Where the Money Meets the Road

America's first roads were toll roads. Before the advent of federal highways in the 20th century, construction was financed by the states and the private sector. The first turnpike was built by a company chartered by the Pennsylvania government in 1792.

Dozens of toll road companies sprung up in the 1800s, only to be put out of business by the railroads. The hearts of train travelers soon were stolen by the automobile. In the early 1900s, cars gave birth to the concept of tax-supported freeways and turned pavement into a political hot button. Oregon created the nation's first dedicated road fund in 1919, around the same time Congress enacted the laws that govern highway construction today.

Today, states are responsible for building roads. Federal agencies are responsible for reviewing and approving roadwork if it involves federal funds. Most highway money reaches the states through 13 FHWA programs collectively known as the Federal-Aid Highway Program. The four largest programs cover surface transportation, the national highway system, interstate maintenance and bridge replacement. The federal investment in construction and maintenance has averaged about 42 percent in the past 10 years. But the Federal-Aid Highway Program often pays as much as 80 percent of project costs, according to GAO.

Although the states have considerable discretion over the funds they receive, Congress ultimately decides how federal highway capital is spent. It sets funding formulas and contract obligations through transportation authorizations typically enacted at six-year intervals. In general, recipient state and local governments choose which projects to fund and manage the work with federal oversight.