School bus drivers in California and Hawaii have the most potholes with 25 percent of interstate pavement in poor condition. Alaska and Rhode Island have the bumpiest rural pavement, and Rhode Island has the nation's worst bridges. Those are some of the results of the 19th Annual Highway Report released by the Reason Foundation.

The silver lining is the report found that state highway conditions, both urban and rural, are the smoothest they've been since 1993.

Still, the report notes, improvement has come at a cost. Disbursements for state-administered highways increased about 8.4 percent, and administrative costs surged 36 percent over 2007. But capital and bridge expenditures rose just 0.5 percent, and maintenance expenditures actually declined about 3.8 percent.

Reason Foundation reported that automobile travel fell in 2008 about 3.5 percent from 2007 levels. The result was reducing congestion and fatality rates and slowing road deterioration. Federal stimulus funds for highway infrastructure improvement that were released in late 2008 and have continued to funnel to states over the past two years contributed an additional 22 percent to resources. These result has been that the states have "some breathing room" in addressing long-delayed construction work.

But while this led to better overall system performance, the report cautioned that the recession also slowed federal and state fuel tax revenues, perhaps making future repairs more difficult. This makes state expenditures that much more important to understand.

For example, New Jersey spends $1.1 million per mile on state roads, "dramatically more than every other state," the report notes. Still, that spending helped New Jersey move to 45th place from the last position in the overall rankings. In comparison, the second biggest spender on roads is the state, Florida at $671,000 per mile, came in 39th place in the overall rankings. South Carolina had the lowest expenses, spending just $34,000 per mile. Yet, it was ranked as having the sixth-best highway infrastructure.

Overall, North Dakota, Montana and Kansas were rated as having the most cost-effective state highway systems.

Other findings included data that shows nearly 24 percent of the nation's bridges were rated as structurally deficient or "functionally obsolete" in 2008, the lowest percentage since the report was first published in 1984. And traffic fatalities have steadily fallen to the lowest levels since the 1960s. Massachusetts has the safest roads with just 0.67 fatalities per 100 million miles driven. Montana and Louisiana, meanwhile, have the highest fatality rates, at 2.12 and 2.02 fatalities per million miles driven.