HomeMy WebLinkAboutItem 7 - Trans.Fund.for PavmntEUGENE CITY COUNCIL
AGENDA ITEM SUMMARY
Action: An Ordinance Concerning Motor Vehicle Fuel Dealer's Business Licenses; and
Amending Sections 3.465, 3.467, 3.474, 3.480, 3.483, and 3.484
of the Eugene Code, 1971
Meeting Date: January 24, 2005 Agenda Item: 7
Department: Public Works Staff Contact: Kurt Corey
www. cl. eugene, or. us Contact Telephone Number: 682-5241
ISSUE STATEMENT
This is an opportunity for the council to discuss and adopt an ordinance amending sections of the
Eugene City Code dealing with the Business License Tax on Motor Vehicle Fuel Dealers. The proposed
amendments would make effective a two-cent increase in the existing local motor vehicle fuel tax,
provide for an 80% refund of motor vehicle fuel tax (MVFT) paid by specified diesel users and
implement various minor housekeeping amendments.
BACKGROUND
Previous Council Action and History
In October 2001, the Citizen Budget Subcommittee on Transportation System Funding presented its
recommendation that the council implement a transportation funding package consisting of a
combination local motor vehicle fuel tax and transportation system maintenance fee for the purpose of
generating an additional $9 million annually to address the City's critical transportation system funding
needs. On January 27, 2003, the council approved the local motor vehicle fuel tax at the three-cent
level.
On September 27, 2004, the council reviewed the progress to date on pavement preservation program
funding efforts, heard updates on cooperative efforts with partner agencies, and discussed the potential
implementation of additional funding options, as well as a potential increase in the level of the existing
local fuel tax. At that meeting, the council directed staff to bring back draft ordinances increasing the
local motor vehicle fuel tax (MVFT) by an additional two cents (to five cents-per-gallon) and
establishing a transportation system maintenance fee. The council also requested at that time that staff
bring back information on possible bonding options for funding pavement preservation needs.
On October 27, 2004, the council reviewed and discussed the two draft ordinances and also reviewed
bonding alternatives for funding the backlog of pavement preservation projects. At that meeting, the
council directed that the amendments to the fuel tax code be moved forward to public hearing with no
amount specified on the level of tax at this time. The council further determined by majority vote to
discontinue efforts to establish a transportation system maintenance fee. A public hearing on December
6, 2004, provided additional public input on the proposed changes to the MVFT.
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On January 19, 2005, the council, including the newly-installed mayor and councilors, once again had
an opportunity to review and discuss the progress on pavement preservation funding efforts and to
discuss the manager's recommendation for code amendments related to the MVFT.
Proposed Revisions to the Eugene Code
Increasing the Level of the Business License Tax - The proposed revisions to the Eugene Code
concerning motor vehicle fuel tax are outlined in Attachment A. The first of the proposed revisions
would increase the level of the business license tax on motor vehicle fuel dealers by an amount yet to be
specified by council. Staff estimates that a two-cent increase in the level of the MVFT would generate
an additional $1.45 million per year in Eugene for pavement preservation projects.
Providing for Partial Refunds on Certain Sales of Bulk Diesel Fuel - Staff is also proposing adoption of
an amendment, similar to Springfield' s, granting partial tax refunds to holders of weight receipts (i.e.,
those paying state weight-mile taxes) on motor vehicle fuel purchased in bulk for distribution at the
holder's own fueling facility within the city limits. A number of local companies in Eugene also have
bulk diesel fuel facilities servicing their own fleets within the Eugene city limits. Some of these
companies have compiled data to support their assertion that the majority of the miles driven by their
diesel-fueled fleets are not driven on Eugene streets. As was the situation in Springfield, this results in a
disproportionate tax burden to these companies. Like the bulk fuelers in Springfield, these local
business owners are concerned about the competitive disadvantage created by Eugene's fuel tax when
applied to their diesel-fueled fleets which are being driven primarily outside the city limits of Eugene.
Additional Proposed Revisions - In consultation with the State Fuels Tax Group, staff is proposing a few
additional housekeeping amendments in addition to those previously discussed. The first proposed
housekeeping amendment addresses the issue of the interest rate to be charged on delinquent tax
payments (i.e., equivalent to 12% per annum) and is consistent with the ORS language applicable to the
State motor vehicle fuel tax. The second proposed housekeeping amendment expands the language for
the exemption of exported fuels to include export transactions in any quantity, since the intention was to
exempt all exported fuel not in the fuel tank of a motor vehicle on the basis that such fuel would not
ultimately be used in propelling a motor vehicle on Eugene city streets. The third proposed
housekeeping amendment would add language to clarify the intent and practice around granting refunds
to purchasers who pay the City' s tax for fuel that will not ultimately be used in on-street motor vehicles.
These proposed changes are intended to clarify council's intent around the application of the city fuel
tax and also to help maintain consistency between the administration of the city and state fuel taxes.
Timing - The funding need for the City' s pavement preservation program is critical and imminent.
With no additional funding, the existing backlog of pavement preservation projects is projected to grow
from the current level of nearly $94 million to a projected $180 million within the next decade.
Additional funding is needed to reverse this trend to ensure the efficient and safe operation of our local
transportation system.
