Flexible Funding Continues to Play a Role in Supporting State and Local Transportation Priorities

What GAO Found

From 2007 to 2011, FHWA apportioned about $53 billion in flexible funding to states, which is about 29 percent of total federal-aid highway funding apportioned to the states during that time. States transferred about $5 billion, or 10 percent of their apportioned flexible funding, to FTA for transit projects. Four states--California, New Jersey, New York, and Virginia--accounted for the majority of flexible funding transferred to FTA for transit projects. The portion of flexible funding transferred and the impact of the transferred funding on the total transit funding available in the states varied considerably. For example, while four states transferred more than 25 percent of their apportioned flexible funding to FTA for transit projects from 2007 to 2011, 16 states transferred less than 2 percent of their apportioned flexible funding over this period. In addition, transferred flexible funding accounted for over 50 percent of the available federal transit funding in Vermont compared to New York, where flexible funding accounted for about 5 percent of the total federal transit funding available to the state. Urbanized areas over 1 million in population received most (more than 75 percent) of the transferred flexible funding.

Officials from our selected states and urbanized areas told us that they based their decisions on whether to use flexible funding for transit projects on state and local priorities, available funding sources, and state and local policies. In particular, the decision to use flexible funding for transit projects stems from state and metropolitan planning processes that identify priority transportation projects. Additionally, the availability of other funding sources for transit projects and state and local policies, such as those setting aside flexible funding for transit projects, affect these decisions. State and local officials told us that although flexible funding generally has not made up a large portion of overall transit funding provided to a region, the funds have had a large impact on the ability of these selected states and localities to meet their transportation needs. Agency officials also told us that they appreciate the flexibility in how these funds can be used. Officials in the states and urbanized areas told us that although flexible funding transferred to transit resulted in fewer dollars for highways, the overall impact on their ability to implement highway projects is not significant.

Why GAO Did This Study

The nation's surface transportation system is critical to the economy and affects the daily life of most Americans. However, the system is under growing strain, and the cost to repair and upgrade the system to safely and reliably meet current and future demands is estimated in the hundreds of billions of dollars. State and local governments must maintain existing systems while making efficient use of transportation dollars at a time when revenues to support the Highway Trust Fund--the major source of federal highway and transit funding--are eroding. For this and other reasons, funding surface transportation remains on GAO's High-Risk List.

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) introduced several Federal Highway Administration (FHWA) programs that provided states and urbanized areas introduced several Federal Highway Administration (FHWA) programs that provided states and urbanized areas flexibility in selecting projects to be funded with federal-aid highway funds. As federal dollars are often tied to a single mode of transportation, these programs are distinctive in the flexibility they grant to states and urbanized areas to implement a wide variety of transportation projects. In particular, states and metropolitan planning organizations (MPO) may use FHWA's Surface Transportation Program (STP) and Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds, which we refer to as flexible funding throughout this report, for transit projects. Subsequent reauthorization acts--including the most recent surface transportation reauthorization, Moving Ahead for Progress in the 21st Century (MAP-21)--have continued to provide this flexibility.

In 2007, we reported on trends in flexible-funding use since the enactment of ISTEA (1992 to 2006). This flexibility also extended to certain Federal Transit Administration (FTA) Urbanized Area Formula Program funds prior to the enactment of MAP-21. The Consolidated and Further Continuing Appropriations Act of 2012 required us to review how states have used their authority to transfer federal funding between highway and transit programs. To respond to that mandate, this report examines the extent to which states have transferred flexible funding between highway and transit programs since 2007 and the factors that affected the decisions of selected states and urbanized areas to transfer flexible funding and the outcomes of those decisions. Similarities and differences to the previous flexible-funding report are noted, as appropriate.

For more information, please contact David J. Wise at (202) 512-2834 or wised@gao.gov.