State transportation agencies distribute funding to eligible municipalities to maintain local roads in a safe condition based on their permanent population and street mileage. However, some municipalities experience an exceedingly high seasonal population that is unaccounted for and thus, they are not receiving equitable funding. To better understand seasonal population and mitigate its impact, this paper evaluates equity and affordability in funding allocation, explores how to estimate seasonal population, suggests a method to improve the current allocation, and identifies practical strategies to reduce disproportionate funding distribution. Three funding allocation strategies were developed and a need-based funding allocation approach was identified to be an equitable solution to help municipalities improve local street conditions based on their needs while subject to constraints on funding availability. This approach allows municipalities to address seasonal population increases without negatively impacting funds for municipalities that do not experience fluctuations in their population.