The vast majority of surface transportation funding in the U.S. is derived from public sources at the federal, state, and local levels. In 2014, approximately $223 billion was invested in highways and another $65.3 billion in transit – $17.7 billion toward capital investments and $47.5 billion toward operating expenses.
Taxes on motor fuel are a significant source, about one-quarter of highway funding in 2014. Vehicle and other taxes and fees, including sales taxes and property taxes provided another quarter for highways. Appropriations from general funds, themselves primarily supported by taxes, accounted for about 23 percent. The remainder of highway funding was derived from tolls, bond proceeds, and investment income.
Although passenger fares were the largest source of transit funding in 2014, they only accounted for about one-quarter of total revenues. Motor fuel tax collections and general fund appropriations represented about 16 and 17 percent of total funding, respectively. Sales taxes also contributed about 16 percent of total funding.
The various revenue sources that contribute to Federal, state, and local surface transportation funding are summarized in the tables below, presenting highway and transit funding separately. The numbers are taken from 2014 FHWA and FTA data.
Revenue Sources for Highway Funding ($ billions, 2014)
| Revenue Type | Federal | Share | State | Share | Local | Share | Total | Share |
|---|---|---|---|---|---|---|---|---|
| User Charges 1 | ||||||||
| Motor Fuel Taxes | $28.00 | 51.00% | $31.70 | 26.10% | $1.00 | 1.50% | $60.60 | 25.10% |
| Motor Vehicle Taxes and Fees | $4.90 | 8.90% | $24.50 | 20.20% | $2.10 | 3.20% | $31.40 | 13.00% |
| Tolls | $0.00 | 0.00% | $12.30 | 10.10% | $2.10 | 3.20% | $14.30 | 5.90% |
| Subtotal | $32.80 | 59.70% | $68.40 | 56.30% | $5.20 | 8.00% | $106.40 | 44.10% |
| Other Revenue | ||||||||
| Property Taxes and Assessments | $0.00 | 0.00% | $0.00 | 0.00% | $12.80 | 19.80% | $12.80 | 5.30% |
| Other Taxes and Fees | $0.40 | 0.70% | $10.30 | 8.50% | $6.70 | 10.30% | $17.40 | 7.20% |
| Bond Issue Proceeds | $0.00 | 0.00% | $22.90 | 18.90% | $6.30 | 9.70% | $29.20 | 12.10% |
| Investment Income and Other Receipts | $1.00 | 1.80% | $10.10 | 8.30% | $7.60 | 11.70% | $18.70 | 7.80% |
| General Fund Appropriations 2 | $20.60 | 37.50% | $9.60 | 7.90% | $26.20 | 40.40% | $56.50 | 23.40% |
| Subtotal | $22.10 | 40.30% | $53.00 | 43.70% | $59.70 | 92.10% | $134.70 | 55.90% |
| Total Revenues | $54.90 | 100.00% | $121.40 | 100.00% | $64.80 | 100.00% | $241.10 | 100.00% |
| Funds Drawn From (or Placed in) Reserves 3 | ($7.60) | ($10.20) | ($0.80) | ($18.60) | -7.70% | |||
| Total Expenditures | $47.30 | 21.40% | $111.20 | 50.30% | $64.10 | 29.00% | $222.60 | 92.30% |
1 Amounts shown represent only the portion of user charges that are used to fund highway spending; a portion of the revenue generated by motor fuel taxes, motor vehicle taxes and fees, and tolls is used for mass transit and other non-highway purposes. Gross receipts generated by user charges totaled $133.6 billion in 2012.
2 The $20.6 billion shown for Federal includes $17.4 billion transferred from the general fund to the Highway Account of the Highway Trust Fund. The remainder supported expenditures by the FHWA and other Federal agencies that were not paid for from the Highway Trust Fund.
3 The $1.0 billion figure shown for Federal includes $1.0 billion transferred from the balance of the Leaking Underground Storage Tank Fund to the Highway Account of the Highway Trust Fund.
Source: USDOT Status of the Nation’s Highways, Bridges, and Transit | Conditions and Performance | 23rd Edition citing Highway Statistics 2015, Table HF-10A (preliminary), and unpublished FHWA data.
Revenue Sources for Transit Funding ($ billions, 2014)
| Revenue Type | Federal | Share | State | Share | Local | Share | Total | Share |
|---|---|---|---|---|---|---|---|---|
| Public Funds | ||||||||
| Motor Fuel Taxes | $9.23 | 79.80% | $1.01 | 7.00% | $0.19 | 0.50% | $10.45 | 16% |
| General Fund Appropriations | $2.31 | 20.20% | $3.98 | 27.40% | $4.87 | 12.40% | $11.16 | 17% |
| Income Taxes | $0.00 | 0.00% | $0.46 | 3.20% | $0.11 | 0.30% | $0.57 | 1% |
| Sales Taxes | $0.00 | 0.00% | $3.91 | 27.00% | $6.21 | 15.80% | $6.21 | 16% |
| Property Taxes | $0.00 | 0.00% | $0.02 | 0.10% | $0.52 | 1.30% | $0.53 | 1% |
| Other Dedicated Taxes | $0.00 | 0.00% | $2.64 | 18.20% | $0.09 | 0.20% | $2.73 | 4% |
| Other Public Funds | $0.00 | 0.00% | $0.26 | 1.80% | $1.14 | 2.90% | $1.40 | 2% |
| Subtotal | $11.56 | 100.00% | $14.51 | 100.00% | $20.05 | 51.10% | $46.11 | 71% |
| System-Generated Funds | ||||||||
| Passenger Fares | $0.00 | 0.00% | $0.00 | 0.00% | $16.45 | 41.90% | $16.45 | 25% |
| Other Revenue 1 | $0.00 | 0.00% | $0.00 | 0.00% | $2.72 | 6.90% | $2.72 | 4% |
| Subtotal | $0.00 | 0.00% | $0.00 | 0.00% | $19.19 | 48.90% | $19.19 | 29% |
| Total Revenues | $11.56 | 100.00% | $14.51 | 100.00% | $39.24 | 100.00% | $65.29 | 100% |
1 Other system-generated revenue includes advertising and concessions, park-and-ride lots, investment income, and rental of excess property and equipment.
Source: USDOT Status of the Nation’s Highways, Bridges, and Transit | Conditions and Performance | 23rd Edition citing National Transit Database
Sections
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Federal Funding
The U.S. government uses its Federal taxing authority to levy several taxes supporting transportation funding through the Highway Trust Fund. In addition, some funding for surface transportation is sourced from the General Fund of the U.S. Treasury.
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Local Funding
Revenue from local government plays an important role in transportation finance. General fund appropriations represent the largest single source of local funding. The use of property taxes also distinguishes local transportation funding from that of the Federal and state governments. Other broadly collected taxes, such as hotel or rental car taxes may also be directed…
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Proposed Funding Sources
A number of new transportation funding sources have been proposed to augment existing sources. AASHTO maintains a Matrix of Illustrative Surface Transportation Revenue Options itemizing new sources and their yield forecasts based on certain applied rates or percentages. The matrix also makes revenue estimates for illustrative increases in existing Federal Highway Trust Fund revenue mechanisms.…
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State Funding
States collect taxes and fees from motor vehicle users and use the revenues to support a variety of transportation (and non-transportation) expenditures. States generally have more flexibility in the varieties of taxes they collect, as well as in how they dispose of those taxes. Taxes imposed by states and localities are collected and administered by…
