Highway and Road Expenditures

State and Local Backgrounders Homepage

Spending on highways and roads includes the operation, maintenance and construction of highways, streets, roads, sidewalks, bridges, and other related structures.1 This category includes both regular highways and toll highways.

How much do state and local governments spend on highways and roads?

In 2018, state and local governments spent $187 billion, or 6 percent of direct general spending, on highways and roads.2 As a share of state and local direct general expenditures, highways and roads were the fifth-largest expenditure in 2018.

 

In 2018, 44 percent of highway and road spending went toward operational costs, such as maintenance, repair, snow and ice removal, highway and traffic design and operation, and highway safety. The other 56 percent went toward capital spending, such as the construction of both highways and roads.

This operational-capital divide stands in stark contrast to other major state and local spending categories, where capital spending typically accounts for 10 percent or less of total direct spending. Since 1977, capital spending has consistently been between 50 percent and 60 percent of state and local highway and road spending.

How does state spending differ from local spending and what does the federal government contribute?

Spending on highways and roads is roughly split between state and local governments. In 2018, states provided 60 percent of highway and road spending while local governments provided 40 percent. State spending is typically for highways and tollways, whereas local governments spend more money on local streets and roads.

As a result, direct spending on highways and roads as a share of total spending was not significantly different at the state and local level in 2018: it accounted for 7 percent of state direct general expenditures and 4 percent of local direct general expenditures.

Spending on highways and roads as a share of all spending is also roughly equal across specific local levels of government. In 2017 (the most recent year that we have data for these levels of government), direct spending on highways and roads accounted for 8 percent of state spending, 7 percent of county spending, and 8 percent of city/township spending.

Both state and local governments dedicate motor fuel tax revenue and highway toll revenue to transportation spending. However, revenue from motor fuel taxes and tolls (even combined) do not contribute a majority of the funds used for highway and road spending.

In 2018, state and local motor fuel tax revenue ($50 billion) accounted for 27 percent of highway and road spending while toll facilities and other street construction and repair fees ($22 billion) provided another 12 percent. The rest of the funding for highway and road spending came from state and local general funds and federal funds.

Overall, state and local governments provided three-quarters of highway and road funding ($141 billion) in 2018. Federal transfers for highways and roads were $45 billion dollars in 2018, or 24 percent of all spending.

How have highway and road expenditures changed over time?

From 1977 to 2018, in 2018 inflation-adjusted dollars, state and local government spending on highways and roads increased from $96 billion to $187 billion (95 percent increase). Over the same period, spending on all other expenditures increased by 191 percent, meaning highway and road spending growth lagged all other state and local spending. (The 400 percent increase in public welfare spending over this period was responsible for much of the growth in combined other spending, and much that was driven by federal spending increases on Medicaid.)

There has been less change in highway and road spending as a share of state and local direct spending. In 1977, 8 percent of state and local spending went to highways and roads compared with 6 percent in 2018.

How and why does spending differ across states?

Across the US, state and local governments spent $572 per capita on highways and roads in 2018. Alaska spent the most per capita on highways and roads at $2,146 per person, followed by North Dakota ($1,862), Wyoming ($1,176), South Dakota ($1,096), and Vermont ($1,067). Tennessee spent the least on highways and roads at $368 per person, followed by Arizona ($373), Indiana ($390), California ($403), and Missouri ($418).

Data: View and download each state's per capita spending by spending category

Per capita spending is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, or physical size. A state’s total spending on highways and roads depends on several factors, including how many drivers are on the road, how many lane miles are in a state, and the usage of public roadways in the state as well as payroll, materials, and other costs. States with high per capita spending come from two general groups: low-population states with low population density but large physical size (e.g., Alaska, North Dakota, and Wyoming) and places with higher traffic volume, which produces higher costs.3

Further, because highways and roads are capital intensive, spending can change dramatically from year to year depending on whether a capital project is active in that state. For example, Delaware's real per capita spending shifted from $866 in 2010 to $527 in 2015 to $899 in 2017. Similarly, Wisconsin's real per capita spending bounced from $688 in 2015 to $972 in 2017 to $814 in 2018.

Spending per vehicle mile traveled may provide a sense of how much states spend relative to how much their highways and roads are used. Looking at state and local dollars spent as a share of vehicle miles traveled, the US average was $576 for every 10,000 miles traveled in 2018.4 The highest spender was Alaska ($2,875), followed by the District of Columbia ($2,063), North Dakota ($1,432), New York ($1,198), and Pennsylvania($1,058). Spending per vehicle mile traveled spending was lowest in Tennessee ($306), Indiana ($320), and Missouri ($334).

Interactive Data Tools

State and Local Finance Data: Exploring the Census of Governments

State Fiscal Briefs

What everyone should know about their state’s budget

Further Reading

Using Dollars with Sense: Ideas for Better Infrastructure Choices
Urban Institute (2018)

Infrastructure, the Gas Tax, and Municipal Bonds
Richard Auxier and John Iselin (2017)

High costs may explain crumbling support for US infrastructure
Tracy Gordon, Urban Wire (2015)

Reforming State Gas Taxes
Richard Auxier (2014)

Assessing Fiscal Capacities of States: A Representative Revenue System–Representative Expenditure System Approach, Fiscal Year 2012
Tracy Gordon, Richard Auxier, and John Iselin (2016)

Notes
1 Data are from Census expenditure functions E44, F44, G44, E45, F45, and G45.

2 Direct general spending refers to all direct spending (or spending excluding transfers to other governments) except spending specially enumerated as utility, liquor store, employee-retirement, or insurance trust. The utility sector includes public transit systems. Unless otherwise noted, all data are from US Census Bureau Annual Survey of State and Local Government Finances, 1977-2018 (compiled by the Urban Institute via State and Local Finance Data: Exploring the Census of Governments; accessed 30-Apr-2021 05:17), https://state-local-finance-data.taxpolicycenter.org. The census recognizes five types of local government in addition to state government: counties, municipalities, townships, special districts (e.g., a water and sewer authority), and school districts. All dates in sections about expenditures reference the fiscal year unless explicitly stated otherwise

3 For an analysis of components of state and local spending using 2012 data, see the Urban Institute’s interactive tool, What everyone should know about their state’s budget.

4 Calculation from the US Bureau of the Census, Survey of State and Local Government Finance, 1977–2016, accessed via the Urban-Brookings Tax Policy Center Data Query System, January 9, 2019, https://state-local-finance-data.taxpolicycenter.org; and US Department of Transportation, Federal Highway Administration, Highway Statistics 2017 Table 5.4.1: Vehicle-miles of travel, by functional system. https://www.fhwa.dot.gov/policyinformation/statistics/2018/vm2.cfm.