 10-percent State matching basis. Subsequent legislation has extended the Interstate authorizations.
In recent years, increased attention has been directed to the preservation and reconstruction of the Nation's highways and bridges. Although regular Federal-aid funds may be used by the States for the rehabilitation and replacement of deficient bridges, a special bridge rehabilitation and replacement program with separate authorizations began in 1970.
Beginning in 1976, a special category of Interstate funds was authorized specifically for resurfacing, restoration, and rehabilitation (3R) work. In 1981, the program was amended to include reconstruction (4R) and funding was substantially increased. Under the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), resurfacing, restoration and rehabilitation are funded under the Interstate Maintenance (IM) program. The Federal share of IM projects is 90 percent.
The ISTEA eliminated the Federalaid Primary, Secondary, and Urban systems and created the National Highway System (NHS). When the NHS is designated by Congress (an interim designation is in use until that time), it will include the existing Interstate System routes, a large percentage of urban and rural principal arterials, the Strategic Highway Network, and major connectors.
The ISTEA also created a new flexible
funding program, the Surface Transportation Program (STP), that
can be used for roads and streets not functionally classified
as local or rural minor collector, for bridges on any public road,
and for transit capital projects.
The Federal Highway Trust Fund
The Federal Highway Trust Fund (HTF) is the funding source for the Federal-aid highway program. The HTF was established by the Highway Revenue Act of 1956. Changes in the Federal excise tax structure have occurred periodically. Tables FE101A and FE-101B provide a historical summary of Federal excise tax rates, including rates currently in effect. Table FE-21 provides additional detail on Federal motor-fuel taxes.
Effective April 1983, the Highway Revenue Act of 1982 created the Mass Transit Account within the Highway Trust Fund. The Act provided that the equivalent of one cent per gallon of the motor-fuel taxes would be deposited in the Mass Transit Account for transit system capital expenditures. Tables FE-101A and FE-21 trace the history of the taxes dedicated to the Mass Transit Account.
Tables in the FE series do not include Federal fuel tax revenues that are not deposited in the Highway Trust Fund. Such taxes include the levy dedicated to the Leaking Underground Storage Tank Trust Fund, which is administered by the Environmental Protection Agency, and the portion of fuel taxes dedicated to deficit reduction. The receipts from gasoline consumed in motorboats are transferred from the Highway Trust Fund to the Aquatic Resources Trust Fund and the Land and Water Conservation Fund, which are administered by the U.S. Department of the Interior.
Federal Highway Trust Fund revenues are derived from various Federal excise taxes on highway users. The attribution of these revenues to highway users in each State is shown in table FE-9. Since these revenues cannot be directly related to payments by highway users in each State, the receipts attributable to highway users in each State are estimated by the FHWA based on highway fuel consumption.
Table FE-221 shows a comparison, by
State, of HTF Highway Account receipts attributable to highway
users and apportionments and allocations from the Fund. This table
reflects a concerted effort to include all funds apportioned or
allocated to the States from the Highway Account in the HTF. Table MF-27
shows the 1993 highway motor fuel gallonage used to attribute
the 1994 HTF receipts to the States in table FE221.
Federal Aid to State and Local Governments
The Federal-aid highway program is administered by the Federal Highway Administration (FHWA) as a grant-in-aid program. Most funds are apportioned to States in accordance with formulas that give weight to population, area, mileage, relative costs (needs), and the percent share of prior (FY 1987 to FY 1991) apportioned funds. Certain programs administered by the FHWA are funded from Federal general funds. Other Federal agencies may transfer funds to the FHWA to administer for highway improvement projects. Details of the Federal-aid funding process can be found in the FHWA publication, Financing Federal-aid Highways.
Annual appropriations of Federal-aid funds for the various programs are apportioned among the States using the formulas shown in table FA-4A. For most programs, these funds are matched by State or local governments on an 80 percent Federal share to a 20 percent State share basis. Amounts apportioned to the States pursuant to authorizations by Congress for a fiscal year are not to be confused with payments to the States for work completed. Although Federal-aid funds are apportioned by year, a grace period in expending the funds is permitted to allow the States time for orderly planning, budgeting, and execution of their highway programs.
