NDDOT Exploring Fee Increases

The North Dakota Department of Transportation (NDDOT) announced it will be proposing an increase in driver’s license and motor vehicle fees. Deputy Director Mark Nelson shared with members of the Interim Government Finance committee that the NDDOT has been directed by Governor Doug Burgum to move forward on a proposal for the 2019 Legislative Session.

Fees for driver’s licenses and vehicle registration have not been changed for numerous years. The driver’s license fees are $15 for 6 years, a fee that has stayed static since 1987. The registration fees were last adjusted in 2005. The fees are set by legislative approval. Adjustments to the fees have been discussed in past years, however, Nelson says prior Executive Branches never felt the time was right to make an increase.

The driver’s license and registration fees at their current level are costing the state $2.45 million a year. The NDDOT presented examples of how the fees can be adjusted to allow for the fees to be revenue neutral. For example, a $26 increase for a Class D license (the most popular license) would cover the cost to break even. This would be a total cost of $41 every six years.  

The fees generated through driver’s license operations are deposited into the State Highway Fund; accordingly for every dollar of costs incurred in excess of revenues generated, there is one dollar less that is available to spend on transportation by NDDOT.

In addition, the costs to cover the Motor Vehicle Division are far greater than the revenue. The state is $11 million away from breaking even every year. To adjust the registration fees so that they are revenue neutral, a $10 increase would be necessary.

Every dollar of cost incurred by Motor Vehicle is one dollar that does not go into the Highway Tax Distribution Fund and is therefore not available to fund transportation. The chart shows Highway Distribution Fund Allocations with the numbers in red illustrating how each area loses funding to cover costs totaling $11 million per year next biennium.

As you can see by the chart, if a proposal to adjust fees so that the costs for motor vehicle revenue neutral, counties could see an increase of $2.4 million in transportation funds.