Item 4: Ordinance on Wastewater and Stormwater

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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 As an alternative, a minimum of $2.8 restore the fund balance to the policy-recommended level. million in one-time revenue would be needed for FY10 to fully fund the current operations of the Road Fund for one year while council continues to work on a comprehensive, sustainable funding strategy. Program Cost-Cutting Measures - Responding to the challenge of identifying opportunities for ongoing cost savings, the Public Works Department is implementing $178,000 of reductions in the FY10 Road Fund operating budget through the redeployment of several employee positions from traditional Road Fund work (street debris removal, development review, night call response) to address emerging needs in other City programs. Staff believes these cost savings are both achievable and sustainable without significant reductions in service or public response. Across the City, staff continues to explore other opportunities for increasing efficiencies and reducing costs. Some of these budget-saving strategies, such as voluntary furloughs, deferred replacements and reductions in the fleet of equipment and vehicles, and reduced use of outside consultants and services, are anticipated to benefit funds and operating budgets across the organization. One-time Funding Strategy - Responding to council direction to bring back a one-time funding strategy to maintain street O&M services through FY10, the City Manager is proposing a three-part funding package as a FY10 stop-gap solution, comprised of the following three elements: Redirect up to $1.4 million of the FY10 local motor vehicle fuel tax revenue 1) from capital pavement preservation to critical street O&M services and back-fill the pavement preservation program funding with the $3.0 million of federal stimulus payments dedicated to that purpose; Authorize a transfer from stormwater/wastewater reserves 2)by including in the final FY10 Adopted Budget a one-time $500,000 contribution for FY10 from existing reserves in City-owned wastewater and stormwater utilities; and Impose a 5% transportation surcharge on solid waste haulers. 3) ? It is the second element of the City Manager’s stop-gap funding strategy to keep the Road Fund solvent through FY10 that is the subject of this public hearing. RELATED COUNCIL GOALS AND POLICIES The council’s Vision and Goals Statement with respect to Fair, Stable and Adequate Financial Resources reaffirms commitment to “a local government whose ongoing financial resources are based on a fair and equitable system of taxation and other revenue sources and are adequate to maintain and deliver municipal services.” The goal of the council Transportation Initiative is to: “Develop mechanisms to adequately fund Eugene’s transportation system for cars, trucks, bikes and pedestrians, including maintenance and preservation and capital reconstruction.” COUNCIL OPTIONS The two principal strategies available for balancing the FY10 Road Fund budget are: 1) to reduce the current service system to the level of existing and projected resources; or 2) to increase the level of Z:\CMO\2009 Council Agendas\M090420\S0904204.DOC