State and local governments also receive funds for their highway activities from programs administered by other Federal agencies. Some Federal funds are distributed through State governments to local governments. Federal agencies' direct work on highways represents only a small portion of Federal assistance to highways. The different Federal assistance programs for highways are summarized in table F106 in the FHWA publication Highway Taxes and Fees, How They Are Collected and Distributed.
Payments to contractors for work on Federal-aid projects are initially made from State or local funds. The Federal share is reimbursed to the States as work progresses. The final reimbursement payment is made after completion of the project.
Most payments are reimbursements to the States. Some funds are expended directly by FHWA. Tables FA-3, FA5, and FA5A provide information on the expenditure of Federal funds. The FA-4 table series and table FA6 provide information on the apportionment and obligation of Federal funds. Table FA10 provides information on Federal-aid highway program accomplishments for Federal-aid projects initiated in fiscal year 1994.
Obligation of STP funds for projects
off the NHS are included in the summary tables STP-1 and STP-1A.
These tables are intended to show expected products or accomplishments
to be achieved with this category of Federal-aid highway funds.
The SF and SB table series show the highway finance activities and debt status of State highway agencies. Table SF-21 consolidates and summarizes all highway receipts and disbursements of the States. The remaining tables in the SF series provide further details and breakdowns of all highway receipts and disbursements of the States, including data on State toll facilities. The SB table series provides details of the highway debt transactions of the States.
The MT table series shows State mass transit activities. Tables MT1A and MT-1B show State funding for direct State mass transit activities and State grants-in-aid for mass transit.
Federal Transit Administration (FTA)
information on mass transit operators is shown in tables MT2A
State aid to local governments
States provide assistance to the highway, road, and street programs of local governments primarily through the transfer or sharing of highway-user revenue. However, State aid is not limited to highway-user revenue. Many States also transfer other State revenues or redistribute Federal funds to local governments. Some States also perform a significant amount of work on roads and streets under the jurisdiction of local governments.
For uniformity in FHWA analyses, all State-imposed taxes and fees on highway-users are considered to be collected and distributed by the States. The local governments' shares of State highway-user revenue, if any, are shown as intergovernmental payments from the State.
Many local governments collect State motor-vehicle taxes and retain a portion before forwarding the remaining receipts to the State. The retained amounts are also shown as a State intergovernmental payment to local governments.
In 1994, the statutes of 45 States provided for the sharing of State-collected highway-user tax revenue with local governments for road and street purposes. This assistance is in the form of direct grants-in-aid and shared revenue. Alaska, Georgia, New York, Rhode Island, and West Virginia did not have such a statute.
Some transactions that involve a transfer of funds from States to local governments are shown as direct State expenditures, rather than as intergovernmental payments. These transactions include: (1) amounts paid to local governments under contractual agreements for construction or maintenance work on the State highway system for the State highway agency; and (2) payments on local debt obligations assumed by the State as reimbursement for the cost of local roads added to the State highway systems.
Numerous other State transactions or
activities benefiting local governments do not involve a transfer
of funds and are not treated as intergovernmental payments. These
transactions include: (1) advisory, consulting, and supervisory
services, engineering assistance, and aidinkind (e.g.,
free provision of road materials or loans of equipment); (2) State
assumption of the responsibility for construction and maintenance
of former county roads or municipal streets; (3) direct State
payments for materials or to contractors for the State's share
of the cost of joint State-local projects on local road systems;
and (4) direct work by the State on locally controlled roads and
The highway finance activities of local governments are shown in the LGF table series. Debt status for local governments is given in table LGB2. Table LGF-21 consolidates and summarizes all highway receipts and disbursements of local governments. Some States use sampling to develop highway finance data for local governments.
Most local governments are constrained by their State governments to the taxation of real and personal property as their primary source of revenue. Because there are limits to the amount of revenue that can be derived from property taxation, many States share revenues with local governments.
