Item 3: Ordinance Concerning Business License Tax on Motor Vehicle Fuel Dealers

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: 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: May 29, 2007 Agenda Item: 3 Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov Contact Telephone Number: 682-5241 ISSUE STATEMENT This action would adopt an ordinance amending sections of the Eugene City Code dealing with the Business License Tax on Motor Vehicle Fuel Dealers. The two 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. Eugene lacks adequate funding to operate, maintain, and preserve its local street system. For FY08, the annual deficit for operation and maintenance activities in the Road Fund is projected to exceed $1.6 million, and the backlog of unfunded capital street repairs has grown to over $170 million. On May 23, 2007, the Eugene City Council approved the recommendations of the Council Subcommittee on Transportation Funding Solutions and directed implementation of those recommendations, including tonight’s proposed action to increase Eugene’s motor vehicle fuel tax by three cents per gallon to generate an additional $2 million annually to operate, maintain and preserve the city’s street system. BACKGROUND Previous Council Action and History 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 annually to address the City’s critical transportation system funding needs. That first fuel tax was implemented at three cents per gallon and has generated about $2 million per year since 2003. The other revenue mechanism in that funding recommendation, a street utility fee designed to generate an additional $6.5-$7 million per year, was adopted but later repealed before it could be fully implemented. 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, to be effective 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. L:\CMO\2007 Council Agendas\M070529\S0705293.DOC