Federal funding for highways is provided to the states mostly through a series of grant programs collectively known as the Federal-Aid Highway Program. Periodically, Congress enacts multiyear legislation that authorizes funding for the nation’s surface transportation programs. In 2005, Congress enacted SAFETEA-LU, which authorized $197.5 billion for the Federal-Aid Highway Program for fiscal years 2005 through 2009. In a joint federal-state partnership, FHWA, within DOT, administers the Federal-Aid Highway Program and distributes most funds to the states through annual apportionments established by statutory formulas. Once FHWA apportions these funds, the funds are available for obligation for construction, reconstruction, and improvement of highways and bridges on eligible federal-aid highway routes, as well as for other authorized purposes. The amount of federal funding made available for highways has been substantial—from $34.4 billion to $43 billion per year for fiscal years 2005 through 2009. The Highway Trust Fund was established by Congress in 1956 to fund construction of the Interstate Highway System. The Highway Trust Fund receives excise taxes collected on motor fuels and truck-related taxes, including taxes on gasoline, diesel fuel, gasohol, and other fuels; truck tires and truck sales; and heavy vehicle use. The Department of the Treasury collects fuel taxes from a small number of corporations (i.e., oil refineries or fuel tank farms) located in a relatively small number of places and not directly from states. As such, FHWA calculates motor fuel-related contributions based on estimates of the gallons of fuel used on highways in each state by relying on data gathered from state revenue agencies and summary tax data available from Treasury as part of the estimation process (see app. II). Most of the funds from the Highway Account of the Highway Trust Fund (about 83.3 percent) were apportioned to states across 13 formula programs during the 5-year SAFETEA-LU period. Included among these are 6 “core” highway programs (see table 1). In addition to formula programs, Congress also directly allocated about 7.4 percent of Highway Account funds to state departments of transportation through congressionally directed High Priority Projects, which provided funding for a total of 5,091 specific projects identified in SAFETEA-LU. The remaining funds, about 9.3 percent of the total, represent dozens of other authorized programs allocated to state departments of transportation, congressionally directed projects other than High Priority Projects, administrative expenses, and funding provided to states by other DOT agencies, such as the National Highway Traffic Safety Administration and Federal Motor Carrier Safety Administration (see fig. 1). Some of the apportioned programs use states’ contributions to the Highway Account of the Highway Trust Fund as a factor in determining funding levels for each state. As previously mentioned, FHWA has to estimate the fuel tax contributions made to the fund by users in each state. The collection and estimation process takes place over several years (see fig. 2), and thus, the data used to calculate the formula are two years old. For example, the data used to apportion funding to states in fiscal year 2009 were based on estimated collections attributable to each state in fiscal year 2007. By the early 1980s, construction of the Interstate Highway System was nearing completion, and a larger portion of the funds authorized from the Highway Trust Fund were for non-Interstate programs. The Surface Transportation Assistance Act of 1982 provided, for the first time, that each state would for certain programs receive a “minimum allocation” of 85 percent of its share of estimated tax payments to the Highway Account of the Highway Trust Fund. This approach was largely retained when Congress reauthorized the program in 1987. Since then, each state has received a specific share of the total program (defined as all apportioned programs plus High Priority Projects) and rate-of-return considerations into funds states received for the Interstate Maintenance, National Highway System, and Surface Transportation programs. In 2005, Congress implemented through SAFETEA-LU the Equity Bonus Program that was designed to give states a guaranteed rate of return of 92 percent by fiscal year 2008. In June 2010, we reported that every state but one received more funding for highway programs than users contributed to the Highway Account. The only exception, Texas, received about $1.00 (99.7 cents) for each dollar contributed. Among other states, this ranged from a low of $1.02 for both Arizona and Indiana to a high of $5.63 for the District of Columbia. In addition, all states, including Texas, received more funding than was contributed during both fiscal years 2007 and 2008. In effect, almost every state was a donee state during the first 4 years of SAFETEA-LU. This occurred because overall, more funding was authorized and apportioned than was collected from highway users, as the account was supplemented by general funds from Treasury. We also reported that whether a state is