Recently, more highway-user revenue
is being reported from local governments as States permit that
form of taxation. Local highway-user taxation is usually in the
form of local option taxes on motor fuel. With a local option
tax, the State allows local governments to decide whether to levy
a tax to be added to the State tax rate. Typically the local option
tax is then collected and administered along with the State tax.
Regional gasoline taxes are considered to be local highwayuser
taxes unless levied uniformly throughout the State. See the discussion
under "Classification of Highway Receipts."
Local government transfers to States
Receipts and disbursements on Federal-aid projects are usually considered transactions of the State. However, local funds may be expended on such projects. When local governments provide the matching share and the State administers the project, the payments to the State are considered to be intergovernmental transfers.
In some States, a portion of the local
share of State tax revenues is not paid directly to local governments.
The revenues are retained by the State to match Federal funds
for locally controlled road and street projects, or to reimburse
the State for work performed at the request of the local government.
When the State retains such tax revenue, the transactions do not
appear as intergovernmental payments in the State or local finance
series of tables.
CLASSIFICATION OF HIGHWAY-USER REVENUES
Taxes and fees imposed on the owners and operators of motor vehicles for their use of public highways are highway-user revenues. Most highway-user revenues are used for highways, but some are used for mass transit or nonhighway purposes. Tables HDF, SDF, DF, MF-3, MV3, and LDF show the disposition of highway-user revenues.
The clearest example of a highway-user tax or fee is a toll. Before either entering or exiting a toll facility, the driver of a motor vehicle must pay a toll for the use of the highway. Most motor fuel taxes are classified as highway-user revenues. In most States, the tax is initially paid by wholesale distributors, and the costs are ultimately passed down to motor fuel users.
To qualify as a highway-user revenue in FHWA tables, a motor-fuel tax must be levied per unit of volume, e.g., per gallon. It must also apply only to motor fuel-as opposed to all petroleum products, or all hazardous materials-or provide a separate rate for motor fuel.
The motor fuel revenue data reported by the States may include small amounts of revenues generated from the nonhighway use of motor fuel. In many States, nonhighway use is tax exempt or subject to refund. In other States, nonhighway use is taxed, but the revenues are separately identifiable, and may be dedicated to special accounts for nonhighway purposes. For example, tax revenues generated from boating use are frequently dedicated for improvement of boating facilities. In cases where nonhighway use is taxed and the revenues are commingled with receipts from highway use, the revenues from nonhighway use will appear in FHWA tables. An example is the gasoline used in lawnmowers, which is not separately identifiable from that used for highways.
Motor-vehicle registration fees, certificate-of-title fees, driver-license fees, and other miscellaneous vehicle fees are all highway-user revenues, since they are imposed on owners and operators as a condition prior to use of a motor vehicle on the highways. Weight-distance taxes, oversize-overweight permits and trip permits are even more directly related to highway use.
Additional special fees imposed on registrations are counted as highway-user revenue although they may not be viewed as such by some States. These additional fees include surcharges for vehicle emission programs or emergency medical services.
Not all taxes paid by highway users are highway-user revenue. Those taxes and fees that target a broader base than highway users are considered to be part of the general tax structure of the State, and are not considered to be highway-user revenues. Most sales and use taxes, gross receipts taxes, and ad valorem property taxes are not targeted specifically at highway users. They are imposed on all sales transactions, business receipts or property.
For example, special environmental taxes imposed equally on all petroleum products, or all hazardous materials, are not considered to be highway-user revenue. Although highway users indirectly pay some of these taxes, they are not being targeted for their use of highways. These taxes are being imposed on a broader group of users of materials that potentially can cause environmental damage. However, environmental fees that are imposed solely on motor fuel or that provide a separate tax rate for motor fuel, are considered to be specifically targeted at highway users and are then classified as highway-user revenue.
State sales taxes imposed on motor vehicle sales typically are not highway-user revenues, because they usually target all sales transactions. When motor vehicle sales are charged a separate tax rate from that imposed on general sales transactions, the motor-vehicle sales tax is considered a highway-user revenue. The sales tax is specifically directed at highway-users.
