Engineers give Indiana infrastructure a D+ amid warnings of aging systems, funding gaps

Indiana’s roads and bridges are holding up better than those in much of the country, but aging water systems, deteriorating dams and mounting pressure on the state’s electric grid have earned its overall infrastructure a D+ in a new assessment released Thursday.

The 2026 Report Card for Indiana’s Infrastructure, prepared by the American Society of Civil Engineers, found that years of transportation investments have helped preserve highways and bridges. But engineers warned that billions of dollars in needed repairs, increasingly severe weather and growing demand for electricity are threatening other critical systems.

The findings also raise concerns about how Indiana will pay for future improvements as federal infrastructure funding winds down and the state’s suspension of gasoline taxes creates additional uncertainty for road construction and maintenance.

The D+ grade falls below the C assigned to the nation’s infrastructure in 2025. The national assessment, however, covers 18 infrastructure categories, compared with seven evaluated in Indiana.

Engineers presented the findings Thursday at the Indiana Statehouse, joined by state transportation officials, as well as representatives from U.S. Sen. Todd Young’s office and Indiana American Water.

Story continues below.

The report examined seven areas: bridges, dams, drinking water, energy, roads, stormwater and wastewater.

Bridges earned the highest grade, a B-, followed by roads and drinking water at C-. Dams, energy and stormwater received D grades, while wastewater received a D+.

The analysis says D means poor and at risk.

“A ‘D+’ grade is a reminder of the importance of Indiana’s infrastructure and the successes in some areas and challenges other sectors face in the future,” said James Tradup, a report card co-chair. “This report card shows the positive impact investment has sparked in some sectors, while a reminder of where additional funds are needed to improve these systems every Hoosier depends on.”

The assessment is the first state-specific infrastructure report card published by the engineering group for Indiana. Engineers said they evaluated infrastructure conditions, capacity, funding, future needs, maintenance, public safety, resilience and innovation.

The report notes that while Indiana has benefited from more than $9 billion in federal infrastructure investments under the Infrastructure Investment and Jobs Act, those resources are temporary — and the engineers said sustained funding will be critical for preventing infrastructure from deteriorating.

Roads and bridges outperform, but funding questions remain

Transportation was among Indiana’s strongest areas in the report card, following years of state investment and efforts meant to maintain existing infrastructure before major repairs or replacements become necessary.

About 95% of Indiana’s more than 19,500 bridges are in fair or good condition, according to the report. State-owned bridges generally fare better than those maintained by counties, cities and towns.

Just 1% of state-owned bridges are rated poor, compared with 7% of bridges owned by other agencies.

Still, the report identified a substantial funding gap for locally maintained bridges.

Engineers estimated that local bridges need approximately $580 million annually to reach a state of good repair, but receive only about $67 million, leaving a $513 million annual shortfall.

Local roads face similar challenges. While the state’s major highways are generally in relatively good condition, nearly one-third of city, town and county roads are rated poor.

The report estimates that deferred roadway maintenance costs Indiana motorists $1.6 billion annually through additional vehicle repairs, fuel consumption and depreciation.

Funding is another concern.

The engineers warned that the ongoing suspension of Indiana’s gasoline taxes threatens a major revenue source for transportation improvements at a time when aging infrastructure already requires significant investment.

Indiana Secretary of Transportation and Infrastructure Matthew Ubelhor, who spoke at Thursday’s announcement on behalf of Gov. Mike Braun, said the extended suspension is expected to create a roughly $1.1 billion funding shortfall.

He said the administration intends to use available reserves to keep planned transportation work moving, including projects and maintenance scheduled for fiscal year 2027. Lawmakers will have to make that happen, though.

Ubelhor said no projects have been removed from the state’s construction schedule because of the funding uncertainty.

“We are not taking one project off,” Ubelhor said, emphasizing that Braun has insisted the state’s planned construction and maintenance work continue despite the revenue losses.

He also acknowledged that Indiana will need to identify a sustainable source of transportation revenue in the longer term, particularly as fuel efficiency improves and more electric vehicles enter the market.

“We need to look at that yesterday,” Ubelhor said of finding alternatives to the gasoline tax, which he indicated will become a less dependable source of revenue as vehicle technology changes.

The administration is examining possible alternatives, including tolling, although Ubelhor said questions remain about the potential approach and federal approvals.

He said the state is still awaiting a federal waiver decision related to a proposed I-70 reconstruction and rehabilitation program.

The report’s recommendations include expanding programs such as Community Crossings, providing local governments with additional revenue options and establishing more predictable long-term transportation funding.

Billions needed for drinking water, sewer systems

Some of Indiana’s largest infrastructure challenges are underground.

The report estimates that Indiana needs more than $8 billion in drinking water improvements and more than $10 billion for wastewater infrastructure.

Those needs include replacing aging water mains, removing lead service lines, addressing emerging contaminants such as PFAS, upgrading treatment plants and repairing deteriorating sewer systems.

Much of the funding for drinking water systems comes from customers’ utility bills, which must also cover daily operations. That leaves utilities facing difficult decisions about how to finance major improvements without making water service unaffordable.

Indiana’s wastewater systems face similar pressure.

Americans’ water bills are growing faster than groceries, overall inflation

More than 4 million Hoosiers rely on municipal wastewater systems, many of which are approaching the end of their intended service lives.

