There's extensive legal jurisprudence saying otherwise, including in the specific case of interstate highway funding. (As pointed out elsewhere in the comments; https://en.wikipedia.org/wiki/National_Minimum_Drinking_Age_... / https://en.wikipedia.org/wiki/South_Dakota_v._Dole)

I don’t really see how “I’ll give you money to build roads as long as you don’t put silly signs on those roads” counts as extortion.