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Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence
Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence


A final update to this content was completed in March 2022.

Local Funding

Revenue from local government plays an important role in transportation finance.

General fund appropriations represent the largest single source of local funding. The use of property taxes also distinguishes local transportation funding from that of the Federal and state governments. Other broadly collected taxes, such as hotel or rental car taxes may also be directed to transportation.

An increasing number of local county and municipal governments are making the decision to enact new taxes to generate revenue for transportation needs. These often require local referenda and result in increases to the local sales tax, which can be leveraged in the municipal bond market. A range of value capture techniques, including for example, tax increments, development impact fees, and special assessments, also highlight local governments' attempts to direct non-traditional revenue to transportation improvements.

Sources of Local Funding

The FHWA Center for Innovative Finance Support provides information on the following types of local funding sources:

  • Local Options Sales Taxes and Fees
  • Vehicle Registration Fees
  • Income/Payroll/Employer Taxes
  • Property Taxes
  • Advertising Revenue
  • Naming Rights Revenue
  • Shared Resources Revenue
  • Transportation Utility Fees

The Center for Innovative Finance Support also provides information on:

Additional sources of local funding include local motor fuels taxes, tolls, and fares.

Local motor fuels taxes are levied in certain states statewide or only by certain jurisdictions. The American Petroleum Institute provides a frequently updated summary of state motor fuel taxes that includes notes on the inclusion of local option taxes in those rates.

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