Item 1: Ordinance on Business License Tax on Motor Vehicle Fuel Dealers

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Capital Pavement Preservation Needs - The current five-cent gas tax has allowed the City to complete nearly $22 million in street preservation project work since 2003, with additional contracts in progress. This year, more than 32 lane-miles of slurry seal projects and 30.8 lane-miles of rehabilitation projects ththth are scheduled, including the overlay of portions of 6 and 7 avenues, West 11 Avenue, Bertelsen Road, Country Club Road, Crescent Avenue, Danebo Road, Fox Hollow Road, McKinley Road, Roosevelt Boulevard, Royal Avenue and Seneca Road. In order to fully fund and stabilize the annual overlay program, and begin to make progress in reducing the substantial backlog of reconstruction projects, it is critical that the City not go backwards by losing the ability to control the two-cent portion of our local gas tax. To ensure continuation of a reliable fuel tax revenue stream to support ongoing street preservation and rehabilitation, the City Manager is recommending that the council repeal the sunset provision enacted in 2005, and extended in 2008, a provision which would otherwise cause the tax rate to revert to the three-cent level after February 28, 2011. Implementation Timeframe – If the council wishes to retain the ability to control the two-cent portion of the local gas tax, action must be taken to enact the attached City ordinance within 91 days of the close of the state legislative session. A council work session was held on July 15 for discussion of the proposed ordinance repealing the sunset provision on the two-cent tax, and potential council action has been scheduled for July 27 to allow sufficient time for enactment of the City ordinance prior to the effective date of the state transportation bill, with its moratorium on local gas taxes. RELATED CITY 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.” In January 2007, the council identified a new council goal to “Develop mechanisms to adequately fund our transportation system for cars, trucks, bikes, and pedestrians including maintenance and preservation and capital reconstruction.” Additionally, the City’s Financial Management Goals and Policy, A.4, states that the City’s municipal service priority Level 2 (second only to the preservation of the public safety system) is to “maintain and replace the City’s fixed assets, which includes… infrastructure…so as to optimize their life.” COUNCIL OPTIONS When this proposed ordinance comes before the Eugene City Council for potential action on July 27, the council will have the following options: ?Option 1: The council could decline to take action on the ordinance, choosing to make no changes to the Eugene Code and effectively allowing the City’s motor vehicle fuel tax rate to revert to three cents per gallon after February 28, 2011; ?Option 2: The council could approve the proposed code amendment as shown in Attachment A to repeal the sunset provision enacted in 2005, and extended in 2008, effectively leaving the fuel tax rate at five cents per gallon for an indefinite period, or ?Option 3: The council could choose to extend the sunset for an additional three years to February 28, 2014 (beyond the four-year moratorium period), after which time any additional extensions on the two-cent tax would need to be referred to the voters, with the attendant election costs. Z:\CMO\2009 Council Agendas\M090720\S0907201.DOC