Highway Funding:

Alternatives for Distributing Federal Funds

RCED-96-6: Published: Nov 28, 1995. Publicly Released: Nov 28, 1995.

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Pursuant to a legislative requirement, GAO reviewed the formula for distributing federal highway funds, focusing on the: (1) relevancy of the data used for the formula; (2) major funding objectives implicit in the formula; and (3) implications of alternative formula factors for achieving these objectives.

GAO found that: (1) the federal highway funding formula is complex and cumbersome; (2) the underlying data and factors used in the formula are to a large extent irrelevant, since funding outcomes are essentially predetermined; (3) annual combined funding for the four largest highway programs is fixed throughout the 6-year life of the Intermodal Surface Transportation Efficiency Act (ISTEA); (4) some of the factors used in formula calculations are based on outdated information, are unresponsive to changing conditions, and often do not reflect the highway system's utilization; (5) equity adjustments increase many states' final funding levels; (6) funding for demonstration projects is not determined by formula; (7) ISTEA objectives include maintaining and improving the highway infrastructure, returning Highway Trust funds to the states where the revenue was generated, advancing selected goals, and safeguarding the states' historical funding shares; and (8) a combination of objectives based on states' needs and resources could form the basis for a new formula, but any new formula is likely to change the states' highway funding levels.

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