Item B: Funding Strategies for Transportation System Operations, Maintenance, and Preservation

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Transportation System Maintenance Fee (TSMF) On November 22, 2006, the council postponed scheduled action on the adoption of a TSMF. Therefore, the council could choose to adopt either that proposed ordinance or a revised version. Depending on the nature of the revisions made, an additional public hearing may be required prior to taking final action on an ordinance. Should the council adopt an ordinance increasing the motor vehicle fuel tax and dedicating the additional revenue to Road Fund operations, as previously discussed, the council could also consider modifying the proposed TSMF ordinance to eliminate the “flat base rate” component (estimated at $1.87 per month per account for FY08) which was intended to generate $1.5 million in FY08 to address the projected Road Fund operating shortfall. Proceeds generated from the remaining “variable trip-rate” component would then be used for capital pavement preservation projects. Commuter Tax Another potential transportation funding option for which council requested additional information was a commuter tax. This is a tax or fee based upon persons who work but do not live in a jurisdiction. Attachment C provides a more complete overview of this funding option. Due to unresolved questions regarding the City’s legal authority to establish such a fee, staff at this time has no recommendation to offer regarding this potential funding option. RELATED COUNCIL GOALS AND 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 previous years, the council has identified specific work plan items to “identify and implement funding sources (including possible reallocation of existing sources) for operation, maintenance and preservation of the transportation system.” 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.” There are also several financial policies related to the use of specific revenue sources. Policy C.4 states that the City will secure a dedicated revenue source to fund general capital projects to the extent possible. Policy D.3 states that the use of GO bonds will be limited to major capital construction or improvements in support of general municipal services. The council also has several financial policies stating that, to the extent possible, non-recurring resources, such as a temporary property tax levy, should be used for non-recurring expenses, such as capital projects. COUNCIL OPTIONS The funding alternatives and strategies contemplated here are intended to help achieve greater long-term financial stability for the operations, maintenance and preservation of the city’s transportation service system and are summarized as follows: Option 1: The council could choose to take no action at this time with regard to the need for additional funding for transportation system OM&P, with the result that the Road Fund L:\CMO\2007 Council Agendas\M070122\S070122B.doc