Murphy’s Law 2020 #11 Taxation

September 10, 2020

The most relevant part of Interim Taxation’s last interim meeting for Agriculture was about transportation. Several people testified on this topic including NDDOT Director Bill Panos and other DOT staff as well as Tim Horner and others from the Upper Great Plains Transportation Institute. NDDOT testified that we will suffer a dip in revenue from COVID-19 of around $21 million. The big picture for needed revenue over the next 10 years is around $2.18 billion to maintain what we have now. That figure is about $200 million per year over what we collect now, so for the Taxation committee the question is how to help with that shortfall. Our gas tax has not been increased since 2005 and we rank 40th in that statistic at 23 cents per gallon. A one penny increase results in about a $7.4 million increase in revenue. One thing to note is that our state has the best Federal match ratio of all states (save Wyoming) with an 80-20 match. So if we could raise our gas tax around 6 cents we could leverage it with the Fed match to cover the annual shortfall. We all know that we are only as strong as our weakest link and in transportation terms for North Dakota, that is bridges. We rank 49th in the nation for bridge condition according to NDDOT Director Panos, so the need is there. All of you producers know what happens when a bridge you have always used is suddenly out of commission, so I thought you might like to know how big the problem is. There are no bills formally coming out of this committee, but I would not be surprised if some members are thinking about sponsoring some sort of gas tax hike. It is often discussed but the time might be right for investing in roads and bridges to leverage whatever Federal dollars may be left after COVID-19.