As the federally-designated Metropolitan Planning Organization (MPO) of the Atlanta Region, ARC selects projects of significant regional benefit to be funded by a portion of the Federal transportation funds that are authorized for the region. Additionally ARC ensures that the long-range Regional Transportation Plan (RTP) remains fiscally constrained per Federal guidelines—meaning that the total costs of all projects to be completed within the 30-year time horizon never exceed the anticipated levels of available funding. An estimated $1.5-$2 billion annually—depending on economic and fiscal conditions—is spent on transportation in the Atlanta Region. Funding for transportation in the Region is derived from various sources on the federal, state, regional, and local levels.
An estimated $600 million to $800 million of transportation funding in the Region—comprising an average 35 percent of all transportation funding in the Region— is derived from the Federal government. Federal funding for transportation is authorized through a transportation bill which sets upper limits on funding by categories for both highways and transit facilities. Revenues to support Federal spending on transportation stem from the Highway Trust Fund—which is supported by a national fuel tax (18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel). The Highway Trust Fund is comprised of two accounts:
- Highway Account (administered by FHWA)
- Mass Transit Account (administered by FTA)
The highway account is the larger of the two accounts with a monetary value of roughly 71% of the total Highway Trust Fund value.
Detailed breakdown of Federal motor fuel sales tax proceeds
Historically, the Highway Trust Fund has carried a positive net balance due to Federal decisions to distribute or spend less than incoming tax revenues on an annual basis. However in recent years the fund has approached the brink of insolvency—compelling Congress to issue three transfers from the General Fund and other sources to the Highway Trust Fund totaling over $50 billion since 2008. Thus the weakening condition of the Highway Trust Fund will place pressure on states to assume a larger role in funding transportation improvements over the coming years.
VIDEO: Understanding the Federal Gas Tax
The Federal Transportation Bill: MAP-21
The USDOT establishes the ceiling on the amount of federal transportation dollars to be spent across the nation over a specified time period - usually spanning four years - through authorization bills. On June 6, 2012 the Moving Ahead for Progress in the 21st Century (MAP-21) legislation was signed into law. MAP-21 consolidates several of the existing programs from the previous transportation authorization bill, SAFETEA-LU, as well as enhances existing innovating finance programs that make it easier and more attractive for the private sector to participate in highway infrastructure projects. Overall MAP-21 funds surface transportation programs at a level of $105 billion over FY 2013 and 2014.
Additional Info on Federal Transportation Funding
The portion of transportation funding in the Atlanta Region that is derived from state sources accounts for an estimated $300 million annually—or 14.7 percent of total transportation funding in the region. There are several sources of funding and revenue on the state level; however the State of Georgia’s motor fuel sales tax revenue remains the primary source of revenue and funding for transportation on the state level.
Motor Fuel Sales Taxes
The State of Georgia collects two motor fuel taxes that contribute directly to transportation planning and development statewide:
- Motor Fuel Excise Tax: has had a rate of 7.5 cents/gallon since 1971 and is not indexed for inflation. Unsurprisingly, the real value of the revenue contributions from this funding source has declined sharply.
- Prepaid Motor Fuel Sales Tax: is a 4-percent sales tax on the average retail price of fuel, of which three percent is dedicated to transportation and the remaining one percent is allocated to the State General Fund. Rising fuel prices contributed to revenue generated from this source to peak in FY 2007; however revenue from the Prepaid Motor Fuel Sales Tax began to decline the following year as fuel prices dropped.
The counteracting effects of the two fuel taxes have contributed to a steady level of total revenue from the two state motor fuel taxes over the past ten years, despite the robust growth that the Atlanta Region—and the state of Georgia as a whole—has experienced over the past decade. Historically Georgia has maintained one of the lowest levels of motor fuel taxation in the nation. Increasing project costs, as well as mounting debt service payments on bonds issued for major state transportation projects, have placed a significant strain on this diminishing, yet crucial, funding source.
Because State gas tax revenues can only be spent on roads and bridges as required by the Georgia Constitution, any State transit expenditures must come out of the State General Fund. The FY 2012 State Budget allocates approximately $6.2 million to the Department of Transportation for transit, all out of the State General Fund.
