Funding Federal-Aid Highways

This report by the Federal Highway Administration (FHWA) provides information about the funding of Federal-aid highways.  The report details the fiscal process of funding the highways from inception in an authorization act to payment from the Highway Trust Fund.  In addition, congressional and Federal agency actions that take place throughout this process are discussed.

Related items:

Federal Highway Administration (FHWA) publications can be found here: https://bookstore.gpo.gov/agency/federal-highway-administration-fhwa

Department of Transportation (DOT) publications can be found here: https://bookstore.gpo.gov/agency/department-transportation-dot

Table of Contents:

1. Introduction...........................................................................................................................................1

Key terminology ....................................................................................................................................1

Structure of this report...........................................................................................................................3

2. Authorization of Funding......................................................................................................................5

Authorization act ...................................................................................................................................5

From bill to law......................................................................................................................................8

Budget authority..................................................................................................................................12

Homes for Federal highway law ..........................................................................................................14

3. Distribution of Funding ......................................................................................................................15

Apportionments...................................................................................................................................15

Allocations...........................................................................................................................................19

Rescission...........................................................................................................................................19

Sequestration......................................................................................................................................20

4. Obligation of Funding.........................................................................................................................23

What is an obligation?.........................................................................................................................23

Availability...........................................................................................................................................23

Federal share......................................................................................................................................24

Appropriations act ...............................................................................................................................26

Federal budget process.......................................................................................................................26

Other appropriations ...........................................................................................................................29

5. Obligation Limitation ..........................................................................................................................31

History.................................................................................................................................................31

Function and characteristics................................................................................................................32

Distribution..........................................................................................................................................33

Lop-off.................................................................................................................................................34

6. Outlay of Funding ...............................................................................................................................37

Conditions precedent ..........................................................................................................................37

Payments to States .............................................................................................................................37

Rate of outlay......................................................................................................................................39

7. The Highway Trust Fund ....................................................................................................................41

History and legal authorities ................................................................................................................41

Sources of income ..............................................................................................................................42

Collection of taxes...............................................................................................................................45

Trust Fund operations .........................................................................................................................46

Significance of the balance .................................................................................................................47

Byrd Test.............................................................................................................................................47

Appendices ............................................................................................................................................... 49

A. Glossary ........................................................................................................................................... 50

B. FAST Act authorizations ................................................................................................................... 52

C. Apportionment and programmatic distribution .................................................................................. 54

D. Penalties applicable to the Federal-aid highway program ................................................................ 56

E. Sub-State distribution of Surface Transportation Block Grant Program funding .............................. 60

F. Sub-State distribution of Transportation Alternatives funding ........................................................... 61

G. Transferability of apportioned funding .............................................................................................. 62

H. Federal share ................................................................................................................................... 63

I. Distribution of the Fiscal Year 2016 obligation limitation ................................................................... 66

J. Lop-off from allocated programs ....................................................................................................... 67

K. Historical Federal fuel tax rates ........................................................................................................ 68

Endnotes ................................................................................................................................................... 72

Figures

 1. Lifecycle of Federal-aid highway funding .......................................................................................... 3

 2. Enactment of an authorization act .................................................................................................... 8

 3. Comparative lifecycles of appropriated budget authority and contract authority ............................ 12

 4. Typical period of availability for Federal-aid highway funding ......................................................... 24

 5. Federal budget process .................................................................................................................. 27

 6. Payments to States ......................................................................................................................... 38

 7. Rate of outlay of Federal-aid highway funding ................................................................................ 39

Tables

 1. Extensions to authorizations acts ..................................................................................................... 6

 2. Jurisdiction over surface transportation authorization ....................................................................... 9

 3. Amounts sequestered under the Budget Control Act of 2011 ......................................................... 22

 4. Jurisdiction over the Federal budget and surface transportation appropriations ............................ 28

 5. Impact of FY 2016 obligation limitation on availability of funding .................................................... 32

 6. Expiration of Highway Trust Fund-related authorities ..................................................................... 42

 7. Current Highway Trust Fund tax rates ............................................................................................ 44

 8. Transfers to ensure Highway Trust Fund solvency ......................................................................... 45

 9. Operation of the Highway Account, FY 2015 .................................................................................. 46

 10. Calculation of initial FY 2016 Byrd Test .......................................................................................... 48

Members of Congress, Federal and State government, and Federal agencies involved in the Federal-aid highway funding process would find this report of great use.