Local governments-including counties, townships and municipalities-provide approximately 30 percent of total surface transportation funding and own 77 percent of the nation's roadway miles. Both legislatures and DOTs participate in local aid programs that allocate a portion of state transportation revenues to local entities for transportation projects. At least 27 states distribute funds primarily by statutory formulas based on equal distribution, population, road mileage or other criteria. Nineteen other states report distributing funds using a blend of statutory formulas and state legislative appropriations; of these, 11 also provide grants or other funds at the discretion of a DOT or transportation commission. Discretionary programs, especially when combined with appropriations, can facilitate substantial involvement of both the executive branch and the legislature in local aid.

Almost all states allocate transportation funds to local governments either primarily by statutory formulas or by a blend of statutory formulas and state legislative appropriations.