Questions and Answers

Q: What has caused the revenue shortfall described in the report?

A: Federal revenue: Historically, Iowa has relied on federal funding for roads as a steadily increasing revenue source. However, the amount of federal funding for core highway programs has leveled off in recent years.

State revenue: The Road Use Tax Fund (RUTF) used to experience 4.5 percent average annual revenue growth (FY1990 through FY2000), allowing the fund to keep up with inflation. In recent years, however, the RUTF’s growth has lessened. The FY2001 to FY2006 average annual growth has been just 1.5 percent and no growth is forecast for FY2007. The fuel tax rate was last increased in 1989 to 20 cents per gallon of gasoline. If the fuel tax rate had kept up with inflation, as measured by the Consumer Price Index, the 2006 tax rate would be 32.4 cents per gallon.

Loss of buying power: The purchasing power of the RUTF has declined seven out of the last nine years. The cost of materials used in roadway building have all dramatically increased over the last four years, ranging from a 9.5 percent cost increase for structural concrete to a 33 percent cost increase for reinforcing steel. Roadway excavation costs have increased 66.4 percent.