Item 3A: Approval of City Council Minutes

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B. WORK SESSION: Road Fund Status and Service System Stabilization Strategies Ms. Jones introduced the item, noting the issue was not a new one for the council. She said staff was seeking policy direction from the council as it moved into development of the fiscal year (FY) 2007 budget. Public Works Director Kurt Corey was present for the item. Mr. Corey briefly overviewed the City's transportation-related services and currently available funding sources. The majority of Road Fund revenues for operations and maintenance came from Eugene's share of the State Highway Trust Fund, with other moneys coming from the County/City Road Partnership Agreement with Lane County (expiring in FY07 and unlikely to be renewed) and the Oregon Transporta- tion Act (OTIA III). Mr. Corey noted that two cents of the City's five-cent gas tax would sunset in February 2008. He anticipated that high gasoline prices would impact the revenues generated by that tax, which had not been increased since 1992. In addition, fuel-efficient vehicles helped keep those revenues flat. Mr. Corey reported that staff would soon submit the 2005 version of the Annual Preservation Report, which estimated a backlog of maintenance proj ects in excess of $100 million. He compared existing revenues to needed funding. The comparison indicated $9 million was received in revenues against a need of approximately $10 million annually. He said that in FY06, staff estimated an operating deficit of about $580,000 to be made up that year by the fund balance. After that, there would be a shortfall of between $800,000 and $1 million in FY07, and up to $2 million in FY08. Mr. Corey identified three strategies to address the shortfall: 1) efficiency gains; 2) service reductions; and 3) revenue enhancements. With regard to efficiencies, he noted a 2001 audit of the Road Fund indicated the City's operation was generally efficient when compared to other cities. A subsequent department self-assessment led to its accreditation as one of the few public works agencies in the nation conforming to the best management practices of the American Public Works Association, and a depart- ment restructuring in 2004 that eliminated a number of supervisory positions led to a savings of $850,000. He did not think there were any remaining substantive efficiencies to be realized. With regard to service reductions, Mr. Corey noted examples of the types of reductions needed to effect a $2 million fund reduction included as Attachment B to the agenda item summary (AlS). The reductions included reductions in the Street Tree Program or its move to the General Fund; turning off street lights along residential streets, arterials, and collectors; eliminating non-regulatory sign fabrication, installation, and maintenance; elimination of funding for landscaped median maintenance; elimination of funding for special projects; and reductions in the neighborhood transportation program. With regard to revenue enhancements, Mr. Corey referred the council to the options listed in the AlS, which included the formation of street light maintenance districts; an urban forestry fee; franchise fees for City and other utilities; increased support from General Fund revenues; and the establishment of a transportation system maintenance fee as previously recommended by the Budget Citizen Subcommittee and subsequently implemented and then repealed by the City Council. Mr. Corey endorsed the concept behind such a fee, saying he was aware of no better locally controlled, sustainable, long-term solution to transportation funding. Mr. Corey recommended that the FY07 and beyond Road Fund budgets be prepared with a combination of new and existing resources sufficient to address the ongoing deficit to sustain at least the existing level of service as well as the unfunded capital preservation backlog. He suggested revenue sources could include, MINUTES-Eugene City Council Work Session September 26, 2005 Page 6