Policy and Legislative Services


Updated in April 2020. Funding levels shown are the most recent comprehensive amounts available.


Each year in Iowa, a wide range of transportation improvements and operations are carried out by state and local government. Examples include constructing, maintaining and improving highways; improving airports, waterways and railroads; enhancing aviation, rail and transit services; and supporting motor carrier safety and enforcement. These activities are funded with a combination of local, state and federal dollars.

Federal Transportation Trust Funds

Most "federal" transportation funds are actually dollars returned to state and local governments via modal trust funds made up of various federal user fees. Many programs also receive a smaller amount from the federal General Fund.

Federal tax revenue deposited into federal transportation trust funds
(latest available comprehensive data)

Trust Fund FY 2014 FY 2015
Highway Trust Fund:
- Highway account
- Transit account
$41 billion
$35.7 billion
$5.3 billion
$42.6 billion
$37.3 billion
$.35 billion
Airport and Airway Trust Fund $ 15 billion $ 15.8 billion
Inland Waterways Trust Fund $ 113.7 million $ 116.8 million

Highway Trust Fund

The largest of the transportation trust funds was established in 1956 to ensure a steady flow of money to support the construction of the nation's interstate system. The Highway Trust Fund (HTF) and user fees have been continued and now support a wide range of transportation programs. User fees include fuel taxes, heavy vehicle use taxes, and retail taxes on purchases of trucks and truck tires. About 85 percent of the revenue to the HTF comes from fuel taxes. HTF receipts are credited to two accounts: the highway account and the mass transit account. In FY 2018 Iowa contributed $495.2 million to the highway account (1.3 percent of total national receipts) and $65.4 million to the mass transit account (1.2 percent of total national receipts).

In addition to the construction, maintenance and improvement of the system of federal-aid highways, the highway account funds a wide range of motor carrier safety and enforcement programs, along with highway-railroad grade crossing programs. The mass transit account provides funds for the construction and operation of bus and rail transit systems.

In recent years, increased fuel efficiency, less driving and other factors have significantly slowed the revenue stream going into the HTF. At the same time, inflation has eroded its buying power and investment levels have increased. The result is a significant HTF deficit, with shortfalls avoided in recent years only with substantial general fund transfers. The most recent, $70.3 billion beginning in December 2015, is expected to generally carry the trust fund through FY 2020, when the current authorization bill, the FAST Act, expires.

Airport and Airways Trust Fund
Revenue to support Federal Aviation Administration programs comes from the Airport and Airways Trust Fund. This fund is generated by passenger ticket taxes, segment taxes, freight taxes, and fuel taxes. Taxes paid by passengers account for nearly seventy percent of revenues; the aviation fuel tax contributes five percent, freight waybills account for four percent, and the international enplanement tax contributes twenty-one percent.

Inland Waterway Trust Fund
The smallest of the transportation trust funds is the Inland Waterways Trust Fund. A tax on barge diesel fuel is the only revenue source for this fund. These funds provide fifty percent of the cost of major capital improvements on the inland waterway system.  The 2014 Water Resources Reform and Development Act raised the diesel fuel tax charged to barge operators by nine cents per gallon.

Congress must give permission for federal funds to be expended. Transportation authorization legislation is, primarily, the mechanism by which this permission is granted. Authorization legislation establishes transportation policy and areas of emphasis for spending by creating and defining programs and authorizing funding. The funding mechanism, including the various user fees, is established. Authorization legislation covers multiple years because transportation projects require a long time from planning through construction.

Surface transportation
The current multi-year surface transportation authorization act, the Fixing America’s Surface Transportation Act (FAST Act), was signed Dec. 4, 2015 (Pub. Law 114-94). In general, the FAST Act left existing programs intact, and maintained FY 2015 investment levels until Sept. 30, 2020, with small increases for inflation. As mentioned above, these investment levels have been made possible by supplementing Highway Trust Fund revenue with transfers from the General Fund and other sources such as the Leaking Underground Storage Tank Fund and the Federal Reserve surplus account; revenue from the sale of some crude oil reserves; and savings and increased revenue from changes to certain taxes and penalties, etc.  In some cases, ten years’ worth of savings and increased revenue are harnessed to pay for the six-year bill.

On Oct. 5, 2018, the president signed a bill reauthorizing federal aviation programs and funding until Sept. 30, 2023. Public Law 115-254 provided $97 billion, including $16.8 billion for the Airport Improvement Program ($3.35 billion per year, consistent with several previous years).

On Dec. 20, 2019, the president signed HR 1865, an eight-bill appropriations package providing full-year funding for FY 2020 for USDOT and most other federal agencies. For USDOT, the bill provided authorized levels of formula obligation: $46.365 billion for highways, $10.15 billion for transit, and $3.35 billion for the Airport Improvement Program.  However, another piece of legislation passed by Congress in July 2019, the Bipartisan Budget Act of 2019, raised the spending caps for the year.  Consequently, in many program areas the omnibus supplemented the authorized amounts with General Fund dollars. Examples of these increases include: an additional $2.2 billion for highways, bridges and certain other projects, an additional $510 million for bus projects, and an additional $400 million for discretionary grants to airports.

Distribution of funds
Most federal funds are distributed to state and local officials based on formulas. For example, Iowa receives funds to maintain the interstate system based generally on the state’s share of the nation's interstate vehicle miles traveled and interstate lane miles, while urban planning funds are based on our share of the nation's urban population. Funds for improving our airports are based on the number of passengers, population, and geographic area of the state; and a portion of the five-year capital improvement plan for general aviation airports. Transit funding is based in part on transit ridership. These formula funds are called apportionments. Other programs have no mandatory distribution formula, so distribution is based on competitive applications or another project selection process. These funds are called allocations. In general, as a condition of receiving federal funding the state or local jurisdiction is required to provide matching dollars. The most common matching requirement for formula programs is twenty percent, but the rate can be as low as zero percent or as high as fifty percent.

Formula transportation funding for Iowa
The following table identifies the level of federal FY 2017-FY 2018 formula funding received by Iowa for state and local projects and activities.

Projects/Programs FY 2017   FY 2018  
  to Iowa % of national to Iowa % of national
Highway formula funds $536.8 M 1.03% $536.9 M 1.21%
Transit formula funds $45.4 M 0.37% $51.1 M 0.39%
Airport funds $43.8 M 1.31% $68.1 M 1.97%


For additional information, please contact Susan Wallace in the Strategic Communications and Performance Division, 515-239-1838 or, for specific funding program information, review the Iowa DOT's Funding Guide.