This is one of a series of blog posts to help understand common budget terms.
State transportation funding does not go through the General Fund. Historically, the money went through the Highway Fund. In 1989, the Highway Trust Fund was created to finance major construction projects. Together, they receive the $3.5 billion state portion of highway funding. Half of those funds come from fuel taxes, 30% from DMV Fees, and 20% from the Highway Use Tax, a sales tax on new vehicles.
The Highway Fund takes 60% of those taxes and fees, or $2 billion, to cover maintenance and operations including the Department of Transportation’s 12,000 full-time equivalent employees, local construction projects, roadside improvements, airports, ferries, and other modes of transportation. It receives 71% of fuel tax revenue and about 85% of DMV fees
Roughly $1.5 billion in state funds go to the Highway Trust Fund to cover major construction projects, the Turnpike Authority and thePorts Authority. The Fund receives 29% of fuel tax revenues, about 15% of DMV fees, and all of the Highway Use Tax revenue.
Another $1 billion in federal funds brings the total to $4.5 billion in transportation funding. Only 28% of that goes to maintenance, while 48% goes to construction, which drives up the need for future maintenance.
More information from the Department of Transportation, and the John Locke Foundation.
