Item B: Road Fund Status - Laserfiche WebLink

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The second major source of revenue for this fund is the County/City Road Partnership Agreement that once contributed $2.5 million per year and more recently has been providing about $1.2 million in annual street maintenance funding to Eugene. The current agreement expires in FY07, and the Board of County Commissioners recently adopted a five-year Capital Improvement Plan which discontinues the partnership payments to Lane County cities after expiration of the current agreement. Unless the Board reconsiders this action and approves continuation of the historic partnership payments, Eugene would lose over $1 million in annual street maintenance funding beginning in FY08. The City began receiving a third significant source of road maintenance revenue funding in mid-FY04 in the form of the OTIA III maintenance monies allocation which is received directly from the State. This revenue source is expected to generate $850,000 - $900,000 annually through the six-year forecast period. There have also been active efforts in this fund and in the Public Works Department to identify and implement opportunities for increased operational efficiencies and cost containment. ? At the request of the Citizen Subcommittee, a respected independent consultant reviewed how efficiently Eugene’s Road Fund dollars were being spent. His 2001 report suggested several minor modifications, which were subsequently implemented, but generally found that the City’s Road Fund operations are efficient when compared to other cities. ? The Public Works Department as a whole went through a rigorous self-assessment process in 2004, resulting in accreditation and recognition as one of the few public works agencies in the nation conforming to best management practices of the American Public Works Association. ? In FY04, $850,000 in ongoing expenditure and service reductions were achieved in the Road Fund, primarily through the elimination of the in-house street overlay program and the organizational restructuring and consolidation of Public Works divisions and work crews, resulting in the elimination of supervisory positions. These cost reductions were implemented as a partial remedy for stabilizing the O&M activities for the city’s road system, with the hope that additional revenue sources for O&M activities would eventually be realized as an outcome of the council’s ongoing work with transportation funding. However, insufficient additional resources have been identified to date, while at the same time the fund continues to experience rapid growth in operating costs (14% health benefits increase and 38% PERS contribution rate increase for the FY06 budget). In FY06, the Road Fund is expected to generate a $586,000 operating deficit in the course of providing basic O&M activities such as street lighting, pothole patching, street tree maintenance, signing and striping and more. Based on current projections, that annual deficit would grow to nearly $1 million in FY07 and would stretch to an ongoing gap in excess of $2 million per year by FY08. The attached graph (Attachment A, Exhibit 1) illustrates what is projected for the fund balance in the absence of either a) reductions or eliminations in current programs or b) the identification of alternate funding sources for the continuation of these activities. A second exhibit (Exhibit 2) illustrates what would happen to the fund forecast if action is taken to close the projected $2 million future annual operating deficit with a set of solutions implemented in FY07 and FY08. L:\CMO\2005 Council Agendas\M050926\S050926B.doc