Communities across the country depend on reliable infrastructure to ensure public safety, economic opportunity and quality of life. Over the past several years, growing costs, workforce shortages and shifting funding landscapes have forced cities, towns and villages to rethink how they plan, finance and maintain these essential systems.
The 2026 Municipal Infrastructure Conditions (MIC) Survey provides a timely snapshot of how responding municipalities assess the condition of their infrastructure today—and how those conditions and priorities have changed since 2022.
The Realities of Municipal Infrastructure Finance: Trends and Strategies
Cities operate within a challenging fiscal environment where infrastructure investments compete with essential daily services. Property taxes—representing 60 percent of municipal tax revenue and relied upon by nearly 90 percent of cities—remain the foundation of local infrastructure finance.
The 2026 MIC survey reveals a notable shift in funding strategies. Compared to 2022, when sample cities reported a more balanced mix of borrowing and own‑source revenues, today’s municipalities are increasingly relying on local, cash‑based funding. Non‑borrowing methods continue to play a central role in how surveyed cities pay for infrastructure, underscoring both fiscal caution and limited financing capacity.
Hover over the boxes below to see the definitions of the terms.
Locally generated revenues and reserves
General obligation and revenue bonds
Infrastructure Conditions: Progress and Pressure Points
Municipal leaders continue to grapple with aging assets, rising construction costs and evolving federal funding rules. When asked to grade the condition of 11 infrastructure categories, respondents indicated that recent federal investments have improved their ability to assess and understand system needs—but not eliminated underlying challenges.
The 2026 results point to an uneven infrastructure landscape. While some asset types have stabilized or improved slightly, others show increasing strain. These findings reinforce the need for sustained, predictable funding and technical assistance to help communities address long‑standing capital needs and modernize critical systems.
Capital Priorities Align with Areas of Strain
Municipal infrastructure priorities in 2026 closely mirror those reported in 2022. Cities continue to prioritize core systems that support daily operations and public safety, including streets, water, sewer and stormwater systems, and water treatment facilities. These assets consistently rank as top priorities, even as their conditions shift.
By contrast, public buildings, parking facilities, broadband and public transit remain lower priorities for many communities—reflecting long‑standing local planning patterns.
Municipal Priorities Reflect the Strain on Core Infrastructure Systems
REPORTED CAPITAL ASSET CONDITIONS AND PRIORITIES
Source: National League of Cities Municipal Infrastructure Conditions 2026 Survey (N = 64)
Figure Note: Ratings D+F, C and A+B are labeled as Not Satisfactory, Fair and Satisfactory respectively. High, Medium and Low represent priority levels.
Taken together, the findings suggest that municipal leaders are directing attention toward the systems under the greatest pressure. This alignment underscores the importance of long‑term planning and dependable funding to address immediate risks while advancing major capital projects.
What Shapes Local Capital Decisions
The factors influencing capital decisions in 2026 remain largely unchanged from 2022. Funding availability continues to be the single most important driver of infrastructure investment. Respondents also emphasized the role of staff capacity, strategic plans and elected officials’ priorities in determining which projects move forward—and how quickly.
Funding Availability Remains Dominant Influence on Capital Planning
Source: National League of Cities Municipal Conditions 2022 (N=177) and 2026 (N=70) Survey.
Figure Note: Differences between years are not statistically significant, possibly due to small sizes. Key factors determined as those were identified as influencing municipal capital decisions “to a great extent”. Factors shown here were the most common identified in 2026 survey, see Appendix B Table B4 for other factors.
Federal Grants Matter – Especially for Transportation and Water Infrastructure
Cities report that federal grants have been particularly valuable for transportation and water infrastructure, aligning closely with major funding priorities of the Infrastructure Investment and Jobs Act (IIJA).
NLC’s Rebuilding Together analysis shows that more than 1,600 cities have already secured approximately $12.7 billion in federal infrastructure funding, demonstrating both the impact of these programs and the importance of local capacity to pursue them.
Conclusion
The 2026 MIC Survey highlights both resilience and rising pressure across municipal infrastructure systems. Local governments remain deeply committed to maintaining and improving the assets their residents rely on — even as fiscal, administrative and workforce constraints shape what is feasible.
While the full impact of recent federal investments will take time to emerge, this report offers a clear, grounded view of how municipalities are balancing immediate needs with long‑term goals. Sustained funding, technical support and strong local capacity will be essential to ensure communities can fully leverage available resources and build infrastructure that meets the demands of a changing future.
Member Action on Water & Surface Transportation Reauthorization
As Congress debates reauthorization of core infrastructure legislation, local governments need a reliable federal partner. Let your Members of Congress know the priority programs and funding needs for transportation and water projects in your community.
Direct Funding Works: Five Years of the State and Local Fiscal Recovery Funds Program
Small Communities in Action: Direct Federal Funds Strengthening Small Municipalities
Municipal Infrastructure Conditions 2025
Municipal Infrastructure Conditions in 2023
