Reducing fuel consumption on roadway networks can have a huge impact on the nation's economy and environment. Existing ad-hoc transportation planning efforts that allocate limited funding on need-based criteria are insufficient for providing a significant reduction in fuel consumption. Therefore, there is an urgent need for new research to analyze the impact of planning effort on fuel consumption to support transportation's decision making. This paper presents the development of a new model for estimating fuel consumption in transportation networks under budget constraints by taking into consideration the effect of pavement deterioration on fuel consumption. The model is composed of three main modules to (1) estimate vehicle fuel consumption of transportation networks; (2) allocate limited funding to competing highway rehabilitation projects; and (3) evaluate the impact of pavement roughness and deterioration on fuel consumption. An application example is analyzed to evaluate the developed model and illustrate capabilities of the model. The application result demonstrates the significant impact of highway rehabilitation planning on fuel consumption on roadway networks. This study should prove useful to planners and decision makers in evaluating the impact of highway rehabilitation efforts on fuel consumption.