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"Traffic generates revenue," Transportation Director Grant Levi told the Legislature's interim Transportation Committee. Agency data showed North Dakota traffic down 20,000 from 2014. Photo: Daniel R. Blume via Flickr.

North Dakota fuel tax revenue drops with economic slowdown

BISMARCK, N.D. (AP) — Fuel tax collections for North Dakota’s Transportation Department are tanking with fewer vehicles on the road due to the state’s economic slowdown, the agency’s director said Thursday.

North Dakota has a 23-cents-a-gallon tax on motor fuel, which has not been raised since 2005 and is a nickel less than the national average. Each penny of North Dakota’s tax raised $8.7 million for the state last year, and is expected to drop to $7.6 million this year, and $7.4 million for the 2017-2019 budget cycle, Levi said.

Agency data show the average daily traffic count in June was 480,000 vehicles, down almost 20,000 vehicles 2014.

“Traffic generates revenue,” Transportation Director Grant Levi told the Legislature’s interim Transportation Committee.

Levi said North Dakota is not alone in seeing decreased fuel tax revenue. He said people across the country are driving more fuel-efficient vehicles or simply driving less.

North Dakota’s economic slowdown is due largely to slumping oil prices, and declining drilling activity forced the agency in February to make up for a more than $69 million projected shortfall in fuel tax collections, motor vehicle registrations and other fees. It did so by not filling about 20 positions and closing five of the state’s 28 rest areas.

The Transportation Department is one of the state’s largest agencies. It has about 1,100 employees and a two-year budget of more than $2.8 billion, including federal aid.

The agency’s budget has more than quadrupled in the past decade mainly due to development in western North Dakota’s oil-producing region.

Agency data show there are 188 road projects under construction this year in North Dakota, up from 163 in 2015 and 205 in 2014.

Levi said lower fuel prices are helping stretch state dollars further toward road construction projects, and bids this year have come in at about $80 million under previous estimates.

“We’re seeing prices we haven’t seen for many, many, many years,” he said.


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