If the percentage of funds states contributed to the total is compared with the percentage of funds states received (i.e., relative share), then 28 states received a relatively lower share and 22 states received a relatively higher share than they contributed. Thus, depending on the method of calculation, the same state can appear to be either a donor or donee state, said the report.
But the report also highlights some of the problems that come with general fund infusions and with the requirement that the HTF be tied to a rate of return.
The report notes that the infusion of general revenues into the Highway Trust Fund affects the relationship between funding and contributions. “Using rate of return as a major factor in determining highway funding poses challenges to introducing a performance and accountability orientation into the highway program; rate-of-return calculations in effect override other considerations to yield a largely predetermined outcome – that of returning revenues to their state of origin. Because of these and other challenges, funding surface transportation programs remains on GAO’s High-Risk list.”
The report bluntly highlights a problem: “Adding general revenues into the trust fund and other challenges raise questions about relying on states’ rate-of-return to distribute federal highway funds.”
In addition to outside (general fund) funding, the report identifies two other wild cards that influence the amount and percentage of funds received: One is “the challenge of factoring performance and accountability for results into transportation investment decisions;” and two is “the long-term sustainability of existing mechanisms and the challenges associated with developing new approaches to funding the nation’s transportation system.”
The key to the problem is not hard to find; in fact, the report states it quite succinctly: “… the infusion of significant amounts of general revenues into the Highway Trust Fund Highway Account breaks the link between highway taxes and highway funding.” This is the problem that is worrying lobbyists and associations pushing hard for reauthorization. They fear that if an infusion from the general fund comes to be considered a common practice, then opponents of the HTF will claim the need for it has passed.
There is another problem: “The infusion of a significant amount of general fund revenues complicates rate-of-return analysis because the current method of calculating contributions does not account for states’ general revenue contributions. For many states, the share of Highway Trust Fund contributions and general revenue contributions are different, therefore state-based contributions to all the funding in the Trust Fund are no longer clear.”
The rate-of-return formula poses yet another problem when it comes to trying to factor performance and accountability into transportation investment decisions.
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