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Economic slowdown means road project savings but also less gas tax revenue for N.D.

BISMARCK - The North Dakota Department of Transportation has saved about $80 million through lower bids for road projects this year, but the state's economic slowdown also has produced lower gas tax revenues that demand a "very serious discussion...

A semi truck and pickup truck meet on U.S. Highway 85 while going through the small town of Fairfield about 16 miles north of Interstate 94 on Saturday morning. (Dustin Monke / The Dickinson Press)
A semi truck and pickup truck meet on U.S. Highway 85 while going through the small town of Fairfield about 16 miles north of Interstate 94 on Saturday morning. (Dustin Monke / The Dickinson Press)

BISMARCK – The North Dakota Department of Transportation has saved about $80 million through lower bids for road projects this year, but the state’s economic slowdown also has produced lower gas tax revenues that demand a “very serious discussion” about how to match federal funding, the agency’s director said Thursday.  

The department advertised an estimated $680 million worth of work and ended up with projects totaling about $580 million, which Director Grant Levi attributed to a competitive bidding environment and lower costs for fuel, asphalt and other construction materials.

“We had a savings of about 18 percent, which is phenomenal,” he told the Legislature’s interim Transportation Committee.

About $22 million also was cut from the DOT’s road budget in February to help balance a $1.07 billion revenue shortfall.

Levi said the savings has allowed the DOT to do more – about 180 projects are under way – and even bid projects this fall for next spring.

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But a decline in traffic has taken a bite out of motor fuels tax revenues. The DOT estimated about 480,000 vehicles were on the road daily in June, down about 20,000 from 2014 and 2015, while truck traffic this year has been closer to 2011 levels.

Levi said the country overall has experienced a decline in gas tax revenues because of greater fuel efficiency and fewer miles traveled.

“There’s just less usage that’s occurring,” he said.

North Dakota’s tax on both gasoline and diesel is 23 cents per gallon. Each penny of the tax generated $7.6 million in the fiscal year that just ended June 30 – down from $8.7 million the previous year – and is projected to drop to $7.4 million per year in the 2017-19 budget cycle.

Revenues were cushioned by increased traffic that accompanied the oil boom, but now that it’s cooled off, the state is in a similar situation. Levi noted surrounding states have raised gas taxes to compensate. Minnesota’s gasoline tax is 28.6 cents a gallon, Montana’s is 27.75 cents a gallon and South Dakota approved a hike last year to 30 cents a gallon.

Lawmakers asked when North Dakota’s gas tax was last increased and whether they’ll need to take a hard look at it. Levi said the state last raised the tax in 2005 in order to match federal funding, and vehicle registration fees also haven’t changed since 2007.

Asked if the DOT would push for a gas tax increase during next year’s session, Levi told reporters “those are policy discussions that need to occur” among lawmakers.

“It’s going to have to be a very serious discussion” about how to match federal funds, he told the committee.

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