Item A: Road Fund Update - Laserfiche WebLink

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Status of the Council Goal and Transportation Initiative In the subcommittee’s Summary of Recommended Funding Solutions, two new revenue options were specifically identified for funding street O&M—the Street/Bike Path Lighting Fee and a portion of the proceeds from a three-cent increase in the City’s motor vehicle fuel tax. However, the November 2007, election determined that the council would likely be unable to implement the increase in the local gas tax, as recommended by the subcommittee. A significant challenge in the implementation of a street/bike path lighting fee has been finding an affordable, efficient collection mechanism for this new street fee. Any new revenue sources proposed for an interim funding strategy for street operations and maintenance will need to address the legal and operational barriers encountered by these two efforts. Financial and/or Resource Considerations Revenue Trends and Financial Forecast The Road Fund accounts for the operations and maintenance (O&M) activities of the City’s street system. Resources are provided from Eugene’s share of State Highway Trust Fund allocations, direct allocations of state Oregon Transportation Improvement Act (OTIA III) monies, and other small miscellaneous grants, fees and permits. Following are some of the trends seen in those revenues: ? State Highway Trust Fund – This is where the City gets the majority of its Road Fund revenue, which comes from Oregon motor vehicle fuel taxes and state motor vehicle registration fees. Five years ago, the City received over $6.1 million from this trust fund; next year we expect to receive only $5.6 million, which represents a nearly 8% decrease over that period. ? Lane County/City Road Partnership Agreement - Historically, this was the second major source of revenue for the Road Fund and once contributed $2.5 million per year and, as recently as FY07, was providing over $1.2 million in annual street operations funding to Eugene. That agreement and the partnership payments were discontinued beginning in FY08 due to the County’s own challenges in maintaining adequate funding for County-maintained roads and bridges, resulting in the elimination of this important source of revenue for City street O&M funding. ? Oregon Transportation Investment Act (OTIA) III - 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. As is the case with the highway trust monies, OTIA III revenues have also decreased 8% over the past five years, from $859,000 in FY05 to a projected $790,000 in FY10. ? Operating Costs – During this same five-year period that total Road Fund revenues fell by nearly 15%, the costs of providing street and traffic infrastructure services increased by 23%, primarily due to the rapidly rising prices of health insurance, utility costs, fuel and materials such as cement and asphalt. As a result, the fund is projected to have enough resources to fund only two-thirds of those traditional Road Fund services in FY10. Cost-containment and Efficiency Initiatives In response to these funding challenges, the Public Works Department has made active and on-going efforts over the years to identify and implement opportunities for increased operational efficiencies, cost containment and realignment of funding for Road Fund services. A few of these efforts are outlined here. ? At the request of the Citizen Budget Subcommittee, a respected independent consultant in 2001 reviewed how efficiently Eugene’s Road Fund dollars were being spent. His report suggested several minor modifications, which were subsequently implemented by the department, 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 and professional Z:\CMO\2008 Council Agendas\M081112\S081112A.doc