Item B: Road Fund Status - Laserfiche WebLink

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RELATED COUNCIL GOALS AND POLICIES The council’s Vision and Goals Statement with respect to Fair, Stable, and Adequate Financial Resources reaffirms its commitment to “a government whose ongoing financial resources are based on a fair and equitable system of revenues 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.” COUNCIL OPTIONS This is a work session and, as such, the council is not required to take any action. However, it would be timely and prudent for the council to use this opportunity to provide advance direction to the city manager and staff to begin working on specific strategies for balancing the Road Fund budget for FY07 and into the future. The two principal strategies available for balancing the Road Fund budget are: 1) to reduce the current service system to the level of existing and projected resources (i.e., $2 million in annual budget reductions phased in by FY08); or 2) to increase the level of resources to adequately fund the current service system for FY07 and future years. Regardless of which strategy is selected, it is critical that the council and the manager continue to pursue efforts to sustain existing revenue sources at or above current levels, including renewed efforts for continuation of the historic County/City Road Fund Partnership Agreement and funding. Options available to the council in providing the city manager with direction for building the FY07 budget are: Option 1: The council could direct the city manager to build the Road Fund budget based on known, existing revenue sources, which would require service reductions of approximately $2 million, phased in during the FY07 and FY08 fiscal years. Option 2: The council could direct the city manager to develop an FY07 proposed Road Fund budget based on funding assumption to include new revenue sized to address not only the projected ongoing operating deficit in street operations and maintenance but which would also generate additional revenue to be dedicated to the backlog of unfunded projects in the Pavement Preservation Program. This funding package could include: 1) funding the Street Trees Program with a combination of an Urban Forestry Fee and a shift in funding for certain activities to the Stormwater Fund and General Fund, as appropriate; 2) a proposal for street lighting assessment districts to provide dedicated funding for street light maintenance; and/or 3) a proposal for reestablishing the previously-repealed Transportation System Maintenance Fee to shore up funding for the remaining Road Fund O&M activities and to address the annual funding gap in the Pavement Preservation Program. L:\CMO\2005 Council Agendas\M050926\S050926B.doc