For decades (starting in the 1980s), a group of states, mostly from the Sun Belt, habitually complained that they paid much more in taxes into the Highway Trust Fund than they received in highway spending. Calling themselves “donor states,” over the years they managed to get a series of procedures built into the law to guarantee each state a minimum “rate of return” on their estimated tax payments into the Highway Account of the Highway Trust Fund.

While there used to be many such donor states, the insolvency of the Trust Fund starting in 2008 led to the Trust Fund giving out more money every year than it took in, and that meant fewer donor states. Under the FAST Act, the only states that tripped the 95 percent donor state minimum rate-of-return guarantee were Texas (several times) and Colorado (once).

But the 2021 Infrastructure Investment and Jobs Act (IIJA) increased spending from the Trust Fund so much, without increasing the taxes that support the Trust Fund, that donor states are now a relic of the past, and without a significant user tax increase, will never exist again.

Traditional calculation. We can’t know how exactly much gas motorists will buy, or how many new trucks will be purchased by trucking companies, before the motorists and trucking companies actually make the purchases. So the federal government doesn’t have the data to calculate how much tax money was received by the Trust Fund, or how to attribute it to each state, until after the fiscal year ends. But highway formula funding has to be provided to states, by law, on the first day of the fiscal year.

As such, there is a two-year lag between tax estimates and the highway funding that is based on those estimates. Fiscal Year One ends on September 30, and six months later, by springtime of Fiscal Year Two, Treasury and the Federal Highway Administration have finished the calculations to attribute highway user taxes for FY One to each state. Then, in August-September of FY Two, FHWA finalizes the calculations for the apportionments going out for FY Three on October 1, and make any changes in state funding necessary to make sure each state gets back at least 95 percent of the money they put in.

As such, the current year, fiscal 2023, was informed by the Trust Fund tax receipts in fiscal 2021.

The Highway Account of the Highway Trust Fund took in $38.0 billion in receipts attributed to states, per Table FE-9. But states received a total of $53.5 billion from the Account in formula apportionments for 2023 via Notice 4510.870. That $15.5 billion difference (triple the $5.0 billion difference from just two years ago, pre-IIJA) is more than enough to take care of every state, representing an aggregate rate of return of 140.7 percent.

Rates of return (in this instance, measured by highway formula apportionments divided by Highway Account tax contributions) range from 990 percent for the District of Columbia down to 114 percent for North Carolina. In dollar terms, even North Carolina got $175 million more in FY 2023 highway formula funding than they paid in FY 2021 Highway Account taxes.

The top ten and bottom ten state rates of return calculated in this fashion are shown below.

Note that this is formula money only. There are several billion dollars per year of Trust Fund highway non-formula programs (INFRA grants, TIFIA credit, discretionary bridge grants, discretionary PROTECT grants, Appalachian highways, and pilot programs) that are eventually given to state DOTs throughout the year, and billions more in Trust Fund federal lands highways and other programs that wind up being spent on roads in states, none of which are reflected in this calculation. But those are included in a separate FHWA table (FE-221) that becomes available a year after the spending fiscal year closes.

According to the last FE-221, over the cumulative July 1, 1957 to September 30, 2021 period, states had paid $1.090 trillion in taxes to the Highway Account and received a total of $1.313 trillion in apportionments and allocations to the account. The only state that is still a lifetime donor under this calculation is Texas, which (as of September 2021) was still $2.025 billion in the red over the lifetime of the Trust Fund. But, given that Texas is getting back over $500 million per year more out of the Highway Account than they put in under the IIJA, they will be very close to break-even by the end of the IIJA in 2026 if they have not broken even as well.

Including transit in the calculation. Once more former donor states began breaking even on the highway side, they shifted their complaints to the Mass Transit Account. This is, to some extent, comparing apples and oranges, because the creation of the Mass Transit Account, and the use of highway money for transit anyway, is not part of the user-pay, user-benefit discussion. It was a politically pragmatic deal necessary to raise the gas tax in 1982. If there were no Mass Transit Account, then the gas tax would still be 4 cents per gallon, or the Trust Fund would not exist today. (Or else it would be drastically different.)

Transit formulas are all about ridership numbers and the number of transit vehicles and the length of the route network and things like that, and there is no formula factor or correction for Mass Transit Account tax payments. Since New York City has 40 percent of total U.S. mass transit ridership, the transit formula distribution looks nothing like the highway formula distribution.

But when you add Highway Account and Mass Transit Account tax payments together, and then add highway formula apportionments to mass transit formula apportionments, there are still no more donor states. Total FY 2021 Trust Fund tax payments into both accounts totaled $43.5 billion and FY 2023 highway and transit formula apportionments out of the Trust Fund totaled $66.9 billion (the transit apportionments are aggregated by state here), a difference of $23.5 billion (an aggregate rate of return of 154.0 percent, because the Mass Transit Account is even more over-leveraged than the Highway Account).

Big transit states move up the scale when transit dollars are added to highway dollars. New York State’s return jumps from a highway-only 167.6 percent to 287.2 percent, and California goes from 148.0 percent to 181.0 percent. Even Texas does almost the same when you include transit (a RoR of 120.2% highway-only vs 119.0% for combined highway-transit) because Texas has several big-city transit systems.