Item B: Strategies for Long-Term Transportation Needs

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operating costs. In FY07, the Road Fund is expected to generate an operating deficit of nearly $540,000 in the course of providing basic O&M activities such as street lighting, pothole patching, street tree maintenance, signing and striping. Based on current projections, that annual deficit would grow to nearly $2 million in FY08 when the County/City Partnership transfer is scheduled to be discontinued. Pavement Preservation Program - On the capital side of the program, the implementation of a 3-cent-per- gallon local motor vehicle fuel tax in August 2003 (raised to 5 cents in January 2005), along with revenue from the reimbursement component of the Transportation SDC and Eugene’s share of the Lane County OTIA III maintenance monies, have allowed the City to begin addressing the significant backlog of pavement preservation projects in Eugene. During the 2005 construction season, the City completed rehabilitation of approximately 12 lane miles of streets. Four contracts were awarded on eight different street segments, including the completion of one additional project made possible due to the two-cent increase in tax. However, the pavement preservation backlog, projected at $102 million as of the end of 2005, continues to grow. Additional funding is still needed to reverse this trend and to do the repair work necessary to ensure the efficient and safe operation of the local transportation system. In its report to the council in October 2001, the Citizen Budget Subcommittee recommended a street pavement preservation program revenue target of $8.5 million annually to address this high-priority funding need. An additional estimated $4.7 million is needed to meet that target funding goal for FY07, once the county OTIA III revenue-sharing agreement ends. That funding gap grows to $5.8 million per year by FY09, when the 2- cent motor vehicle fuel tax increase is scheduled to sunset. Citizen Budget Subcommittee Conclusions, June 2001 - As part of its two-year study of Eugene’s transportation funding issues and deliberations on possible new funding alternatives for the City’s unmet transportation needs, the Citizen Budget Subcommittee reviewed over 20 potential revenue sources in broad categories ranging from assessment mechanisms, property tax-based options, various forms of excise taxes, utility/user fees, as well as more traditional general municipal revenue sources. Additional revenue sources were suggested by subcommittee members and researched by staff. Staff prepared more in-depth analysis on those alternatives selected by the subcommittee for further study, and these were further studied and discussed at subsequent subcommittee meetings. At the end of their deliberations, the subcommittee members agreed that “the most effective transportation funding package would consist of a transportation utility fee and a motor vehicle fuel tax. These measures are capable of raising adequate levels of revenue and most closely conform to the subcommittee’s guiding principles.” (Transportation System Funding Interim Report, dated June 2001). Excerpts from the subcommittee report entitled “Subcommittee Discussion – Transportation Funding Alternatives” are included here as Attachment B. Potential Alternative Revenue Options, January 2006 - As an alternative to implementing service reductions in the operations and maintenance (O&M) component of the city’s transportation service system for FY07, the council could consider the implementation of one or more alternative revenue options, such as those that follow: ? Street Lighting Fee – Under this concept, the City would levy a city-wide street lighting fee to fund the operation, maintenance and enhancement of the City’s street lighting system along arterial, collector and neighborhood streets, a program which is budgeted at about $800,000 for FY07. The revenue would be dedicated to paying the cost of maintaining light fixtures, replacing fixtures and parts, and utilities. This revenue mechanism would also potentially allow the council to begin addressing the issue of missing street lights along arterial and collector streets if the fee were implemented with a capital component. More detailed information is provided on this potential new revenue mechanism in Attachment C. L:\CMO\2006 Council Agendas\M060227\S060227B.doc