State surface transportation spending in 2003 totaled approximately $68 billion. In most states, the primary source of transportation revenue is the state motor vehicle fuel tax. A unique feature of transportation funding, compared with many other publicly funded programs in the United States is that it historically has been supported by user fees, generally in the form of gas taxes.
From 1998 to 2004, the gas tax was the main source of highway funding for 25 states.8 Federal money, primarily from gas tax revenues, was the primary source of highway funding in 17 states and the District of Columbia. In Kentucky, motor vehicle and motor carrier taxes were the primary source of revenue. Connecticut, Delaware, Kansas, Massachusetts, New Jersey, New Mexico and New York relied primarily on bond revenue proceeds during the six-year period (see table 7 on page 59).
In addition to highways, states also are an important source of funding for transit programs, they provide more annual transit funding than the federal government. In 2004, state transit funding was $2.3 billion more than federal transit funding. States paid approximately $9.3 billion for transit in 2004, compared to approximately $7 billion in federal expenditures for transit.9 In 2004, 90 percent of states provided at least $100,000 to support transit programs.
State transit funding is growing. Total state annual transit funding has increased more than 250 percent since 1985. According to an APTA survey, 27 states increased their transit funding in 2004, and total transit funding from states grew by $300 million in 2004 over the previous year.
States use several sources for revenue to fund transit programs. In 19 states, the primary source of transit money is the state general fund. Fifteen states fund transit with gas tax revenues; nine use motor vehicle and rental car sales taxes; nine use bond proceeds; eight use registration, title or license fees; and seven use general sales tax revenues.