Section IV
HIGHWAY
FINANCE
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 1995. Highway finance data for local governments
are for 1994.
COMBINED FINANCES
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, 1994. 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 1994, 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.
FEDERAL FINANCING
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). In November 1995, Congress enacted legislation establishing
the NHS. The NHS includes the existing Interstate System routes,
a large percentage of urban and rural principal arterials, the
Strategic Highway Network, and major connectors. The tables in
this section show financial information on the interim NHS. The
interim NHS consisted of the Interstate System and other principal
arterials.
The ISTEA 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-21B 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 tax includes the 4.3 cents per gallon 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 fund programs of U.S. Department of the
Interior and U.S. Coast Guard.
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 1994 highway motor fuel gallonage used to attribute
the 1995 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 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 FA21 provide information on the expenditure of Federal
funds. The FA-21 consolidates and summarizes all highway receipts
and disbursements to the Federal Government. 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 1995.
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.
Beginning with Highway Statistics 1995, these tables reflect financial
data from FHWA's Fiscal Management Information System (FMIS);
previous years' data has been directly reported by the State.
Financial and other data on several trend charts
have been re-estimated to reflect improved data available from
FMIS. In particular, FMIS reconstruction data is now split between
capacity and preservation projects and has been used to reestimate
1991-1994 data.
STATE FINANCING
The SF and SB table series show the highway
finance activities and debt status of State highway agencies.
Table SF21 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 and MT2B.
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 1995, 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 streets.
LOCAL FINANCING
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.
General funds
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, reasonable consistency within present
and past data reporting, and with data reporting instructions
contained in a Guide 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.
Reporting period
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.
Interagency coordination
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.
Sampling
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.
Jurisdictional responsibilities
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
governments 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.
Financing mechanisms
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.
Revenue classification
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.
Expenditure classification
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.
Trends
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.