Item A: Status Report on Local Gas Tax

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Status Report on Local Gas Tax Meeting Date: June 15, 2011 Agenda Item: A Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov Contact Telephone Number: 541-682-8421 ISSUE STATEMENT The purpose of this work session is to provide the council with an opportunity to discuss the motor vehicle fuel dealer’s business license tax (local gas tax). The local gas tax is one component of a comprehensive, locally-controlled funding package to support operations, maintenance, preservation and reconstruction of Eugene’s transportation system. This work session provides the council an opportunity to discuss the local gas tax and the unfunded needs in the City’s transportation service system. BACKGROUND Previous Council Action and History The City’s first motor vehicle fuel tax was enacted in January 2003, and implemented in August 2003, based on the recommendation from the Council Subcommittee on Transportation Funding Solutions. The subcommittee’s recommendation was for a combination local motor vehicle fuel tax and transportation system maintenance fee for the purpose of generating an additional $9.0 million annually to address the City’s critical transportation system funding needs. That first fuel tax was implemented at three cents per gallon, and that portion has generated an average of $2 million per year since 2003. The other revenue mechanism in that funding recommendation, a street utility fee designed to generate an additional $6.5-$7 million per year, was adopted but later repealed before it could be fully implemented. A two-cent increase to the motor vehicle fuel tax was approved on January 24, 2005, along with a sunset provision that would cause the tax to revert to three cents per gallon on February 29, 2008. On January 28, 2008, the council voted to extend the sunset provision for three additional years to February 28, 2011, to allow sufficient time to see what new funding might result from the State Legislature and also to allow for the development and implementation of other elements of the council’s locally-controlled package funding strategy. One element of that strategy, raising the total local gas tax to eight cents per gallon, was not approved by the voters at the polls in November 2007. Additionally, in June 2009, the council considered but voted not to adopt a surcharge on solid waste fee collections to generate resources for street operations and maintenance services. The Jobs and Transportation Act (JTA, and also known as House Bill 2001) passed by the State Legislature in 2009, increased the state gas tax by six cents per gallon, in addition to increasing vehicle title and license fees and weight-mile taxes on heavy trucks. A provision of the bill prevented local governments from approving new gas taxes or increasing existing ones until January 2, 2014, after which time voter approval would be needed for any new or increased local gas tax. These moratorium \ \cesrv500\CC Support\CMO\2011 Council Agendas\M110615\S110615A.doc