Aerial view of an Interstate Interchange

At a crossroads: Redefining transportation funding in an era of growing needs and receding motor fuels tax

Photographic potrait of Evan Burgstahler
Evan Burgstahler

Senior Director, Strategy & Transactions, EY-Parthenon, Ernst & Young LLP

2 minute read 25 Mar 2026
Related topics
Government & Public Sector

Governments across the US are at a crossroads as transportation infrastructure needs continue to grow while traditional funding sources fall short.

For the last half century, roads and bridges in the US have experienced chronic underfunding, leading to a continued and pronounced deterioration of system conditions. As of 2025, approximately 40% of the nation’s roads are in poor or mediocre condition and over 231,000 bridges need repair and preservation work.¹

How EY can help

In the Federal Highway Administration’s most recent report to Congress, the value of the investment backlog in roads and bridges was estimated at approximately $852 billion.² This amount is on top of the nearly $2 trillion of additional requirements projected through the mid-2030s. Addressing these amounts would require spending levels nearly 30% higher than 2014-2018 spending levels for the next two decades (an additional $35 billion per year).³

 

Further evidence of the inability of motor fuel tax revenues to meet spending needs is seen in the amount of transfers required to keep the federal Highway Trust Fund solvent. In addition to the motor fuel tax revenues it receives, over $140 billion in additional funds have been transferred from the General Fund since 2008 to keep the Highway Trust Fund solvent. The IIJA authorized an additional $90 billion transfer,⁴ with the Highway Trust Fund currently projected to hold a positive balance until 2028.⁵ Looking ahead to spending reauthorization in 2026 when IIJA expires, unless Congress makes cuts to current spending levels any surface transportation funding legislation will likely require another, even larger transfer of funds.

 

There is no one-size-fits-all approach to motor fuel tax reform. Transportation funding structures vary from state to state (with a broad mix of fuel and diesel taxes, weight-mile charges, registration and license fees, tolls, and general fund transfers among many others) and it’s safe to say that will continue to be the case throughout the electric vehicle transition and after. In fact, given the number of potential alternatives, it’s possible that tax structures will grow to be more varied than they are today. When undertaking an effort to modernize transportation funding, it is critical that lawmakers and state transportation departments perform a wide-ranging and robust analysis of the potential options to identify the best fit for their respective situation.

 

Download the full whitepaper to learn more about the ever-increasing demands governments are facing on road maintenance and construction budgets, and how they need to be forward-thinking to meet the needs of transportation projects for decades to come.

Download here

Summary 

Governments need to be flexible and forward-thinking in how they reform fuel-tax-focused funding mechanisms for transportation construction and maintenance that can meet the needs of transportation projects for decades to come.

About this article

Photographic potrait of Evan Burgstahler
Evan Burgstahler
Senior Director, Strategy & Transactions, EY-Parthenon, Ernst & Young LLP
Advising clients on their most complex financial issues. Financial forecasting, liquidity management, scenario analysis – providing insights to answer the most complex questions objectively.
Related topics
Government & Public Sector

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.