Frozen credit markets, sky-high gasoline prices, and a rising federal budget deficit are hurting cash-strapped states as they confront increasing congestion on the nation's deteriorating roads and bridges.

States are desperate to tap every possible source of funding - tolls on leased roads, sharp increases in taxes on motor fuels, and partnering with the private sector - to finance the building and repairing of roads and bridges.

Experts see sharp increases in states partnering with the private sector for funding. Some analysts say highway funding may be the next "sweet spot" for institutional investors as the burst housing bubble leaves firms looking for ways to put their money to work.

In 2006, the Goldman Sachs Group Inc. launched a $3 billion fund for infrastructure privatization, while Morgan Stanley and the Carlyle Group have each put together billion-dollar infrastructure funds. Macquarie Infrastructure Company Trust, which launched an initial public offering in December 2004, attracted more than half a billion dollars in funds for privatized infrastructure.

That is just one piece of the puzzle. On the West Coast, California lawmakers want to raise the state's gasoline tax to 28 cents a gallon, a 52 percent increase, to finance road repairs. Republican Gov. Arnold Schwarzenegger opposes the move as do many other governors and state legislators.

Funding shortages may force politicians to take the unpopular step of raising fuel taxes, because they pay a large share of the cost of highway maintenance and financing.

The federal motor-fuel tax has held steady at 18.4 cents per gallon since 1993 and would be 27 cents if it had kept pace with inflation. States are in a similar boat.

"It's a very difficult political sell to raise the gas tax," said Matt Sundeen, a transportation analyst for the National Conference of State Legislatures.

The timing adds to the challenge Gasoline prices have hit record highs in recent months. Also, "people don't trust the governments would use motor-fuel taxes wisely," said Joe Schweiterman, a transportation expert at DePaul University in Chicago.

The infrastructure-funding shortage is so severe that some states have been forced to close roads temporarily, or are contemplating such action, because the states do not have or cannot borrow the funds to keep roads open while they are being fixed.

In New Jersey, Gov. Corzine has proposed increasing highway tolls 50 percent every four years until 2022 to slash the state's $32 billion debt in half and raise money for transportation work.

In Harrisburg, plans by Gov. Rendell to lease the Pennsylvania Turnpike to a private company means there would be money coming in to fix roads, repair bridges, and subsidize mass transit.

There is, however, a big downside: The company that would lease the turnpike likely would implement "aggressive toll increases" for drivers, according to a recent House Democratic study.

Meanwhile, escalating prices of raw materials, such as steel and concrete, are exacerbating the problem. The average cost of materials used for highway construction, including asphalt, concrete, steel, lumber and diesel, has risen 46 percent from January 2004 to January 2008, according to TRIP, a Washington-based group comprising insurance companies, equipment manufacturers, construction firms, and labor unions that depend on highway construction for jobs.

Drivers, taxpayers and lawmakers in Texas, New York, Massachusetts and Minnesota all face multibillion-dollar gaps in infrastructure-funding needs.

"The states have been asked to pay more of their way on this, which is part of the problem," said Phineas Baxandall, an analyst for U.S. PIRG. Other experts agree.

The National Surface Transportation Policy and Revenue Commission estimates $225 billion a year will be needed through 2058 to upgrade the nation's transportation system. Meanwhile, the federal Highway Trust Fund, which is used to pay for maintenance of U.S. highways, is expected to have a $4.3 billion deficit in fiscal 2009, according to the commission's January report.

"Motorists," said DePaul's Schweiterman, "have to accept that road use will have a price like everything else, especially in congested areas."