Item 4: Ordinance on Tax on Motor Fuel

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“revenue from taxes on motor vehicle use and fuel … shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state.” Road Operations and Maintenance Needs - The City’s Road Fund accounts for the operation and maintenance of Eugene’s street system. Due to flat growth in state revenues and loss of historical county road partnership revenues, the Road Fund is currently expected to have an annual operating deficit of over $1.8 million for FY08 (growing to $2.3 million by FY10) for ongoing activities such as street lighting, pothole patching, street tree maintenance, signing and striping of city streets. At some point, the council will be faced with a decision to either reduce the current service levels of road operations and maintenance activities or dedicate a portion of new or existing funding sources to maintaining the service levels. Implementation Timeframe - Our tax administrator, the ODOT Fuels Tax Group in Salem, suggests that notice provided them as of the end of January for the repeal of the sunset provision would be optimal for their administration of this change in code and also provide adequate time for notice to Eugene fuel dealers. For that reason, action is requested on one or the other of the proposed ordinances tonight. RELATED CITY POLICIES The council’s Vision and Goals Statement with respect to Fair, Stable and Adequate Financial Resources reaffirms commitment to “a local government whose ongoing financial resources are based on a fair and equitable system of taxation and other revenue sources and are adequate to maintain and deliver municipal services.” In January 2007, the council identified a new council goal to “Develop mechanisms to adequately fund our transportation system for cars, trucks, bikes, and pedestrians including maintenance and preservation and capital reconstruction.” Additionally, the City’s Financial Management Goals and Policy, A.4, states that the City’s municipal service priority Level 2 (second only to the preservation of the public safety system) is to “maintain and replace the City’s fixed assets, which includes… infrastructure…so as to optimize their life.” COUNCIL OPTIONS The council has the following options: 1. Council could decline to take action on either proposed ordinance, choosing to make no changes to the Eugene Code and effectively allowing the city’s motor vehicle fuel tax rate to revert to three cents per gallon; 2. Council could approve the proposed code amendments as shown in Attachment A to extend the sunset provision for three additional years to February 28, 2011, leaving the fuel tax at five cents per gallon for an additional three years, in order to allow sufficient time for state legislative efforts to bear fruit and for development and implementation of other elements of the council package funding strategy; or 3. Council could approve the proposed code amendments as shown in Attachment B to repeal the sunset provision enacted in 2005, effectively leaving the fuel tax rate at five cents per gallon for an indefinite period. F:\CMO\2008 Council Agendas\M080128\S0801284.doc