CLASSIFICATION OF HIGHWAY RECEIPTS
Highway receipts shown in the HF, SF, and LGF table series include highway-user revenue and all other receipts that are expended for highway purposes, regardless of source. Highway-user revenues that are used for other purposes are excluded.
Funds attributable to highway users
Many States have legislatively dedicated highway-user revenues to specific purposes. For example, a State might dedicate 70 percent of its motor-fuel tax revenues for highway construction, 10 percent for State highway debt service, and 20 percent for schools. Under these circumstances, the SF table series would reflect the construction and debt service dedications, but would not include the amount dedicated for schools.
When highway-user revenues are dedicated to multipurpose funds and mixed with other revenue, it is impossible to precisely identify how revenues from particular sources are used. In this case, the FHWA would assign motor-fuel and motor-vehicle revenue proportionally to each type of expenditure made by the multipurpose fund.
Some States allocate highway-user revenue to the State general fund and then appropriate general funds to highway purposes. In the FHWA analyses, the amount flowing into and out of the State general fund has been offset, so that the highway-user revenues are treated as if they went for highways directly. Tables DF, MF-3 and MV-3 show the amounts that were offset in this fashion.
Tables MF-106 presents the legislative
and administrative provisions for allocating State motor-fuel
taxes. Table MV106 provides similar information for motor-vehicle
registration fees, driver-license fees, and motor-carrier taxes.
These tables are published in the FHWA publication, Highway
Taxes and Fees, How They Are Collected and Distributed.
Other taxes and fees
All taxes that are dedicated for highways, but are not classified as highway-user revenues, are shown as other taxes and fees. The most common of these taxes are general sales and use taxes, gross receipts taxes, ad valorem property taxes, and severance taxes. Only the amounts allocated to highway purposes from other taxes and fees appear in the tables. Specific dedications and appropriations for highway purposes from State taxes and fees, are shown in table S106 in the FHWA publication, Highway Taxes and Fees, How They Are Collected and Distributed.
Investment income and miscellaneous receipts
By investing surplus or unused highway
funds, many highway agencies are able to realize interest income
or profit on the purchase and sale of securities. Other miscellaneous
income includes: private donations (including cash contributions
and transfers of real property); sign fees; insurance recoveries;
rentals; fines and penalties; and permit fees.
Income from sale of bonds and notes
Shortterm note issues (a maturity of 2 years or less) have been omitted from all revenue and expenditure tables. Although local governments use short-term debt financing frequently, short-term note issues and redemptions are only included in table LGB2 for the local finance (LGF) table series. Note interest payments for short-term debt are included in the highway finance summary tables.
Tables that give details of State obligations (SB table series) and local obligations (table LGB2) have been included. Separate tables have been provided for State and local toll obligations and for State obligations for local roads and streets.
Some bond issues combine borrowing
for more than one purpose. The highway share of combined debt
in the tables may be estimated.
Funds from a number of sources are
deposited into State and local general funds and effectively lose
their identities. Except for highway-user revenues, no effort
is made to track the ultimate revenue source of general fund appropriations
that are used for highways.
CLASSIFICATION OF HIGHWAY EXPENDITURES
Expenditures for highways have been grouped into the following major classes: capital outlay, maintenance, highway and traffic services, administration, highway law enforcement and safety, debt service, and intergovernmental payments.
Capital outlays are those costs associated with highway improvements, including: land acquisition and other rightof-way costs; preliminary and construction engineering; construction and reconstruction; resurfacing, rehabilitation, and restoration costs of roadway and structure; and installation of traffic service facilities such as guard rails, fencing, signs, and signals.
Maintenance costs are those required to keep highways in usable condition. The service life of a highway is not extended beyond the original design. Maintenance preserves the highway.
Highway and traffic service costs are those associated with the operation and management of highways. These costs are classified into three types. The first type involves traffic control operations which includes expenditures for operating traffic control and surveillance systems for monitoring and controlling traffic flow. The second type includes the cost of snow and ice removal. The third type includes miscellaneous costs for highway beautification, litter control, vegetation management, erosion control, and air quality programs.
