New Data Shows Eight States Were Highway “Donor States” in FY 2016

April 5, 2018

The Federal Highway Administration has just released the detailed computational tables underlying the formula apportionments of highway contract authority for fiscal year 2018. Among the nuggets of new data buried in the spreadsheets is an updated allocation of the gasoline, diesel fuel and trucking taxes paid by taxpayers in each state and the District of Columbia into the Highway Account of the Highway Trust Fund.

Since the federal government does not tax motor fuels at the retail level, the allocation of tax payments to states is done by FHWA via mathematical modeling which is to say educated guesswork. The new numbers are for fiscal year 2016. These numbers make it possible to look back at the highway funding received by states in FY 2016 and see which states, if any, were actually “donor states” that year.

In terms of dollars, there were eight donor states in 2016: Colorado, Maine, Maryland, Mississippi, North Carolina, South Carolina, Texas, and Utah.

Eight donor states is actually more than expected, since the entire Highway Account runs massive annual deficits because Congress has, for a decade, decided to keep increasing Highway Trust Fund spending well beyond what can be supported by the existing excise tax rates.

For FY 2016, a total of $43.1 billion in Highway Account contract authority was provided, but the Account only took in $36.2 billion in tax receipts, interest, and safety penalties. $3.4 billion of the contract authority was reserved by FHWA for non-formula programs, $716 million went to NHTSA, and $580 million for FMCSA. This left $39.7 billion to be apportioned by formula, or $3.5 billion more than the total Highway Account tax payments.

In terms of dollar amounts, Texas is (predictably) the biggest donor state by far, putting in $533 million more than it received. And the biggest donee is Alaska, which got $419 million more than its taxpayers contributed.

There is a provision in law (subsection (c)(1)(B) of 23 U.S.C. §104) that requires that apportionments be adjusted so that each state gets back via apportionments at least 95 percent of the dollars paid into the Highway Account. But that calculation has a two year lag – the FY 2016 tax data is used on the FY 2018 apportionments and so on.

So, in FY 2018, Texas is guaranteed at least $3.832 billion in apportionments (95 percent of $4.034 billion in FY 2016 tax payments). But when comparing FY 2016 dollars in to dollars out, Texas only got a “rate of return” of 86.8 percent on its Highway Account tax payments. The overall rate of return for the U.S. was 109.8 percent since apportionments exceeded tax payments by $3.5 billion.

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