Legislature, DOT set flexible-transportation fund rules; DOT outlines distribution, timeline and three added projects

The Legislative Budget Section heard a presentation from the North Dakota Department of Transportation on how the legislature’s changes to transportation funding will be implemented, including the flexible transportation fund, set‑aside distributions and project selection process.

The budget changes approved by the 69th Legislative Assembly direct several new streams of money into transportation: $287,100,000 from SIF to DOT, a legacy‑earnings share (about $175,200,000 to DOT after bond payments), and a flexible transportation fund that includes a 25% set‑aside of motor vehicle excise taxes for non‑oil producing counties and townships. DOT staff told the committee the 2325 biennium flexible fund totaled about $222,500,000 and that the set‑aside produced roughly $43,000,000 in requests; DOT awarded 44 projects from that set‑aside and recently added three more projects to reach the 25% statutory threshold.

Ron Henke, director of the Department of Transportation, described how the 25% set‑aside was split and scored. He said DOT used a committee of local and state partners — including county, city, township and economic development representatives — to score applications. Townships received a guaranteed 10% of the set‑aside, with the remaining 90% competitive among counties, because DOT staff found township applications were often less complete than county applications. Henke told the panel the department reimburses local sponsors on a pay‑for‑cost basis after they submit bills and that DOT retains separate project codes so monies and spending for the 2325 projects can be tracked apart from 2527 projects.

Henke also described the department’s partner allocation (the grant portion open to cities, counties and townships) and said DOT selected 23 partnering projects for roughly another $44,000,000 and had spent about $88,000,000 of the program to date. Because bids on some projects came in lower than expected, DOT picked the next projects on the list to make sure statutory set‑aside percentages were met. The three projects added in the last three weeks were a bridge replacement in Trail County, a stream crossing structure in Dickey County and grading and graveling on a county major collector in Towner County.

DOT staff explained the 2527 biennium priorities and changes: separate grant pools for non‑oil townships ($31,100,000) and non‑oil counties and cities ($44,800,000), a new $40,000,000 local bridge grant program and formula distributions that the tax commissioner or state treasurer will administer. DOT noted additional statutory criteria apply to township eligibility (for example, organized townships must have a mill levy at or above 18 mills and a general‑fund balance under $100,000 to receive priority in some distributions). Henke said DOT will use existing bridge inspection scores to prioritize bridge grant funding and, where counties own multiple qualifying bridges, will work with counties to pick the first priorities.

On discretionary funds, DOT reported it will receive $48,300,000 of flexible fund dollars that come directly to the agency and can be used broadly for transportation needs — Henke said DOT expects to use part of that as grant match for a rail crossing project in Grand Forks and to hold the remainder to match other federal grants or to respond to emergency needs. Henke told the committee, “That 48,300,000 will be flex fund dollars so we can use it for whatever basically is transportation related.”

DOT described the 2527 application and awarding timeline: applications to open in early July, webinars in mid‑late July, application close in September, scoring through fall, selection and agreements by mid‑December, with construction and reimbursements expected through 2026–27. Staff said they will attempt to allocate roughly 50% of program dollars the first year and the rest the second year to keep steady workload for contractors. DOT plans to reuse the same application and scoring list for the prairie‑dog fund and flex fund to reduce applicant burden.

Committee members pressed DOT about program administration and contingencies. Henke confirmed DOT intends to award projects based on the published scoring criteria and that the 48.3 million discretionary pot provides the only readily available source for emergency or off‑cycle needs. He also warned the percentages written into statute leave little flexibility if project bids change; he said DOT will “do our best to get to 19.5%” distribution targets but may face tough choices if bid prices vary.

The committee asked for and DOT agreed to provide a final report for the 2325 flex fund in July showing all selected projects, expenditures and remaining work.

Less critical details: DOT said construction bidding competitiveness remains strong and that many projects award below engineer estimates; the department plans to post project maps and application materials online and to provide periodic reports to the budget section.