Item 7: Ordinance Concerning Business License Tax on Motor Vehicle Fuel Dealers

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business Licenses; Repealing Section 3 of Ordinance 20337; and Amending Section 3.467 of the Eugene Code, 1971 Meeting Date: February 20, 2007 Agenda Item: 7 Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov www.eugene-or.gov Contact Telephone Number: 682-5241 ISSUE STATEMENT This public hearing provides an opportunity for the council to hear input from the community with regard to proposed revisions to sections of the Eugene City Code dealing with the Business License Tax on Motor Vehicle Fuel Dealers. The proposed amendments would increase by three cents the existing Eugene motor vehicle fuel tax rate (to eight cents per gallon) and, at the same time, repeal the sunset provision on the two-cent fuel tax rate increase enacted in 2005. The intention of these changes would be that the proceeds from the additional three cents be dedicated to funding Road Fund operations and maintenance activities. Eugene lacks adequate funding to operate, maintain, and preserve its local transportation system. For FY08, the annual deficit for operation and maintenance activities in the Road Fund is projected to exceed $1.6 million. BACKGROUND The City’s first motor vehicle fuel tax was enacted in January 2003, based on the recommendation from the Citizen’s Subcommittee on Transportation System Funding. Its recommendation was for a combination local motor vehicle fuel tax and transportation system maintenance fee for the purpose of generating an additional $9 million annual to address the City’s critical transportation system funding needs. A two-cent increase to the motor vehicle fuel tax was approved in January 2005, along with a sunset provision that would cause the tax to revert to three cents per gallon on February 29, 2008. The council added the sunset provision in the third year of the increase, citing the hope that three years would allow sufficient time to complete a comprehensive review of available funding options in the effort to develop a more permanent funding strategy for transportation system needs. On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for Eugene’s Road Fund. Based on that discussion, the council directed the City Manager to develop a FY07 Road Fund budget at the current service level and to bring back a proposal for a new revenue funding package which would address the projected ongoing operating deficit in street operations and maintenance, in addition to generating additional revenue for funding the backlog of unfunded projects in the pavement preservation program. L:\CMO\2007 Council Agendas\M070220\S0702207.doc