Senate committee hears bill to dedicate motor vehicle excise tax to rural roads, create township sustainability fund

State Senator Terry Wanzek, sponsor of Senate Bill 2142, opened the Senate Transportation Committee hearing by calling for a dedicated, sustainable funding stream for rural roads and bridges.

"It is a big ask. I know it's a big ask, but there's a big need out there," Wanzek said, explaining the bill would move a larger share of the motor vehicle excise tax into transportation uses and create a new state‑administered township fund.

The bill would allocate 75% of motor vehicle excise tax revenue to the North Dakota Department of Transportation (NDDOT) Flexible Fund and the remaining 25% to a newly created Township Road and Bridge Sustainability Fund in the state treasury. Under the bill as presented, the treasury fund would be distributed to townships in non‑oil producing counties based on certified road miles; townships would need to be levying at the statutory maximum of 18 mills to qualify under the sponsor's draft.

Why it matters: witnesses told the committee rural roads are the first and last mile of North Dakota agriculture and energy production and said consistent funding is needed for safety and to keep commodities moving to market. "The first mile of that trip from the dirt of North Dakota's fields to the grocery store shelves and coolers is most likely on a township road," said Larry Severson, executive director of the North Dakota Township Officers Association.

Testimony and evidence

Several agricultural and township groups urged committee members to back the bill or to keep working on it. Testimony from the sponsor and multiple witnesses cited an Upper Great Plains Transportation Institute study the sponsor described as estimating roughly $12.35 billion in needs over 20 years for the state's road system, with about 56% attributable to unpaved road needs. Wanzek summarized the study's math to show an average need of roughly $27,253 per mile statewide and about $15,534 per mile for unpaved (township) roads for the current 24‑25 biennium figures.

Township leaders and rural residents emphasized scale and unpredictability of existing one‑time grants. "Township budgets ... can't keep up," said Todd Weber, NDTOA vice president, adding that the Upper Great Plains institute recommends applying 3 inches of gravel every five years at an estimated average cost of about $15,000 per mile. Tim Gaynert, a township clerk and retired grader operator, said ongoing, reliable funding is "critically important" because traffic and vehicle weights have increased dramatically.

County and city officials joined the support testimony while asking for inclusion or consideration of county needs as well. Jenny Dietzeman of the North Dakota Association of Counties said the association supports SB 2142 and asked the committee to consider funding to counties as well because counties and townships form a single, interdependent system.

Department of Transportation and certification process

Chad Oren, deputy director for planning at NDDOT, described the flex fund process the department used in its first biennial round: a statutorily required 25% set‑aside of the flex fund for non‑oil counties this biennium amounted to about $43 million; the DOT added a partner allocation of roughly $44 million and ultimately awarded about $87 million to 66 entities from more than 260 applications. He said the department developed application criteria, a scoring process, and a review committee that included townships, counties, cities, tribes and chambers.

State Treasurer Thomas Beadle, testifying neutrally, asked the committee to align any certification and distribution language with existing township certification processes already in law (township mileage certification flows county → state treasury) to avoid an additional annual paperwork burden for townships and the treasury.

Concerns and committee discussion

Committee members asked several clarifying questions. Senator Rummel asked about the bill's exclusion of oil counties; Wanzek said he would work with cosponsors to include borderline counties and adjust thresholds. Several senators acknowledged the scale of the statewide need and that appropriators will need to reconcile the proposal with general fund pressures and matching requirements.

Members also asked for current data on how many townships are already levying the statutory maximum (18 mills) and which townships have used the optional increases that require a vote; witnesses and county association staff said current consolidated levy reports can be requested from the tax commissioner's office but the data the township organizations had were not fully up to date.

No formal committee action was taken on SB 2142 during the hearing. Senators requested additional information and follow‑up materials from the sponsor, the Department of Transportation and the tax commissioner's office, including township levy reports and certification language options for the treasury distribution.

Ending

The committee left the bill at the hearing stage and asked the sponsor to continue discussions with counties, cities and legislative fiscal staff before any committee recommendation. Wanzek said he is open to amendments and would continue conversations to refine who is eligible and how distributions would be calculated.

Because it received extensive public testimony and multiple agency comments, the measure will return to the committee for further drafting and possible amendment before any formal vote.

Sources: testimony to the North Dakota Senate Transportation Committee (SB 2142 hearing); Upper Great Plains Transportation Institute study as cited by witnesses; NDDOT presentation of flex fund results.