Having been on a small town board, the truth is roads are funded at the state level (may vary by state) with funds distributed to the county governments, who maintain the county highways. The towns and cities get some amount from the county and more from the state to be used for anything highway related.

If this were not the case, and all else being equal many rural towns would go under. Private transportation is currently being subsidized at rates sometimes much higher than the property tax income the towns bring in. It’s unsustainable and barely working like everything else, it’s like long term vision is irrelevant and only short term gains are even considered…