Amid COVID-19, millions of dollars aren’t flowing into South Dakota’s state highway fund

Capitol News Bureau

PIERRE, S.D. (KELO) — South Dakota’s highways and bridges can expect millions of dollars in project delays because of the coronavirus COVID-19.

State Transportation Secretary Darin Bergquist said revenues from motor-fuels taxes could be down 40 percent, because motorists aren’t driving.

He said people aren’t buying as many motor vehicles either. That will reduce state excise taxes charged on the sales.

Bergquist made his remarks during a teleconference meeting of the state Transportation Commission, a panel that approves projects and sets rules for South Dakota highways.

Traffic fell off in mid-March as COVID-19 began to pop up in South Dakota, he said. A comparison of traffic on state roadways during the first three weeks of April for this year and last year showed a 40 percent decline, he said, and less traffic means less from fuel taxes.

“We’re going to see some huge reductions in highway fund revenues,” he warned.

Bergquist said South Dakota’s state highway fund received on average about $15 million monthly from motor-fuel taxes. Applying the 40 percent reduction in traffic would mean about $6 million less per month for the fund.

South Dakota charges 28 cents per gallon on regular gasoline, 14 cents per gallon on ethyl alcohol and similar products, and a variety of rates per gallon on other types of fuels for motor vehicles.

National forecasts are the slowdown will last 12 to 18 months.

People aren’t buying many vehicles either during COVID-19, according to Bergquist.

“I expect that to be fairly significant too,” he said. South Dakota charges a 4 percent excise tax on vehicle purchases. The reduction could be $4 million per month for months to come, he said.

The state Department of Transportation is working on numbers every day, according to Bergquist: “Every state in the country is dealing with this same issue, one way or the other.”

Governor Kristi Noem and the Legislature are planning a special session at some point in June to make budget adjustments throughout state government because of COVID-19. She has repeatedly said South Dakota’s economy has been “dramatically” affected. State government’s new budget year starts July 1.

At the state Transportation Department, the current hope is that Congress could provide a $50 billion increase in federal highway funding to states and that could be used to match other federal funding, Bergquist said.

The impacts at the federal level won’t be felt until the next federal fiscal year starts October 1, he said.

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