Highway Funding

The Transportation Equity Act for the 21st Century (TEA-21) authorized $217.9 billion for highway, mass transit, and other surface transportation programs for fiscal years 1998 through 2003. This report discusses (1) the Treasury Department's process for allocating highway user tax receipts to the Highway Account of the Fund, (2) the Federal Highway Administration's (FHWA) process for estimating motor fuel usage, and (3) the contributions to the account that are attributable to highway users in each state and the impact of these processes on the amount of highway program funds distributed to each state. GAO determined that the quality of information developed by the Treasury Department and FHWA is more critical than ever before in determining accurate funding amounts to be distributed to the states each year.

GAO noted that: (1) given the Transportation Equity Act for the 21st Century's increased linkage between the receipts in the Highway Account of the Highway Trust Fund and the level of highway program funds distributed to the states, the quality of information developed by the Treasury and FHwA is more critical than ever before in determining accurate funding amounts to be distributed to the states each year; (2) the processes used by Treasury and FHwA to estimate overall receipts and the portion of those receipts attributable to highway users in individual states are highly complex and susceptible to error, and the reliability of the estimates has not been demonstrated; (3) as a result, there is little assurance that the actual amounts distributed to the states are accurate, although there is no way of knowing the extent of over- or under-payments, if any, to individual states, given the information available from the two agencies; (4) although the Treasury and FHwA are taking actions to review and improve their estimating processes, these actions are not sufficient to correct all the weaknesses; (5) for example, although Treasury has a number of ongoing efforts aimed at improving its revenue allocation and reporting process for trust funds, it does not have a comprehensive plan, with timeframes, that addresses all of the policy and process changes needed to fully implement those efforts; and (6) furthermore, FHwA's efforts to improve the data and methodology used in its attribution process do not verify the accuracy of the information resulting from that process.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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