Distributing State Road Use Tax Funds to Counties

In short, Iowa's county road system serves many critical functions in a changing environment. With these and other changes, county road finance has become a more complex issue in Iowa. Many counties with very different social, economic, and demographic circumstances do not have adequate resources to provide the desired level of service on their secondary road systems. How the state's Road Use Tax Fund (RUTF) is distributed among counties is therefore of great importance.

This report presents the results of a year-long study of how to distribute RUTF resources among Iowa's 99 counties. The project was undertaken at the request of county engineers who wish to replace the current method of allocation with one that is more stable, comprehensible, and predictable. In this report, we describe the current allocation method, examine how other states distribute road funds to counties, and discuss potential allocation factors that could be included in a revised procedure. We also summarize the process undertaken to narrow the range of possible formulas and determine the one to recommend. Finally, we present the allocation formula recommended by the project advisory committee, along with how it would operate.