North Dakota revamps highway funding and gas tax distribution for infrastructure projects

The North Dakota House Appropriations Committee convened on April 21, 2025, to discuss significant funding allocations and legislative changes impacting the state's infrastructure and financial management. Key topics included adjustments to oil county classifications, highway funding, gas tax distribution, and legacy earnings.

One of the primary discussions centered on the redefinition of oil-producing counties. The threshold for classification has been raised from 5 million barrels to 10 million barrels, resulting in a reduction of qualifying counties from nine to four: Williams, McKenzie, Dunn, and Montreal. This change aims to better reflect current production levels and adjust funding formulas accordingly, impacting the distribution of $42.5 million to both non-oil and oil counties.

The committee also addressed the bonding for Highway 85, which has been a topic of ongoing concern. A federal grant of $55 million has been secured for 13 miles of the highway, but an additional 6 miles, which do not qualify for federal funding, will require state funding. The total cost for completing the entire 19-mile stretch is estimated at $155 million, highlighting the need for comprehensive funding solutions to ensure safety and connectivity.

In terms of gas tax distribution, the committee proposed a new allocation structure. The Department of Transportation (DOT) will receive 60% of the gas tax revenue, while townships will see an increase from 2.7% to 3.4%. This restructuring is designed to enhance funding for road projects and improve transportation infrastructure across the state.

Another significant change discussed was the increase in the legacy earnings fund distribution from 7% to 8%. This adjustment is projected to generate approximately $688 million for the current biennium, with $146 million earmarked for the DOT and $437 million for property tax relief. This move aims to bolster financial resources for essential services while providing tax relief to residents.

The meeting also touched on the establishment of a new flex fund, replacing the previous prairie dog fund, to better accommodate fluctuating oil prices and ensure adequate funding for various state needs. The new fund will allocate $370 million for flexible funding, which could support public services and infrastructure projects.

Lastly, the committee discussed provisions for the Department of Transportation to utilize funds for workplace appliances, ensuring that employees have access to basic amenities while working in challenging conditions.

Overall, the meeting underscored the North Dakota legislature's commitment to addressing infrastructure needs and financial management in response to changing economic conditions, particularly in the oil sector. The proposed changes will be crucial in shaping the state's fiscal landscape and ensuring the safety and efficiency of its transportation systems.