Administration costs are the general expenses of administering a State or local highway program, including general overhead, engineering, and research costs that are not assignable to specific road projects. They also include expenses associated with highway planning and research, highway litigation, and highway publications.
Highway law enforcement and safety expenditures are: traffic supervision activities of State highway patrols; programs for driver education and training and motorcycle safety; vehicle inspection programs; and enforcement of vehicle size and weight limitations. General police expenses associated with drug interdiction, criminal investigation, and security activities are excluded from the tables.
Debt service costs are the expenses incurred from borrowing funds for highway, road, and street projects. Debt service includes expenditures incidental to the sale of highway bonds, bond administration expenses, interest and redemption payments.
Intergovernmental payments are transfers of funds between different levels of government. A description can be found in the preceding discussions on Federal Aid to State and local governments, State aid to local governments, and local government transfers to State.
INFORMATION FOR USERS
Highway finance information in Highway Statistics is statistical in nature and does not represent an accounting or audit statement of State and local governments. The published highway finance information presents a general overview of the funding of highway programs, highway-user taxation and the disposition of highway-user revenues.
All reports and information provided to FHWA are examined for completeness, a with data reporting instructions contained in A Gui reasonable consistency with present and past data reporting, and compliance de To Reporting Highway Statistics. The FHWA analysis process includes reclassification of State data to achieve greater consistency in the presentation of the data.
The reporting of information varies from State to State. How consistent States are in reporting data according to instructions contained in A Guide To Reporting Highway Statistics has an impact on the reliability of comparing the data of different States.
Federal government highway finance data are based on the Federal fiscal year. State government highway finance data may be either fiscal or calendar year at the option of each State's highway agency. Local government highway finance information is based on the variety of fiscal and calendar years used by local governments. Therefore, data shown for any particular year actually represent a mix of data for calendar and fiscal years ending during the reporting period.
Because of the difficulty States encounter
in gathering and developing local government highway finance data,
the reporting of local government information lags one year behind
State government highway finance information.
The information in Highway Statistics on State government highway finance is based on reports coordinated through State highway agencies from data prepared by State personnel in the State highway agency and in a variety of other State agencies that have highway functions, such as tax and revenue agencies, motor vehicle agencies, public utility commissions, public safety departments, and highway police organizations. The completeness and consistency of State government level data is dependent upon the degree of cooperation among State agencies.
Different State agencies have different accounting and information systems which can lead to timing differences in the recording of revenues and expenditures. Timing differences are most apparent in the transfer of funds among the State agencies responsible for collecting revenues and the State agencies responsible for expending those revenues.
The information in Highway Statistics on local government highway finance are based on reports coordinated through State highway agencies from data provided by local governments. States have the option of providing local highway finance data on either an annual or biennial basis with the FHWA estimating the years not reported by the States.
Some State highway agencies develop their local highway finance reports, in part or whole, from central State sources that routinely collect local finance data through legislated local government reporting requirements.
Local highway finance information tends to be more consistent for States which provide data each year and which have legislated local government reporting requirements. The reliability of local highway finance data is highly dependent on the degree of cooperation between State and local governments.
States have the option of using a sampling methodology as an alternative to a complete survey of all local governments. Some States use surveys and sampling to supplement centrally collected data.
Sampling programs are developed by
the State highway agency to fit FHWA reporting needs, the State's
needs, available State resources, and local government structure.
Differences exist among States depending on the governmental level of responsibility for highway functions and the variation in agencies that perform the functions. Some States have jurisdictional authority over almost all highways in the State and perform almost all highway functions. In other States, local governments have jurisdictional authority over a significant portion of the highways. Comparisons are difficult to make among State governments which have vastly different highway responsibilities. Local government data also tend to vary among States depending upon the degree of local government responsibility for highways.
Some States share a significant amount of highway-user revenue with their local governments. Other States assist local goverments by transferring other revenue or by performing direct work on local jurisdiction roads. States performing direct work on local roads tend to report higher levels of capital outlay, maintenance and administration for the amount of revenues raised.
Differences exist between States as to the types of revenues used in funding highways. State and local governments do not impose the same taxes and fees. The tax structure and distribution of tax revenues varies from State to State, and from local government to local government. These differences are often found in how States choose to finance their highway systems and in how States classify revenues.
