Item B: Road Fund Update - Laserfiche WebLink

Home Browse Search

At its May 23, 2007, meeting, the council approved a general course of action that was intended to lead to the implementation of a package of strategies, including a capital local levy, a street utility fee based on parking, a street and bike path lighting fee, and an increase to the current local motor vehicle fuel tax. On November 12, 2008, the City Manager provided the council with an update about the status of the Road Fund as well as his intended interim funding strategies to keep these critical City services funded for FY10 and beyond. At that meeting, individual councilors acknowledged that the Road Fund funding shortfalls could not be found in service reductions alone and that the need to find new sources of City revenue for transportation systems was great. It was suggested that this looming problem would best be met by a combination of cost reductions/reorganizations and new or enhanced revenue sources. The street utility fee continues to have support by council as part of the long-term funding solution, although there was acknowledgement of the complexities involved in assessing such a fee. On February 8, 2009, the council discussed two new potential revenue sources for preserving existing street O&M services—a right-of-way use fee (similar to a franchise fee) on City-owned utilities, and a transportation surcharge on solid waste (garbage) haulers. Councilors discussed the need for two different sets of funding strategies, with the first being a one-time, “stop gap” plan for fully funding these critical services in FY10. There was some interest in further exploring the proposed garbage surcharge, but at a much lower level. There was also support expressed for looking for federal stimulus money for pavement preservation projects, which might allow the more flexible local gas tax dollars to be used to fund O&M services in FY10. The right-of-way use fee on City utilities received guarded support at a lower amount. The second funding strategy set called for was in the form of a comprehensive “road map” for solving the City’s overall transportation funding problems in the long term. The council acknowledged that developing the longer-term solutions, including a potential Street Utility Fee and a potential Street Lighting Fee, would need to involve more public input and buy-in over the coming months. Financial and/or Resource Considerations Current Budget Outlook Under the most current projections, the Road Fund is expected to generate a $2.3 million annual operating deficit this current year (FY09) and, with no new revenues, that annual deficit would grow to nearly $5 million in the out years of the six-year forecast. In the absence of deliberate action, the fund will deplete all available fund resources and become insolvent sometime in the fall of 2009. On the other hand, a set of $3.8 million ongoing revenue solutions implemented by July 1, 2009, would eliminate the projected future annual operating deficits throughout the forecast period and restore the fund balance to the policy- As an alternative, a minimum of $2.8 million in one-time revenue would be recommended level. needed for FY10 to fully fund the current operations of the Road Fund for one year. Federal Stimulus Award for Pavement Preservation Projects As part of the American Recovery and Reinvestment Act (ARRA), Eugene has been awarded $3.0 million st to be used to fund four pavement preservation projects, including sections of West 1 Avenue, Garfield Street, High Street and Crescent Avenue. These projects will be bid before the end of 2009 and constructed in 2010. These are projects which would not otherwise have been constructed in this time period, had the City been looking to local gas tax monies alone for funding. City Manager’s FY10 Budget Strategy for the Road Fund The City Manager’s strategy for preserving street O&M services through FY10 employs both program cost reductions and realignments as well as a proposal for a one-time revenue strategy for FY10. Z:\CMO\2009 Council Agendas\M090408\S090408B.doc