Item A: Status Report on Local Gas Tax

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provisions took effect September 28, 2009. In anticipation of the HB2001 deadline, on July 27, 2009, the council repealed the sunset provision on the two-cent fuel tax rate increase enacted in 2005, and later extended in 2008, with the effect of keeping the City’s local gas tax rate at five cents per gallon indefinitely. Funding Needs As a point of reference, one cent of the local gas tax generates approximately $625,000 of revenue to the City of Eugene for Pavement Preservation Program (PPP) capital funds. One cent of the state gas tax generates approximately $125,000 of revenue to the City of Eugene for road operations and maintenance (operating funds). Before 2011, the last state fuel tax increase occurred in 1993. In that time, inflation increased consumer prices by 51 percent, twice the current percentage increase in the state fuel tax. The purchasing power of the state’s gas tax has steadily eroded over the years for several reasons: the gas tax has not kept pace with inflation; voters have opposed increases in the gas tax; and the fuel efficiency of new vehicles, especially hybrids and alternative-fuel vehicles, continues to increase, resulting in less gas tax paid. As part of the Jobs and Transportation Act, effective January 1, 2011, Oregon’s fuel tax is increased by six cents, bringing it to 30 cents per gallon for passenger and light vehicles. The tax for commercial trucks and other heavy vehicles was raised proportionately effective Oct. 1, 2010. Capital Pavement Preservation Needs - Following considerable study and discussion, including forming a Council Subcommittee on Transportation Funding Solutions and convening an ad hoc citizen Street Maintenance Task Force, the council on July 28, 2008, approved Resolution 4953, calling a City election on a measure authorizing the issuance of $35.9 million of general obligation bonds to fund street preservation projects. On November 4, 2008, voters handily approved the measure. The bonds will fund the 32 projects listed in the resolution, plus the additional street preservation projects approved by the council to use the remaining bond funds, and repair over 70 lane miles of streets and three miles of off- street bike and pedestrian paths. Even though there has been progress, the City still has not resolved its long-term street repair funding problem for major street repair projects. The 2011 Pavement Management Report listed the City’s backlog of needed pavement preservation projects at over $139 million. Continuation of the City motor vehicle fuel tax at the five-cent level is a key component in a package strategy endorsed by the council to ensure a stable, locally-controlled revenue stream to allow the City to continue to make progress on the backlog of needed street repairs. In May 2007, the Council Subcommittee on Transportation Funding Solutions recommended a total yearly pavement preservation funding target of $18 million which is currently being funded at about half \ \cesrv500\CC Support\CMO\2011 Council Agendas\M110615\S110615A.doc