For additional information on state funds for transportation or other transportation funding information, please visit the following:
- FHWA Highway Statistics 2011: A detailed compilation of tables and charts presenting various data on transportation infrastructure across the nation. Among the data presented is state motor fuel taxation, debt obligations for highways, apportionments, obligations, revenues, and expenditures.
The State of Georgia also issues bonds to construct roads and transit facilities. Bonds are a valuable tool enabling needed facilities to be built sooner than the traditional pay as you go method. Bonds can be backed and transportation projects can be funded from a variety of anticipated state revenue sources including state motor fuel funds, federal transportation funds, toll revenue, or any combination of these sources. The most recent State bonding program for transportation investment was Governor Sonny Perdue’s Fast Forward Congestion Relief Program, which is a 6-year $15.5 billion program enacted in 2004 to relieve congestion and spur economic growth through the acceleration of programmed projects. It is important to note that bonds are not new sources of funding but are used to optimize cash flow and build infrastructure sooner than current revenues could allow. Bonds must be paid back over time out of future revenues from taxes or user fees.
Tolls / Innovative Finance
Tolling facilities in the state of Georgia are operated by the State Road and Toll Authority (SRTA). Presently there are only two tolling facilities in the state – both of which are located in the Atlanta region: the tolled 7-mile stretch of Georgia 400 between Interstates 85 and 285 and the I-85 Express Lanes that extend 16-miles from Chamblee-Tucker Road in DeKalb County to Old Peachtree Road in Gwinnett County.
In addition to operating tolling facilities, SRTA has also assumed the role of providing and utilizing alternatives forms of financing for transportation agencies in the state. One of these sources that SRTA manages is the Georgia Transportation Infrastructure Bank (GTIB)—which provides loans and grants to transportation agencies and public entities, such as cities, counties, and community improvement districts, in Georgia for eligible roadway projects.
SRTA has also assumed the lead, in partnership with GDOT— in the implantation of managed-lane projects in the Region, such as the I-85 Express Lane conversion project.
Senate Bill 57 Article 3, which was part of the legislative package that formed the Georgia Regional Transportation Authority (GRTA), significantly affects how transportation services are delivered in Georgia. Known as Congressional Balancing, this law requires that 85 percent of Federal and state capital investment be divided equally among the 13 congressional districts, one-third of the remainder must be for “economic development purposes” statewide. The remainder is flexible as long as any district does not receive 20 percent more than any other district. Transportation entities that are excluded from the accounting include maintenance and operations, MARTA and the Georgia Ports Authority, and the Development Highway System.
MARTA: In 1965, the MARTA Act was passed by the State and allowed for the creation of a regional taxing authority - Metropolitan Atlanta Rapid Transit Authority - to collect a 1-percent sales tax from counties where voters elected to join the district. Presently MARTA serves Fulton County and DeKalb County. The MARTA Act also requires the Authority to spend 50 percent of its revenue on capital expenditures and the other 50-percent on operations and maintenance (“50-50 Rule”). Due to recent budget shortfalls in its O & M Budget, MARTA has been lobbying for the State to suspend the 50-50 Rule. It is important to note that MARTA is the only major transit agency in the US that does not receive State funding.
For more detailed information regarding MARTA’s budget, please see MARTA’s Budgets and Annual Reports.
Local funding for transportation comes primarily from two sources:
Special Purpose Local Option Sales Taxes (SPLOST or local imposts): is usually a 1-percent sales tax levied by a county or local government for funding of capital projects—ranging from school construction to transportation. Most of these taxes have a 4-to-5-year term and are approved by voters through a referendum. Spending on transportation projects usually account for 30% to 100% of total SPLOST revenues. Primarily these revenues are used as a match to State and Federal funds for large capital projects. Additionally SPLOST revenues are used to support the bond financing of major local transportation projects.
Local General Fund: tends to fund operations and maintenance of existing infrastructure in local jurisdictions.
Financial Alternatives Report
In Fall 2009, ARC researched various potential sources of revenue for funding the capital, maintenance, and operating costs of existing and future transportation infrastructure to serve the Region’s growing needs. The resulting report — Bridging the Gap 2010: Investigating Solutions for Transportation Funding Alternatives in the Atlanta Region (PDF) — is intended to help evaluate and estimate potential revenue from financial alternatives available at the Federal, State, Regional, and local levels that could be available to fund the Plan 2040 RTP.