NDOT budget hearing focuses on Highway 85 match, flexible transportation fund and grant pipeline

At a hearing of the Senate Appropriations - Government Operations Division, North Dakota Department of Transportation Director Ron Hanke outlined provisions of Senate Bill 2012 and the agency's top funding priorities, including a federal grant for Highway 85 that requires a state match and continued administration of the flexible transportation fund.

The discussion mattered because the Highway 85 project and the $222,500,000 flexible transportation fund influence which local and county roads can be improved and how the DOT leverages federal discretionary awards. "So, mister chair, we're here to talk about senate bill 2012, which is the Department of Transportation's appropriations bill," Director Ron Hanke said in opening remarks.

Hanke told the committee the DOT was awarded a $55,000,000 federal grant for a segment of Highway 85 but that the award carries a 50% match requirement. "His executive did include match money for that," Hanke said referring to the previous governor's budget; he added the department was still coordinating with Governor Armstrong on any updated match proposals. The department is designing the corridor, planning right-of-way acquisition and coordinating utility relocation before construction can proceed.

Hanke reviewed the flexible transportation fund created by state law and funded in recent sessions. The fund totals $222,500,000 and—unlike the state’s traditional highway program—allows for spending on roads off the state highway system; Hanke said the DOT used criteria from statute to allocate awards and that the program produced far more applications than dollars. The department awarded $87,000,000 to 66 applicants from about $432,000,000 in requests, he said.

Committee members asked whether previously proposed one-time state dollars (including roughly $300,000,000 referenced by a senator as earlier executive proposals) related to the match. Hanke answered that proposals varied by governor and that the DOT would present finalized numbers after discussions with the governor's office. He cautioned that federally awarded grant money can arrive months after selection because the federal contract must be executed before reimbursement flows.

The DOT also described other large discretionary and formula awards the agency pursued or received, and noted the remaining uncertainty tied to federal continuing resolutions and to the governor's budget. Hanke said the department would provide more precise funding estimates after final discussions with the executive branch.

The hearing included technical questions from senators about project sequencing, utility claims on construction north of Watford City and the DOT's approach to mitigating arbitration and court costs tied to accelerated construction. Hanke said the department is sequencing design, right-of-way and utility moves to reduce claims and speed contractor arrival once funds are available.

Looking ahead, Hanke told the committee the DOT's work on Highway 85 and other corridor improvements depends on matching state dollars, final gubernatorial budget proposals, and timely federal contracting. The committee did not take a formal vote on SB2012 during the hearing.