viewed as a “donor” or “donee” state can depend on which of the four following methods of calculating states’ rate of return is used: 1. States’ rate of return per dollar contributed to the Highway Account, using same-year comparison data. This analysis compares funding states received from the Highway Trust Fund Highway Account with the dollars estimated to have been collected in each state into the Highway Account in that same year. For example, for fiscal year 2007, it compares the highway funds states received in fiscal year 2007 with the amount collected and contributed in that fiscal year. This analysis includes all funding provided to the states from the Highway Account, including (1) funds apportioned by formula, (2) High Priority Projects, and (3) other authorized programs, including safety program funding provided to states by other DOT agencies, such as the National Highway Traffic Safety Administration and Federal Motor Carrier Safety Administration (see fig. 1 for a breakdown of these funds). This was the method used to calculate the results reported in our previous report that every state but one received more funding for highway programs than users contributed. 2. States’ rate of return per dollar contributed to the Highway Account, using time-lagged data, apportioned programs, and High Priority Projects. This method applies the same dollar return calculation method but uses contribution data that were available at the time funds were apportioned to the states—the lagged-time data were 2 years old, due to the time lag between when Treasury collects fuel and truck excise taxes and funds are apportioned. It also uses a subset of Federal-Aid Highway programs including both programs apportioned to states by formula and High Priority Projects; it does not include other allocated highway programs or other funding states receive from other DOT agencies, such as the National Highway Traffic Safety Administration and Federal Motor Carrier Safety Administration. 3. States’ relative share rate of return from the Highway Account, using time-lagged comparison data, apportioned programs, and High Priority Projects. This third calculation method is based on a state’s “relative share”—that is, the amount a state receives relative to other states instead of an absolute, dollar rate of return. In order to calculate this rate of return, FHWA must determine what proportion of the total national contributions came from highway users in each state. Each state’s share of contributions into the Highway Account of the Highway Trust Fund is then used to calculate a relative rate of return—how the proportion of each state’s contribution compares to the proportion of funds the state received. 4. States’ relative share rate of return per dollar contributed to the Highway Account, using same-year comparison data. This fourth method for calculating a state’s rate of return involves evaluating the relative share as described in method 3, but using the same-year comparison data. Our analysis of the entire 5-year period of SAFETEA-LU shows that every state was a donee state, receiving more funding for highway programs than their users contributed to the Highway Account (see fig. 3). Funding received for each dollar contributed ranged from about $1.03 for Texas to about $5.85 for the District of Columbia. Every state was a donee state during the 5-year SAFETEA-LU period because overall, more funding was authorized and apportioned than was collected from highway users, since the account was supplemented by general funds from Treasury. Since our June 2010 report, nearly every state increased its rate of return by at least 1 cent over what we originally reported. Hawaii was the only state that remained constant and did not have an increase on the rate of return in fiscal year 2009. Although our analysis shows that states received more than was contributed, other calculations provide different results. Because there are different methods of calculating a rate of return, and the method used affects the results, confusion can result over whether a state is a donor or donee. A state can appear to be a donor using one type of calculation and a donee using a different type. We found that each state received more in funding than its users contributed during the SAFETEA-LU period when using time-lagged comparison data to calculate states’ rate of return per dollar. The rate of return ranged from a low of $1.04 per dollar for 16 states to a high of $5.26 per dollar for the District of Columbia, as shown in figure 4. This methodology results in states generally having a lower dollar rate of return than our calculations using same-year data and differs in that we use a subset of Federal-Aid Highway programs including both programs apportioned to states by formula and High Priority Projects. The results from our June 2010 report have not changed because fiscal year 2009 data were included in our 2010 analysis, and all states are donee states. A third calculation, based on a state’s “relative share”—the amount a state receives relative to other states using time-lagged data—results in both donor and donee states.