Item B: Strategies for Long-Term Transportation Needs

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On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for Eugene’s Road Fund. At that time, the council reviewed an illustrative list of program reductions and eliminations which would be required if a strategy of service reductions alone were employed to correct the structural deficiency between Road Fund revenues and expenditures and to eliminate the $2 million projected annual deficit. Based on that discussion, the council directed the City Manager to develop a FY07 Road Fund budget at the current service level and to bring back a proposal for a new revenue funding package which would not only address 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. At that same work session, staff was directed to come back with a list of the new street-related projects included in the FY2006-2011 Capital Improvement Program which were expected to be funded with money that could have otherwise been used for operations, maintenance and preservation of the street system. That information is being provided here as Attachment A. In summary, within the framework of existing City Council policies, MPC policies, State law, Federal legislation and intergovernmental restrictions, the only projects in the FY2006-2011 CIP funded with monies that could otherwise have been used for street operations, maintenance and preservation (OM&P) are the $30,000 annual allocation ($180,000 over the six-year CIP) of General Fund monies which are directed by City Council policy to traffic calming. On February 15, 2006, the council began a review and discussion of the potential revenue strategies presented here. Due to time constraints, the council reached no definite conclusions but indicated a desire to continue the discussion at a future meeting date, which is the purpose for this evening’s worksession. Financial and/or Resource Considerations Road Fund - The Road Fund accounts for operations and maintenance (O&M) of the city’s street system. The majority of the Road Fund revenue comes from Eugene’s share of the State Highway Trust Fund, which is derived from Oregon motor vehicle fuel taxes as well as state motor vehicle registration fees and weight-mile taxes. Revenue growth in the State Highway Trust Fund has been relatively flat since FY00, when the City was receiving about $6.0 million per year in allocations. The projected revenue for FY07 is less than $6.2 million, which equates to only a 3% growth over the entire seven-year period. The second major source of revenue for this fund is the County/City Road Partnership Agreement that once contributed $2.5 million per year and more recently has been providing about $1.2 million in annual street maintenance funding to Eugene. The current agreement expires in FY07, and the Board of County Commissioners adopted a five-year Capital Improvement Plan which discontinues the partnership payments to Lane County cities after FY07, which means that Eugene would lose over $1 million in annual street maintenance funding beginning in FY08. In the meantime, Eugene continues to look for opportunities to cooperate with the County in identifying sustainable mechanisms and agreements for funding operations, maintenance and preservation (OM&P) for all of the regional transportation system. Cost reductions of $850,000 were implemented in the Road Fund in FY04, primarily through elimination of the in-house street overlay program and organizational restructuring and consolidations of Public Works divisions and work crews, which resulted in the elimination of supervisory positions. These cost reductions were implemented as a partial remedy for stabilizing the O&M activities for the city’s road system, with the hope that additional revenue sources for O&M activities would eventually be realized as an outcome of the council’s ongoing work with transportation funding. However, insufficient additional resources have been identified to date, while at the same time the fund continues to experience growth in L:\CMO\2006 Council Agendas\M060227\S060227B.doc