Appropriations panel debates using motor vehicle excise tax to fund township roads and bridges

A legislator leading the Appropriations - Government Operations Division laid out a plan to shift part of the motor vehicle excise tax into a dedicated fund to provide more predictable maintenance money for township roads and bridges, and asked the Department of Transportation how that money could be distributed and managed.

The proposal described using roughly 25% of the motor vehicle excise tax — the legislator estimated that would generate about $80 million to $100 million for township programs — rather than taking one-time legacy earnings fund dollars. The legislator said the motor vehicle excise tax would be appropriated to the Department of Transportation and could be split with half for roads and half for bridges, or otherwise allocated based on a distribution method the committee chooses.

Why it matters: committee members and DOT officials said predictable, ongoing funds would help townships shift from one-time project grants to sustainable maintenance, a significant issue for rural areas that struggle with graveling, culverts and water-related damage.

Ron Henke, director at the Department of Transportation, told the committee the DOT can implement whatever distribution formula the Legislature directs. “We just need to know how this body wants to distribute the dollars. If they tell us, 25% has to go to non oil producing counties and townships, we just we just work that on a sheet,” Henke said, adding the DOT can track and ensure money is spent for bridges or drainage structures if the Legislature specifies that intent.

Henke raised technical points the committee must consider: under current DOT practice a “bridge” is a structure 20 feet or greater; smaller drainage structures and low-water crossings don’t meet that definition and townships often seek funds for those smaller crossings. Henke recommended the committee clarify whether the set-aside should include “bridges and drainage structures” if the goal is to help smaller township crossings.

Committee members and DOT staff discussed alternatives for allocating funds. Options included:

- Distribution by certified road miles (the state treasurer currently uses certified road miles for some distributions). Scott Meske of the North Dakota Township Officers Association said certified miles vary widely across townships and recommended a formula based on those reported miles.

- Managed distribution by DOT through the flex fund model, with a scoring matrix and stakeholder reviewers (counties, cities, township association, Indian affairs and commerce) to prioritize corridor-level projects rather than isolated short stretches.

Senator Dwyer said the state’s best choice would be to have the DOT manage the funding “just like we did with the flex fund.” Henke described the flex fund process used previously: a multi‑stakeholder scoring panel evaluated applications and DOT funded projects down the ranked list until funds were exhausted; last session DOT also set aside a limited portion specifically for townships because township applications tended to be weaker than county applications.

Committee members pressed implementation details. Henke and deputy engineering director Matt Linderman noted the DOT already inspects and inventories bridges (20 feet and over) and could report condition and needs; the DOT also can work with water boards on upsizing culverts or coordinating drainage work, but statutory drainage and design standards (for example, designing for a minimum 25‑year event) affect what sizes must be installed and where water will be routed.

Members discussed interactions with other funding sources. The group noted a separate bill (Senator Thomas’s proposal) called for roughly $100 million for road and bridge grants split across direct grants and a new township road and bridge fund; Henke said that bill provided about $80 million in direct grants plus $20 million managed by DOT. Committee members also discussed a standalone proposal to add three cents to the gas tax for non-oil-producing counties and townships, with an estimate that one penny equals about $7 million per year.

Henke warned the committee about grant-match and project-implementation constraints: DOT has existing grant awards that require matching state funds, and if additional state dollars are not provided the DOT would need to reallocate flex funds or borrow (Henke discussed an option to borrow from the Bank of North Dakota) to meet current matching obligations.

Township representation: Scott Meske told the committee there are 1,464 organized townships and roughly 611 unorganized townships; certified road miles differ widely and are already reported annually to county auditors and the state treasurer. Meske recommended using certified road miles if the Legislature chooses a formula distribution so payments match the number of miles each township maintains.

Committee next steps: the legislator said staff will prepare amendment language and work with leadership and the DOT to determine whether funds are put through the state treasurer, distributed by DOT, or included in the budget. The committee did not take a formal vote on any bill during the meeting.

The committee adjourned after members agreed to continue refining allocation language and potential amendments in coming days.