The current authorization, under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA; P.L. 109-59 ), expires September 30, 2009. FHWA has a process to estimate each states share of payments to the highway account. The Donor-Donee State Arguments

The donor state argument is that for the sake of equity each state should receive federal highway funding roughly equal to the fees and taxes that their state's highway users pay into the HTF. Donor state advocates generally contend that they have been subsidizing the repair and improvement of donee state infrastructure, especially of the older highway infrastructure in the Northeast. Donee states argue that fairness should not be separated from needs. They assert that the age of their highway infrastructures (especially those in the Northeast), the high cost of working on heavily congested urban roads, as well as the limited financial resources of large, sparsely populated western states justify their donee status. They also argue that some needs exist that are inherently federal, such as a national highway network, that cannot be based solely on state or regional boundaries. In a broader sense, the debate over equity remedies has implications for a number of issues. In recent years, the authorization legislation has been intentionally drawing down what was the unexpended balance of the highway account. Because the HTF was paying out more than was flowing into the highway account for these years, most states' ratios have exceeded 1.0 and for FY2007 all 50 states received more than they were estimated to have paid in and there were, on a dollar-in/dollar-out basis, no donor states. Relative Ratio of Apportionments and Allocations to Payments (Percentage- in/Percentage-Out Method)

Some participants in the donor-donee debate, usually donor state advocates, have argued that the dollar-in/dollar-out method of calculating the ratio is misleading because in years when the trust fund balance is drawn down, it makes many states that historically have been donor states look like donee states. Equity Bonus Reauthorization Issues

The persistence of the donor-donee debate in the reauthorization of federal surface transportation programs is a reflection of the differing views and expressed needs of the many stakeholders in federal highway spending policy and the difficulty in addressing these differences. Determine Program Size Based on Total Annual Payments to the Highway Account of the HTF

The uncertainties of projecting total program size based on share has led to some discussion of eliminating this process (see step 7 in the earlier section on the EB calculation) and simply using the total annual payments to the highway account of the HTF to determine the program size for each fiscal year. Integrate the Guaranteed Rate of Return Into All Federal-Aid Highways Programs

If the assumption is that the ultimate goal of federal-aid highway programs is to guarantee each state a certain percentage rate-of-return, for example 95%, then one way to accomplish this would be to eliminate all other formula criteria and weight all the programs within the scope of the EB based on that rate-of-return. General Fund Transfers to the HTF and the Donor-Donee Debate

Over the first 50 years of the life of the HTF significant amounts of money have been transferred from the Treasury's general fund to the HTF. The use of general funds are problematic for the basic donor-donee argument which is based on return of user fees and taxes paid by highway users. This bill would have devolved much of the federal highway program role to the states.
Few issues in the history of the Federal-Aid Highway Program have raised such heated debate as the argument over how closely the program's payments to the individual states should match the amount of federal highway taxes each state's highway users pay to the highway account of the Highway Trust Fund (HTF). Referred to as the donor-donee state issue, it is expected to re-emerge during the debate over the reauthorization of federal surface transportation programs. The current authorization, under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA; P.L. 109-59), expires on September 30, 2009.
"Donor states" are states whose highway users are estimated to pay more to the highway account of the HTF than they receive. "Donee states" receive more than they pay. The basic donor state argument is a relatively straightforward call for what they view as equity or fairness. Donor state advocates generally contend that for too many years they have been subsidizing the repair and improvement of donee state infrastructure, especially the older highway infrastructure in the Northeast.
Donee state advocates argue that fairness is in the eye of the beholder and should not be separated from needs. They assert that the age of their highway infrastructure, especially in the Northeast, the high cost of working on heavily congested urban roads, and also the limited financial resources of large sparsely populated Western States justify their donee status. They further argue that there are needs that are inherently federal rather than state, and that a national highway network cannot be based solely on state or regional boundaries.
A number of interest groups and State Departments of Transportation (state DOTs) are expected to propose that reauthorization increase the rate-of-return guarantee (currently 92%) and expand the scope of the statutory guarantee to cover more Federal-Aid Highway Program funding. This may be difficult to achieve in a tight budget environment. The Equity Bonus (EB) program, which is the principal means by which the rate-of-return adjustment is facilitated, is already the largest federal highway program. Others would restructure, modify or eliminate the EB altogether.
The Federal Highway Administration's (FHWA) donor-donee figures indicate that for FY2007 all 50 states were donee states. For FY2006 there were 41 donee states and no donor states fell below a 91% rate-of-return (based on a dollar in-dollar out calculation method). Some donor state advocates argue that this situation is anomalous and have argued for a method of calculation that relies on share percentages, rather than dollars, because this would eliminate the modifying effect of the recent drawing down of the unexpended balances of the HTF.
Near the end of FY2008, the balance in the highway account of the HTF had fallen to the point that Congress provided for a transfer of roughly $8 billion from the Treasury's general fund to the highway account of the HTF in the hope that the transfer would be sufficient to support the guaranteed funding authorized in SAFETEA for FY2009. This transfer of general fund monies has no connection to the transportation taxes paid by highway users to the HTF and raises questions about basing an equity guarantee primarily on the states' shares of payments to the HTF.