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Additionally, in consultation with the City's tax administrator (the Oregon Department of Transportation Fuels Tax Group), staff is proposing a few housekeeping amendments to the code. The first proposed housekeeping amendment addresses the issue of the interest rate to be charged on delinquent tax payments (i.e., equivalent to 12% per annum) and is consistent with the ORS language applicable to the State motor vehicle fuel tax. The second proposed housekeeping amendment expands the language for the exemption of exported fuels to include export transactions in any quantity, since the intention was to not tax any exported fuel on the basis that such fuel would not ultimately be used in propelling a motor vehicle on Eugene city streets. The third proposed housekeeping amendment would add language to clarify the intent and practice around granting refunds to purchasers who pay the City's tax for fuel that will not ultimately be used in on-street motor vehicles. These proposed changes are intended to clarify council's intent around the application of the city fuel tax and also to help maintain consistency between the administration of the city fuel tax and the state tax. Additional Considerations Regarding the Taxing of Diesel Fuel When the council enacted the local fuel tax in 2003, diesel fuel was included among the motor vehicle fuels to be taxed in an effort to equitably distribute the local fuel tax burden between automobile and truck traffic. As adopted, the ordinance applies to all motor vehicle diesel fuel, including fuel used in vehicles which are also subject to the State's "weight-mile tax". The State, by contrast, exempts from its fuel tax those vehicles with a gross vehicle weight of over 26,000 pounds. Instead, such vehicles are subject to a separate tax calculation based on the weight of the vehicles and the number of miles traveled in the state (the "weight-mile" tax). In July of this year, the Springfield City Council considered testimony showing that a relatively large number of companies with bulk diesel fueling facilities which service their own fleets within the Springfield city limits traveled only a minor proportion of their mileage on Springfield streets. As a result, it was concluded that the local companies operating these vehicles were likely paying a disproportionate share of the local fuel tax in that city, compared to the miles driven on local streets. The Springfield council subsequently adopted an amendment to its fuel tax ordinance (see Attachment B) that authorized an 80% refund of city tax for diesel fuel sold for vehicles which were also subject to the state weight-mile tax and were fueled at their owner's own bulk fueling facility within the city limits. A number of local companies in Eugene also have bulk diesel fuel facilities servicing their own fleets within the Eugene city limits. Some of these companies have compiled data to support their assertion that the majority of the miles driven by their diesel-fueled fleets are not driven on Eugene streets. As was the situation in Springfield, this results in a disproportionate tax burden to these companies. Like the bulk fuelers in Springfield, these local business owners are concerned about the competitive disadvantage created by Eugene's fuel tax when applied to their weight-mile fleets which are being driven primarily outside the city limits of Eugene. In addition to revisions previously discussed, the council could consider adoption of an amendment, similar to Springfield' s, granting partial tax refunds to holders of weight receipts (i.e., those paying state weight-mile taxes) on motor vehicle fuel purchased in bulk for distribution at the holder's own fueling facility within the city limits. The maximum financial impact of a refund at the 80% level is estimated to be in the $20,000 to $25,000 range for each level of 1-cent fuel tax imposed in Eugene--or approximately $60,000 to $75,000 annually at the current 3-cent tax level. In all likelihood, the revenue impact of such refunds would be significantly less, as not all diesel fuel sales are made to bulk fuelers. L:\CMO\2004 Council Agendas\M041122\S0411225.doc