Transportation Trust Funds and Lockbox Protections

Most states have created dedicated trust funds to support transportation. Some have constitutional restrictions on how the revenues in those funds can be spent. Others simply have restrictions codified in statute that haven’t always been effective in preventing the diversion of revenues to other budget areas. Maryland and Wisconsin are the two newest states with constitutional protections for their transportation trust funds. Additional states could follow suit, but despite their real or perceived benefits, such protections are unlikely to have much impact on struggling state transportation budgets.

  Download the Excel Version of the Table: "State Laws & Constitutional Provisions on Dedicated or Restricted State Funds for Transportation"

In 2014, Maryland and Wisconsin both had measures on the ballot aimed at preventing transportation revenues from being spent for other purposes. The measures were in reaction to recent budgets that used transportation funds in those states to shore up general services during fiscal crunches. In Wisconsin, between 2003 and 2011, lawmakers borrowed a total of $1.4 billion in transportation funds. While much of that money was later repaid through bond proceeds, the diversions were raised as an issue by Scott Walker in his successful 2010 campaign for governor. Similarly, in Maryland, lawmakers had taken more than $1 billion out of transportation funds to balance the budget in recent years. Those diversions resulted in the delay of numerous transportation projects.1

States have created dedicated trust funds to support state departments of transportation and transportation spending in general.

  • Forty-seven states have at least one transportation-dedicated trust fund.2
  • Thirty states have constitutional restrictions on how the revenues in those funds can be spent.3
  • While states without constitutional restrictions have restrictions codified in statute, those protections haven’t always prevented the diversion of transportation revenues to other budgetary areas.4

The restrictive language is stronger in some states than in others.

  • In New Hampshire, the constitutional restrictions are on the revenues that go into the highway fund rather than on the fund itself.
  • Seven states specifically prohibit the use of fuel tax receipts for anything other than transportation.
  • Missouri’s constitution prohibits any state revenues from highway users that are allocated to the State Road Fund from being diverted away from highway purposes and uses.
  • Georgia’s constitution restricts the use of motor fuel revenues to roads and bridges, except in case of “invasion or major catastrophe declared by the governor.”
  • Virginia is the only state that specifically allows the governor and legislature to divert transportation funds provided they come up with a plan to repay those dollars within three years.5

Maryland and Wisconsin are the two newest states with constitutional protections for their transportation trust funds. The two states took different approaches.

  • Maryland’s constitutional amendment, which was approved by more than 80 percent of voters, includes an escape clause. It states that funds in the Transportation Trust Fund may be used for a purpose not related to transportation or transferred to the state’s general fund if “the Governor, by executive order, declares a fiscal emergency exists; and the General Assembly, by legislation … supported by three-fifths of all the members elected to each of the two Houses of the General Assembly, concurs with the use or transfer of the funds.”6
  • Wisconsin’s constitutional amendment, which was also approved by nearly 80 percent of voters, includes no such escape clause. The amendment states that “none of the funds collected or received by the state from any source and deposited into the transportation fund shall be lapsed, further transferred, or appropriated to any program that is not directly administered by the department of transportation.”7

Other states seem likely to follow in the footsteps of states with trust funds and constitutional protections.

  • Alaska—which has the lowest gas tax in the country—is the only state with no transportation-dedicated trust funds and no restrictions on how transportation-derived revenues can be spent.8 The Alaska Legislature has considered bills to define a new, dedicated Transportation Infrastructure Fund that would receive revenues from state fuel taxes and registration fees, but they have all been unsuccessful.9
  • Connecticut Gov. Dannel Malloy in 2015 has proposed both a constitutional amendment and a statutory change to protect the state’s Special Transportation Fund, which would ensure dollars from the fund are spent only for transportation purposes. Neither provision would include an escape clause like an override option for the general assembly or governor. If approved by the legislature, the proposed constitutional amendment would be put to voters in 2016. The statutory change would protect the fund during the interim.10 Since 2005, when lawmakers and then- Gov. Jodi Rell approved five increases in the state’s wholesale fuel levy, more than $1.4 billion in fuel tax receipts have been spent on non-transportation programs. At the same time, the state amassed between $12 billion and $20 billion in vital highway and rail improvement projects currently deemed “unfundable.”11
  • Delaware Gov. Jack Markell in 2015 proposed transferring $40 million from the state’s Transportation Trust Fund to help cover general fund expenses and balance the budget. It was the second year in a row he proposed such a diversion and took place even as he was asking state legislators to come up with new revenues to help meet Delaware’s transportation needs.12

Protections for transportation trust funds may yield real or perceived benefits but such funds can’t solve some problems.

  • While stronger protections for transportation trust funds may help improve public perceptions of state transportation officials—particularly as they seek support for additional transportation funding in the future—those protections are unlikely to have much impact on struggling state transportation budgets. Moreover, the raids on transportation trust funds seem likely to be a problem that takes care of itself for the same reason: The gas taxes that largely fund them aren’t keeping up with current infrastructure needs. “The days of raiding gas tax money for other things besides transportation are likely to be numbered, because the money won’t be there,” said Eno Center for Transportation President and CEO Joshua Schank.13

1 Daniel C. Vock. “3 States Consider Ways to Maximize Existing Transportation Money,” Governing. October 27, 2014. 
2 National Conference of State Legislatures and AASHTO Center for Excellence in Project Finance. “Transportation Governance and Finance: A 50-State Review of State Legislatures and Departments of Transportation,” May 2011. 
3 Ibid.
4 Keith Phaneuf. “With ‘lockboxes’ for toll receipts, there are lots of ways to pick the lock,” The CT Mirror, January 5, 2015.
5 NCSL & AASHTO.
6 Constitution of Maryland. Article III, Section 53. 
7 Constitution of Wisconsin. Article VIII, Section 11. 
8 Alexander E.M. Hess and Thomas C. Frohlich. “States with the highest (and lowest) gas taxes,” USA Today, January 20, 2015. 
9 Alaska House Majority. “Sponsor Statement: HB 123,” February 25, 2013. 
10 Office of Dannel P. Malloy, Governor of Connecticut. “Gov. Malloy Outlines Transportation Lockbox Proposals,” Press Release. January 9, 2015.  
11 Phaneuf.
12 “Markell Budget Again Proposes Shifting Millions from Transportation Fund,” AASHTO Journal. February 6, 2015. 
13 Vock.

Transportation Trust Funds and Lock Box Protection