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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: FY10 Budget Strategies to Maintain Road Fund Service Levels Meeting Date: April 8, 2009 Agenda Item: B Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov Contact Telephone Number: 682-5241 ISSUE STATEMENT This work session provides an additional opportunity for the City Council to review and discuss the City Manager’s proposed strategies for maintaining current service levels for street operations and maintenance (O&M) activities in FY10 and beyond. These are the critical street and traffic infrastructure services which keep the streetlights lit, the street signs and signals in good working order, the potholes and cracks patched, the alternative modes goals on track, and more. These services are paid from the City’s Road Operations Fund, which has experienced a 15% decrease in revenue over the last five years while expenditures have increased by 23% in that period, despite an organizational restructuring in FY04 and FY05 which resulted in service reductions, efficiencies and over $1.0 million in annual budget savings. Ongoing operating deficits are projected to deplete the fund balance to zero by late 2009. Without new revenue, the fund will be unable to support roughly one-third of current City street O&M services after June 30, 2009. In previous work sessions, the council has weighed the two key options for keeping the Road Fund solvent—to either stop providing the traditional number of street services in order to live within the available resources and/or look for new ways to fund the services the City decides to keep. The City Manager is finalizing his FY10 Proposed Budget to preserve existing street O&M services through a combination of cost reductions and realignments as well as options for using both existing and potential new revenue sources to preserve critical services. The potential new revenue source which the City Manager will be discussing with the council is a 5% transportation surcharge on solid waste (garbage) haulers. Existing sources of revenue which may be considered for use in preserving critical street O&M services for FY10 include a portion of the local gas tax proceeds and a modest contribution from the City’s stormwater and wastewater utilities. BACKGROUND Previous Council Action and History On May 23, 2007, the Council Committee on Transportation Funding Solutions presented its report, Operating which stated that the first priority use of new revenue generated from this initiative should be “ and maintaining the existing transportation system , including on-street and off-street bike and pedestrian pathways.” This is consistent with the findings of the 2001 recommendations of the Citizen Budget Subcommittee on Transportation System Funding, which included the assertion that “In the face ensuring adequate funding for of projected O&M shortfalls and service reductions beginning in FY03, the operation and maintenance activities of the City’s transportation system is absolutely essential.” Z:\CMO\2009 Council Agendas\M090408\S090408B.doc