CC Minutes - 01/28/08 Work Session

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C. ACTION: An Ordinance Concerning Motor Vehicle Fuel Dealer's Business License Tax and Amendment Section 3 of Ordinance No. 20337 Mr. Corey stated that the City’s gas tax was presently set at five cents per gallon, two cents of which would sunset on February 29, 2008. He said the Oregon Petroleum Association (OPA) had pledged at the January 14, 2008, public hearing to work toward a statewide gas tax if the two-cent portion of the City’s tax was allowed to sunset. He said in the spirit of cooperation, staff was recommending extending the sunset period by three years instead of repealing it. He said that would allow time for the legislature to address transpor- tation funding during the 2009 session. He said allowing the two cents to sunset at the end of February would create an additional $1.4 million annual deficit in the street repair budget. Ms. Taylor stated she would support a three-year extension of the sunset provision. Mr. Zelenka expressed concern about testimony that suggested the decrease in gasoline sales was associated with the two-cent tax. He felt that was unlikely as the entire State had experienced a reduction in gasoline consumption. He said the OPA was vague about its commitment to work on the concept of transportation legislation in 2009. He preferred to keep the tax in place until that funding materialized. He supported extension of the sunset provision. Ms. Bettman supported removing the sunset provision altogether as she was not optimistic that the legislature would provide sufficient funds for road repairs because they would not be able to resist the temptation to dedicate a large portion of that to modernization. She supported the three-year extension as a compromise. Mr. Clark said he understood that the volume of gasoline sales had decreased in Eugene but been flat or increased in the rest of Lane County during the past two years, which related directly to price competition. He was in general agreement that fuel taxes were a good idea because they were closer to being a user fee. He was unhappy with the council’s decision not to place the issue before voters when gas dealers had gathered enough signatures to place both the three-cent and the two-cent tax on the ballot. In the spirit of compromise he was willing to extend the sunset, although he preferred extending it only until the end of July 2009. He hoped the council could work toward a combined solution to transportation system funding, including the commitment of some General Fund moneys. Mr. Pryor remarked that the dilemma was whether to sunset the tax as an incentive to work with the legislature or retain the tax as an incentive and then rescind it if State funding became available. He was willing to extend the sunset to avoid adding $1.4 million to the annual deficit and would work with OPA and the legislature to pass a State gas tax. He said it should be made clear that the extension was only until there was a legislative solution. Mr. Poling also felt that lower gas sales were the result of competition. He said the council had made a commitment to the public to sunset the two-cent tax and should honor that agreement. Mayor Piercy recollected that the commitment was to rescind the two-cent increase when the problem was solved and that had not yet happened. She noted that the council could not commit future council's to take action. She hoped that a State solution would be beneficial for Eugene. MINUTES—Eugene City Council January 28, 2008 Page 7 Work Session