Lawmakers debate 3-cent gas tax increase, hike in EV registration fee
A sticker opposing a possible 3-cent increase to North Dakota's gas tax is displayed on a Bismarck gas pump on March 24, 2025. (Michael Achterling/North Dakota Monitor)
North Dakota lawmakers are weighing the first increase to the gas tax in 20 years and an increased electric vehicle fee, with the new tax revenue earmarked for improving local roads.
House Bill 1382 proposes to raise the motor fuels tax, including gasoline and diesel, by 3 cents per gallon to 26 cents. The tax was last increased in 2005.
Supporters say that even with the increase, the fuel tax would still be lower than neighboring Minnesota, which charges 32 cents per gallon, South Dakota, which charges 28 cents, and Montana, which charges 33 cents.
The bill also would raise the vehicle registration fees for electric vehicles from $120 to $150 per vehicle, plug-in hybrids from $50 to $60 and electric motorcycle registration fees from $20 to $25. The registration fees were implemented in 2019.
The legislation, sponsored by Rep. Jared Hagert, R-Emerado, would dedicate the estimated $42 million in biennial revenue raised from the tax to a county, city and township road fund.
'The purpose is to create that stable, reliable funding mechanism for our core roads and foundational roads for townships, cities and counties,' Hagert said during a hearing Monday before the Senate Finance and Taxation Committee.
He said he's also proposing an amendment to include all townships, cities and counties in the road fund. An original version of the bill included only non-oil-producing counties.
Russ Hanson, executive vice president of Associated General Contractors of North Dakota, testified in support of the bill and said the tax increase should really be referred to as a user fee.
'You pay it according to how much you use, so the inherent fairness of it is the main reason for our support,' Hanson said.
Mike Rud, president of the North Dakota Petroleum Marketers and Retailers Association, said retailers and convenience store owners are opposed to the tax increase.
'This is a $42 million consumer tax on the driving public. It's that simple,' Rud said.
Others testifying in opposition said people living in small towns who commute to larger population centers for work would be adversely affected and bear the brunt of the increase.
Don Larson, a lobbyist for General Motors, said the company opposes the section of the bill that increases the electric vehicle registration fees because those fees are already disproportionate with the taxes collected from gas-powered vehicles.
He said based on fuel efficiency standards and the average miles driven by North Dakota residents, the average driver buys nearly 340 gallons of gas per year. Based on the current gas tax, he said the gas tax revenue per driver is about $78. With the proposed increase, each driver would pay an average of about $88 per year on gasoline.
'We're already paying more for electric vehicles than a traditional gasoline-powered vehicle would pay for those road fees,' Larson said.
In Minnesota, the electric vehicle registration fee is $75 and, in South Dakota, the registration fee is $50.
The bill passed the House in February on a 58-35 vote.
The committee did not take immediate action Monday.
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