In 2024, communities sought more than $2 billion in wastewater funding, but only about $300 million was available statewide, according to the engineers’ assessment.

Stormwater infrastructure also faces growing challenges as heavy rainfall overwhelms drainage systems built decades ago.

The report estimates $531 million in stormwater infrastructure needs, with available funding covering only a small share.

Engineers recommended expanding state revolving loan programs, pursuing additional federal grants, encouraging partnerships among utilities and investing in flood-management improvements.

Matthew Hobbs, senior director of engineering for Indiana American Water, said Thursday that the utility plans to invest more than $1 billion in water and wastewater infrastructure across Indiana over the next five years.

The company serves approximately 1.5 million Hoosiers in more than 75 communities.

“Water infrastructure is fundamental to public health, fire protection, economic development and quality of life,” Hobbs said. “Maintaining that infrastructure requires consistent, long-term investment — not simply responding when something breaks.”

Hobbs pointed to a new $60 million water treatment plant in Seymour, expected to enter service this month, as an example of the investments underway.

He emphasized that replacing aging infrastructure before it fails can help prevent emergencies and reduce long-term costs.

“Proactive investment is also more efficient than waiting for infrastructure [to] fail,” Hobbs said, adding that replacing aging equipment and pipelines before emergencies occur can reduce service disruptions and costly repairs.

But he also said affordability must remain central to decisions about future upgrades.

“Infrastructure investments and affordability cannot be viewed as competing priorities,” Hobbs said. “We have to do both.”

Data centers add pressure to Indiana’s electric grid

Indiana’s energy infrastructure earned a D. Engineers noted increased electricity demand rises, aging coal-fired power plants near retirement and higher utility bills for Hoosiers. They warned that the state’s power grid will need significant upgrades to keep pace with growing demand while maintaining reliable service.

One of the biggest concerns is the growth of data centers.

The report projects that data centers could account for approximately 41% of Indiana’s electricity consumption by 2030, dramatically increasing demand on a grid already facing major changes.

At the same time, coal-fired power plants are approaching retirement, requiring utilities to replace generation capacity while maintaining reliable service.

The engineers also pointed to growing electricity costs for households.

Tradup said the projected growth of data centers is a major driver of future electricity demand, alongside the retirement of existing power plants and rising costs for customers.

Residential energy costs increased by more than $28 per month between 2024 and 2025, according to the report, prompting an investigation by the Indiana Utility Regulatory Commission.

Severe storms present additional risks to transmission and distribution systems, potentially leaving homes and businesses without power.

Engineers recommended investing in transmission infrastructure, modernizing the electric grid, expanding energy storage and diversifying power generation sources.

Jessica Eichhorst, with ASCE Indiana, said growing demand from data centers, industrial development and electrification will require investments in transmission infrastructure and grid modernization.

She also emphasized the need to diversify electricity generation and improve the system’s ability to withstand disruptions.

The report further outlined workforce shortages as a concern across infrastructure sectors, with retirements, competition for skilled workers and limited training pipelines making it harder to maintain and operate increasingly complex systems.

Aging dams raise safety concerns

Indiana’s dams were another area of concern, earning a D.

The state has 1,641 regulated dams, nearly two-thirds of which are privately owned.

Of those, 278 are classified as high-hazard dams, meaning their failure could result in loss of life or significant property damage. The designation reflects the potential consequences of a failure, not necessarily a dam’s current condition.

Only 55% of Indiana’s high-hazard dams have emergency action plans, compared with a national rate of 83%, according to the report.

State-owned dams also have a maintenance backlog exceeding $80 million.

The engineers warned that many dams are approaching or have exceeded their original design lives, while private owners often lack access to financial assistance for expensive repairs.

Indiana does not have a dedicated loan or grant program to help rehabilitate privately owned dams, according to the assessment.

The report recommends expanding rehabilitation funding, increasing inspections and prioritizing structures that present the greatest potential risks to public safety.

Engineers call for long-term planning

Beyond individual infrastructure categories, the report emphasizes that Indiana’s challenges can’t be addressed just with short-term spending.

Its six broad recommendations include:

• more dedicated local transportation funding;
• faster modernization of water and wastewater systems;
• stronger flood protection;
• electric grid improvements;
• dam rehabilitation; and
• more coordinated infrastructure planning.

The engineers also urged policymakers to account for changing weather patterns and future demand when designing projects, rather than relying on conditions that existed when much of the state’s infrastructure was originally built.

Even so, the funding question extends beyond Indiana.

The federal Infrastructure Investment and Jobs Act provided billions of dollars for projects across the state, but its authorization expired Sept. 30. Congress has not yet approved a comparable long-term replacement.

ASCE representatives said Thursday that they plan to take the report’s findings to Washington in March 2027 as federal lawmakers consider future infrastructure legislation.

Jennifer Sharkey, an Indiana ASCE leader and report card co-chair, said the assessment is intended to give policymakers a clearer picture of where investments have worked and where additional attention is needed. She urged state leaders to consider the findings when making decisions about future infrastructure spending, particularly as communities confront growth and increasingly severe weather.

“The future of our state relies on our ability to maintain and improve upon the current conditions of our infrastructure, while also maintaining focus on that growth for our state and for our communities,” Sharkey said. “These systems, they drive economic growth, they create jobs, they improve our public health, and they also protect us from environmental threats.”