Despite spending more than ever on maintenance, states face difficult budget decisions as one quarter of the nation's bridges are deficient or functionally obsolete, according to Reason Foundation's 18th Annual Highway Report.

"This shows the difficulties states are having when it comes to making across-the-board progress in road conditions," explains David Hartgen, lead author of the nonprofit think tank's report. "In many cases, we see two steps forward, one step back."

The number of deficient bridges had declined for 22 consecutive years. But in 2007 (the latest year for which figures are available), 151,101 bridges were deficient and/or functionally obsolete, a 1% increase over 2006. The trend continued into 2009; in the two worst states, Rhode Island and Massachusetts, more than half of all bridges need improvement.

Arizona reported the lowest percentage of deficient bridges at nearly 11%, while Rhode Island reported the highest at 53%.The highest-percentage states are primarily in the northeast, where the structures are among the oldest in the nation. Maine, for example, fell six slots from 22th to 28nd from 2006 to 2007 because of worsening conditions on rural arterials.

Ironically, maintenance expenditures increased faster than the rate of deterioration, from $17 billion to $20 billion; and account for 18% of state highway budgets. Administrative costs rose from $7 billion to $8 billion, accounting for more than 7% of spending. Capital improvements represent 57%. Total highway maintenance spending jumped 17% between 2006 and 2007, although capital investment in bridges increased from $54 billion to nearly $63 billion, a 15% increase.

Delaware improved the most, moving from 28th to 11th by cutting spending without sacrificing road conditions. Michigan jumped from 42nd to 30th thanks to better rural pavement conditions. Mississippi also posted double-digit gains.

Top-ranked North Dakota, which has had the best-performing roads system each year since 2001, scored well by having the least interstate and rural mileage in poor condition and ranking first in maintenance spending.

New Mexico continues its impressive improvement. The state was 27th in 2000, but now ranks 2nd in overall performance and cost-effectiveness.Kansas is 3rd overall, while South Carolina, with one of the largest state-owned highway systems in the country, is 4th. Montana rounds out the top five.Four states -- Missouri, Oregon, Vermont, and Indiana -- fell by double-digits: which fell 16 spots, from 15th to 31st, because of a sharp decline in urban interstate condition and an increase in spending per mile.

The foundation generates its annual report based on data states submit to the federal Department of Transportation for the year 2007. The overall ranking weighs 11 indicators that include highway and bridge expenditures, pavement and bridge condition, congestion, fatality rates, and lane width.