The federal government provides funding to states for surface transportation projects mainly through the federal-aid highway and transit programs (Table 5). These programs are established by federal surface transportation authorization legislation-now the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), passed in 2005. Federal highway and transit programs are funded by the federal fuel tax, federal heavy vehicle use tax, and federal motor carrier excise taxes, which are collected in the federal Highway Trust Fund (HTF) and the Mass Transit Account within the HTF Although the federal government provides the funding for these programs, state, local and tribal governments maintain control over project selection and implementation. Most projects also require a 20 percent non-federal match; some federal-aid highway programs require a smaller match. In addition, federal grant programs, congressional earmarks and one-time expenditures such as the American Recovery and Reinvestment Act of 2009 can provide additional federal funding to states for transportation projects.
Some state legislatures have minimal involvement with federal transportation funds. Many states-including Arizona, Colorado, Connecticut, Iowa, Kansas, Maryland, Massachusetts, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Oklahoma, Washington and Wyoming-and the District of Columbia allow at least some federal funds to flow directly to the state DOT without legislative appropriation. In Illinois, Minnesota and South Dakota, federal funds are reviewed and reflected in budget documents but do not require legislative action in order to be spent.
In other states, however, the legislature has a more substantial role in allocating federal funds to the DOT. Most states report that they allocate federal funds to the DOT through legislative appropriations at the agency, program, category or project-specific level. Notable examples of legislative involvement include the following:
∙ Alabama, Delaware, Florida, Kentucky and Louisiana allocate federal funds to the DOT through legislative approval of a transportation plan, budget or work program that details use of these funds. In Florida, legislative provisos occasionally direct how federal funding may be used; Kentucky's budget guides expenditures.
∙ In California, federal transportation funds flow directly to the DOT, but a budget appropriation provides the authority to spend the funds. Appropriation authority is given in the budget under broad categories.
Table 5. Federal-Aid Highway and Transit Programs
Federal-Aid Highway Programs | Federal-Aid Transit Programs |
Major Formula Programs • National Highway System (NHS) Program • Interstate Maintenance (IM) Program • Bridge Program • Surface Transportation Program (STP) • Congestion Mitigation and Air Quality Improvement (CMAQ) Program • Highway Safety Improvement Program Targeted Infrastructure Programs • Federal Lands Highways • Other Geographic Locations (including the Appalachian Development Highway System Program, the Delta Region Transportation Development Program, and others) • Specific Purposes and Needs (including the Projects of National and Regional Significance program) Special Programs • Special Highway Assistance Programs • Other Programs (including innovative financing, multimodal coordination, studies, research and pilot programs) | Urban and Rural Area Programs • Urbanized Area Formula Program • Non-Urbanized Area Formula Program Capital Programs • Bus and Bus Facilities Grants • Fixed Guideway Modernization (also known as Rail Modernization or "Rail Mod") • New Starts Special Programs • Formula Program for Elderly Persons and Persons with Disabilities • New Freedom Program • Alternative Transportation on Federal Lands • Job Access and Reverse Commute Program (JARC) • Clean Fuels Formula Program |
Shared Programs | |
Programs that Allow Flexing of Highway Funds into Transit Programs • National Highway System (NHS) Program • Interstate Maintenance (IM) Program • Bridge Program • Surface Transportation Program (STP)* • Congestion Mitigation and Air Quality Improvement (CMAQ) Program* Support Programs • Planning • Research and Technical Assistance • Training | |
* These programs provide the most funding for transit programs through the flex process.
Sources: Intergovernmental Forum on Transportation Finance, 2008; various U.S. Department of Transportation Web sites.
∙ The Hawaii DOT is authorized to expend federal funds through legislative appropriations. A budget proviso, however, allows the DOT to increase federal appropriation ceilings when the legislature is not in session, thus allowing expenditure of federal funds beyond those authorized under legislative appropriations. This, in effect, permits direct transfer of federal funds to the DOT. All actions to raise appropriation ceilings must be reported to the legislature with details of why the appropriation was not sought during the normal legislative budgeting cycle.
∙ In Maine and Michigan, any funding received from the federal government must be allocated or appropriated to specific programs by the legislature before it can be spent.
∙ In Missouri and Pennsylvania, highway funds flow directly to the DOT without legislative involvement, but funds for other modes sometimes require appropriation.
∙ In New Jersey, federal funds must be appropriated by law or approved by the Joint Budget Oversight Committee and the state treasurer before being spent.
∙ In Oregon, federal formula funds for transportation flow directly to the DOT with no state legislative appropriation. The DOT, however, is subject to an expenditure limit on those funds that is set biennially by the legislature. Legislative approval also is required for the DOT to apply for federal grants that are not allocated by fromula.39
∙ In Washington, if federal funding is received for operating purposes and is outside current appropriation authority, the DOT must seek approval through the governor's budget office using the unanticipated receipts process, which includes feedback from legislative staff.
∙ In Wisconsin, if the amount of federal highway funds received differs from the estimate provided in the legislative appropriation by more than 5 percent, the legislature's Joint Committee on Finance must approve an adjustment to the appropriation.
State legislatures also may require additional approvals before a DOT can spend certain federal funds. The Ohio legislature, for example, amended state law to require supermajority approval by the state legislative Controlling Board before the DOT or other entity could spend capital funds-including federal grant funds-for development of passenger rail.40