The US government has funded the highway infrastructure through the bipartisan infrastructure law, or the IIJA 2021 Act, to advance the infrastructure and meet society’s needs. The funds are distributed based on federal laws; let’s understand how highway infrastructure is financed in the US.
Highway Infrastructure Funding USA
The highway infrastructure is important for efficient transportation and to support the nation’s economic growth, as it enhances connectivity and boosts the quality of life. The federal government in 2021 introduced the Infrastructure Investment and Jobs Act and provided $350 billion for the highway programs.
The federal highway programs will support the highway infrastructure projects and improve the sector through a wide range of grant programs. The USA highway infrastructure in today’s time is improving, thanks to the IIJA 2021 Act and other programs till 2026. Under the IIJA funding, the federal authority distributes funds to the state and local communities through grants.
However, the grade for the highway infrastructure in the ASCE report card 2025 is still not satisfactory, as it is around D, and indicates the need for robust investment. Although it has progressed with the federal programs.
Apart from the IIJA’s new investment, the Highway infrastructure was also financed through the Highway Trust Fund; however, it is expected to be insolvent by 2028, which is concerning.
How does highway infrastructure funding happen through state and local governments?
In the highway infrastructure progress, the federal funding does play an important role; however, the state and local governments have made the funding useful and ensured it enhances the highways, as they mostly handle the projects. The state and local communities fund the highway infrastructure through the following sources:
- Fuel taxes: Many US states have fuel taxes, so the collected tax from the residents is used for highway infrastructure funding, maintenance, and implementation.
- Toll and User charges: The state administers the toll, user charges, pricing for services, and others, so the revenue collected through these is used for highway infrastructure. Many stats try to use the profits and fees only for improving, maintenance, and starting new projects on the highway.
- Federal grant programs: The IIJA 2021 Act offers the federal grant programs, where $350 billion was invested for 5 years, and this fund has helped many states.
- State infrastructure Banks: The states have their low-interest state infrastructure banks that support the local projects and empower the state authorities to improve the infrastructure, such as Georgia’s Transportation Infrastructure Bank.
- Municipal Planning organizations: The MPOs play an important role in fund distribution, developing long-term plans, creating bonds, or becoming a body that collaborates between state, local, and federal governments.
What are the Key FHWA programs for the highway infrastructure?
The Federal Highway Administration offers financial assistance to local, state, tribal, and industry for the safety and advancement of America’s highways and roads. The FHWA grants are one of the investments that are helping in strengthening the highway infrastructure; here, you can learn about these grants.
The FHWA offers many competitive grants to fund different types of America’s transportation projects, so let’s see the highway infrastructure grants:
- HUTE:
- This grant reduces, identifies, and eliminates the evasion of fuel taxes at the state and federal levels and strengthens the highway infrastructure.
- INFRA:
- The federal government supports American Infrastructure through the INFRA grant, providing funds for transportation, highway projects, and other important projects for the nation and region.
- This grant prioritizes long-term investment, improved connectivity, and reducing congestion.
- Under the IIJA, the INFRA grant has received $8 billion till 2026 and will improve the highway infrastructure.
- Highway Construction Training Program:
- This grant is for the future of the highway infrastructure, as it is available to develop, review, and test the education program and curriculum to train individuals who will be entering the transportation workforce.
- This meets the future needs of the highway or transportation infrastructure and ensures the workers are well-trained.
- National Highway Performance Program:
- The NHPP program ensures that the investment through federal administration is directed to achieve the best performance targets and ensures the assets are well managed.
- Under this program, the authorities ensure the funds are provided to the states or local authorities through a formula set by the federal law based on the projects, state needs, etc.
What’s happening with the Highway Trust Funds?
The Highway Trust Fund has been in place since 1956 to provide a source of funding for the highway system. It has two accounts: the highway account, dedicated to the construction and maintenance of highways, and the Mass transit account, dedicated to capital expenditures on subways, railways, ferries, buses, and other modes of transportation.
The HTF gets its funding from the excise taxes, motor fuel taxes, and other taxes. However, the HTF is not able to fund the projects or future projects as the funds are not sufficient. The Congressional Budget Office says it will become insolvent in three years due to insufficient revenue from taxes and the growing gap between spending and expenditure.
The ASCE has suggested in the 2025 Report Card to go for long-term investment and sustain the investment through the models, where we can use the project revenue for improvement. For instance, the PPPs model can help in funding and reduce the burden on the government.
The highway infrastructure in the USA is still not in a good phase as it needs improvement and funding, so the state, local, and federal authorities need to increase investment, keeping climate risks and long-term goals in mind.
