How the Transportation Modernization Act Is Changing County Roads in Tennessee
Tennessee’s growing population continues to put pressure on an aging transportation system. In response, the General Assembly has funneled major investments into the Tennessee Department of Transportation (TDOT)—including $1 billion in one-time funds for 2025 and $80 million in new recurring revenue.
But counties are feeling the squeeze, too.
Inflation Is Undermining Progress
Although the 2017 IMPROVE Act initially boosted transportation funding, flat fuel tax revenues and high inflation have eroded its impact. According to Brett Howell, Executive Director of the Tennessee County Highway Officials Association (TCHOA), the situation is serious:
“Even with improvements this year for TDOT, lawmakers understand it is just a short-term fix, and that something more sustainable needs to be considered.”
The cost of construction materials has soared. For example, concrete pipe is now more than twice as expensive as it was in FY2018–19. Steel, asphalt, and other materials have also seen major price hikes, making it difficult for both TDOT and county highway departments to keep up.
A Boost from the Transportation Modernization Act
Passed in 2023, the Transportation Modernization Act (TMA) provided counties with $300 million in one-time funding—an unprecedented increase compared to the usual $21 million allocation for the State Aid Road Program.
Less than two years in, counties have already used over 79% ($179.4 million) of those funds on local road and safety projects. Unused TMA dollars roll over annually, allowing counties to pool resources and plan multi-year infrastructure upgrades.
“This is the first time counties have had a chance to plan ahead 3–5 years, knowing they have a reliable—albeit temporary—revenue source,” Howell said.
Still, the need far outweighs the resources. Counties face a $4 billion backlog, and the state’s infrastructure needs top $37 billion, according to the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).
A Statewide Transportation Study on the Horizon
Recognizing the urgency, the legislature has ordered a comprehensive transportation funding study from TACIR, due by September 2026. The goal? To find long-term solutions to funding challenges caused by more fuel-efficient vehicles, electric cars, and ongoing inflation.
Governor Bill Lee signed SB703/HB736 into law, mandating the report just ahead of the next gubernatorial election.
Local Buy-In: The Importance of County Investment
A key issue at the Capitol: What are counties doing to invest in their own transportation infrastructure?
“Legislators talk to me regularly about what the county is doing to shore up its own transportation infrastructure,” Howell explained. “Having local ‘skin in the game’ and being able to leverage local, state, and other revenue sources… is part of that discussion.”
For many counties, fuel tax revenue from the state is their largest (and sometimes only) source of road funding. In FY2023, counties received $288 million from state fuel taxes, compared to $145.5 million in local funding, often sourced from property or mineral severance taxes.
In distressed counties, budgets are even tighter—and road projects often fall by the wayside.
Exploring New Revenue Streams
This session, county associations proposed reallocating a portion of the state’s real estate transfer fee to counties, with at least 50% earmarked for local transportation needs. The funds could be used for road paving, bridge rehab, or grant matches—offering flexibility and relief.
“Imagine being able to fund a much-needed bridge project that combines multiple funding sources,” Howell said. “If it’s only county-funded, we’re talking about years in the making. Together, we could get it done so much faster.”
Partnering for Better Results
The 2023 Transportation Modernization Act also launched the Statewide Partnership Program, designed to combine local and state resources for high-priority, shovel-ready projects. Interest in the program has outpaced available funding—clear evidence of the demand.
A recent TDOT report highlights the urgency:
- 17 county bridges are over 100 years old
- 207 more are between 50–99 years old
“The cost of repairing or replacing them is never going to be cheaper than it is today,” said Howell.
Looking Ahead
Tennessee’s county highway departments are doing all they can with the resources available. But the challenges are growing.
“Our story is about growing needs, dwindling revenues, and demands on an aging county transportation system,” Howell said. “We could do so much more, with a little help from our state partners.”