Iowa Primary Highway System - Funding

Funding

While the Iowa Highway Commission was growing, the Iowa legislature allowed organizations to sponsor and register certain roads. Sponsors brought in much needed funds to maintain the roadways. Road sponsors were allowed to choose the colors of their road markers and slogans for road signs. The first registered route, the River-to-River Route, connected Davenport and Council Bluffs. Interstate 80 and U.S. Route 6 largely follow the River-to-River Route today. The most famous registered route was the Lincoln Highway. At the peak of the registered route system, there were over 100 registered routes in Iowa.

The Federal Aid Road Act of 1916 set aside $75 million over 5 years ($1.6 billion, adjusted for inflation) of which $146,000 per year ($3.12 million, adjusted for inflation) was earmarked for Iowa. The first section of hard roads build with federal money was a section between Mason City and Clear Lake, near what is now U.S. Route 18. Soon after, a massive road-paving drive began to solve Iowa's "road problem" by getting Iowa out of the mud. This created much needed jobs during the Great Depression. The paving lasted until World War II, when resources were reallocated.

In 1919, the Iowa legislature created the Primary Road Fund, which provided funding for new road projects. In addition to the Primary Road Fund, counties were allowed to issue bonds to expedite the improvement of roads. A 2-cents-per-gallon (0.53-cents-per-liter) gasoline tax (43-cents-per-gallon (11-cents-per-liter), adjusted for inflation) was created in 1925, with one-third of revenues going into the Primary Road Fund and the other two-thirds going towards county and township roads. In 1927, in order to align the public road system with the tax revenues coming in, Iowa's public roads were divided into primary and secondary roads, with primary roads under the state's jurisdiction and secondary roads under county jurisdiction. This division remains today.

Iowa's highways are funded today through a number of sources which are distributed into the Iowa Road Use Fund. Gasoline, regular and ethanol-blend, and diesel fuel is taxed in the range of 19 to 22.5-cents-per-gallon (5.0 to 5.9-cents-per-liter), while vehicle purchases and rentals are taxed at a rate of 5 percent. Today, the Road Use Tax Fund is distributed into funds based on classifications – 47.5% is distributed into the Primary Road Fund, 32.5% is distributed to counties through the Secondary and Farm-to-Market Road Funds, and 20% is distributed into the City Street Fund.