For example, some States extend paying for a project into the future through bond financing. Large bond sales can greatly inflate the amount of revenue for highways in the year the bonds were sold, especially when total revenues are compared to prior and subsequent years. Similarly, total disbursements can vary greatly with the expenditure of the bond funds.
States which do not use bond financing pay for projects by either accumulating sufficient funds before beginning the project, or paying for the project from current revenues. Those States tend to have a more consistent level of revenues and disbursements than States which use bond financing.
Another example involves toll financing. Not all States have toll facilities, and the size and financial scope of toll facilities varies significantly. A small toll facility may raise and spend a few thousand dollars a year. Some large toll facilities have cash flows of several hundred million dollars to over a billion dollars a year. Toll facilities can represent a significant portion of a State's highway revenues and expenditures. Toll facilities also represent a significant source of revenues for mass transit and other purposes.
The classification of revenues varies from State to State. FHWA reclassifies some State revenue data to present tables with more uniform definitions. Revenues generated by taxes and fees that are specifically targeted at highway-users are classified as highway-user revenue. See the discussion on "Highway-User Revenue" for details on the FHWA definition. Taxes that are imposed more broadly, such as State sales taxes, are classified as "Other State Taxes," even if the taxes fall on the highway user.
Full data on the collection and disposition of highway-user revenues are included in Highway Statistics. However, revenues from other taxes and fees are shown only to the extent that their proceeds are used for highways. Therefore, it is not appropriate to draw conclusions about the total amounts of taxation in these other areas, since only a portion of the proceeds is accounted for.
Revenues whose origins are unidentified are also typically classified as general funds. For example, when State highway agencies receive payments from other State agencies for expenditure on highways, it may not be possible to determine the original source of revenue of the transferred funds.
State accounting and information systems assign expenditures based on internal State categories and definitions. To develop their expenditure reports to FHWA, States modify their internal data to correspond to FHWA categories and definitions. The reliability of the reconfigured data is dependent on the detail present in existing State records, and the amount of variation between State and FHWA definitions.
One area in which States have difficulty in recompiling data is in defining types of capital improvements. Project records in some States do not contain a full breakdown of work types. This forces these States to manually assign projects to categories based on narrative descriptions of each project. Such narratives are of varying levels of detail and are subject to interpretation. This may cause data classification to be less consistent. States use a variety of definitions for capital outlay and physical maintenance. In some States, work performed by maintenance crews may be classified as physical maintenance, even if the project was extensive enough to meet the FHWA definition of capital outlay.
Another problem area is the assignment of indirect costs. FHWA requests that States assign incidental costs related to specific construction and maintenance projects to those categories. For example, salaries and benefits for engineers and construction workers detailed to a construction project should be assigned as construction expenditures. However, many State accounting systems do not assign costs in this manner. For example, salaries may be assigned to capital outlay while employee benefits may be assigned to general administration.
The treatment of pensions for highway agency employees is a significant source of variation. In some States, the pension system is completely independent and separate from the highway program, and pension payments are not shown as highway expenditures. In other States, highway agencies are required to make pension fund payments as their liabilities are incurred. In this case, pension fund payments are shown as a highway expenditure, and should be assigned to capital outlay, maintenance, or administration in the same manner that salaries are assigned. In a few States, the State highway program is charged for current benefits to retired employees. Since it is impossible to tie these benefits to specific construction and maintenance areas, these costs are reported as general administrative costs.
The combined effect of variations in indirect cost allocations, and the differences in State highway program structures causes the general administration numbers to vary widely among the States. For these reasons, the administration data are not a suitable measure for comparisons of State administrative efficiency.
Any examination of highway finance information needs to take into account the normal changes that occur because of changes in revenue policies, program emphasis or funding, e.g., tax rate increases or greater tax compliance, establishment of a State highway trust fund, reallocation of highway-user revenue distributions, or special construction programs. Information on highway program changes is available in Highway Taxes and Fees, How They Are Collected and Distributed.