The NRMA says there is an alarming shortfall in spending on the state's local roads, with regional and rural areas hardest hit.

The organisation's annual Funding Local Roads report highlights a $1.96 billion shortfall in spending on basic maintenance, an increase of 13 per cent on the last year.

"Regional roads in particular figure highly in this report and we see that of the $ 1.96 billion in total, about $1.5 billion of that is on regional and rural roads." said the NRMA's regional director, Fiona Simson.

Ms Simson said more than 80 per cent of roads are maintained by local councils, with many struggling to fund the work.

According to the NRMA's audit the North Coast region tops the state with the highest infrastructure backlog of $430.7 million, which is down 11 per cent on 2014/2015.

The report noted some council areas are failing to keep pace with maintenance on "deteriorating sealed and unsealed roads networks" especially in the Riverina, Snowy Mountains and Far West.

"Wagga council's road infrastructure backlog rose from $28.7 million in 2014-15 to $297.34 million in 2015-16," the report noted.

Ms Simson said while the NSW Government had made a $500 million commitment for the Fixing Country Roads Program, it was now time for the State Government to pass on a greater percentage of the fuel excise levy to locals council including providing "low interest infrastructure and investment funds".

"Yes it is important to build huge strategic linkages such as light rail and some of our motorways as we are seeing now, but it is also important to focus on these local roads where we know that 75 per cent of our trauma occurs." Ms Simson said.

The report stated "the cost of road trauma on local council roads is estimated in the order of $5.3 billion".

In a statement to the ABC a spokesperson for NSW Roads Minister, Melinda Pavey, said the NSW Government has spent almost $900 million assisting local councils maintain their local roads over the past three years.

"This year's budget of $8.5 billion will help deliver a range of state-wide road programs, including a $4.8 billion investment in regional NSW," the spokesperson said.

"The statement added the Government had also set aside another $544 million for roads in regional New South Wales."