Staff discussions with our tax administrator, the ODOT Fuels Tax Group in Salem, suggest that a
minimum of 30 to 60 days from the date of adoption would be required for implementation of the
increased fuel tax in order to give adequate notice to the dealers and to make appropriate modifications
to the reporting forms and instructions.
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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." The 2001-2002 City Council Work Plan Item 1 under this goal called for an
effort to "Identify and implement funding sources (including possible reallocation of existing sources)
for operation, maintenance and preservation of the transportation system." Additionally, the City's
FinancialManagement Goals and Poficy, 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
The council has the following options:
Option 1: The council could decline to take any action, effectively choosing to make no changes to the
Eugene Code concerning business license tax on motor vehicle fuel dealers; or
Option 2: The council could approve the proposed amendments to the Eugene Code, including an
increase to the Business License Tax on Motor Vehicle Fuel Dealers of an additional two
cents.
CITY MANAGER'S RECOMMENDATION
The City Manager recommends adoption of the proposed amendments to the motor vehicle fuel tax code
implementing a two-cent increase to the existing local motor vehicle fuel tax, a provision for 80%
refunds of motor vehicle fuel tax paid by specified diesel users and various minor housekeeping
amendments.
SUGGESTED MOTION
I move to adopt an ordinance concerning motor vehicle fuel dealer's business licenses; and amending
sections 3.465, 3.467, 3.474, 3.480, 3.483, and 3.484 of the Eugene Code, 1971.
ATTACHMENTS
A. Proposed amendments to the Eugene Code (Concerning a Business License Tax on Motor Vehicle
Fuel Dealers)
FOR MORE INFORMATION
Staff Contact: Kurt Corey
Telephone: 682-5241
Staff E-Mail: kurt. a. corey~ci, eugene, or. us
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ATTACHMENT A
ORDINANCE NO.
AN ORDINANCE CONCERNING MOTOR VEHICLE FUEL DEALER'S
BUSINESS LICENSES; AND AMENDING SECTIONS 3.465, 3.467,
3.474, 3.480, 3.483, AND 3.484 OF THE EUGENE CODE, 1971.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1. The definition of "weight receipt" is added to Section 3.465 of the
Eugene Code, 1971, in alphabetical order, to provide:
3.465 Definitions. As used in sections 3.465 through 3.489 of this chapter, unless
the context requires otherwise the following words and phrases shall mean:
Weight Receipt. A receipt issued by the Oregon Department of
Transportation, stating the combined weight of each self-propelled or motor-
driven vehicle.
Section 2. Subparagraph (b) of Section 3.467 of the Eugene Code, 1971, is
amended to provide:
3.467 Amount and Payment. In addition to any fees or taxes otherwise provided
for by law, every dealer engaging in the city in the sale, use or distribution of
motor vehicle fuel, shall:
(b) Pay a license tax computed on the basis of $[.03 (three cents)] .05 (five
cents) per gallon of such motor vehicle fuel so sold, used or distributed
as shown by such statement in the manner and within the time provided
in this code.
Section 3. Section 3.474 of the Eugene Code, 1971, is amended to provide:
3.474 Payment of Tax and Delinquency.
(1) The license tax imposed by sections 3.465 to 3.489 of this chapter shall
be paid to the tax administrator on or before the 25th day of each
month.
(2) Except as provided in subsections (3) and [(4)] (5) of this section, if
payment of the license tax is not paid as required by subsection (1) of
this section, a penalty of 1 percent of such license tax shall be
assessed and be immediately due and payable.
(3) Except as provided in subsection [(4)] (5) of this section, if the payment
of the tax and penalty, if any, is not made on or before the 1st day of
Ordinance- ]
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the next month following that month in which payment is due, a further
penalty of 10 percent of the tax shall be assessed. Said penalty shall
be in addition to the penalty provided for in subsection (2) of this section
and shall be immediately due and payable.
(4) If the license tax imposed by sections 3.465 to 3.489 of this code is
not paid as required by subsection (1) of this section, interest
shall be charged at the rate of .0329 percent per day until the tax,
interest and penalties have been paid in full.
(45) Penalties imposed by this section shall not apply if a penalty has been
assessed and paid pursuant to section 3.470. The tax administrator
may for good cause shown waive any penalties assessed under this
section.
($6) If any person fails to pay the license tax, interest, or any penalty
provided for by this section, the tax, interest, and/or penalty shall be
collected from that person for the use of the city. The tax administrator
shall commence and prosecute to final determination in any court of
competent jurisdiction an action at law to collect the same.
($7) In the event any suit or action is instituted to collect the business
license tax, interest, or any penalty provided for by this section, if the
City is the prevailing party, the City shall be entitled to recover from the
person sued reasonable attorney's fees at trial or upon appeal of such
suit or action, in addition to all other sums provided by law.
Section 4. Subsections (1)(b) and (6) of Section 3.480 of the Eugene Code,
1971, are amended to provide:
3.480 Exemption of Export Fuel.
(1) The license tax imposed by section 3.466 shall not be imposed on
motor vehicle fuel:
(b) Sold by a dealer [;"'
for export by the purchaser to an area or areas outside the city
in containers other than the fuel tank of a motor vehicle, but
every dealer shall be required to report such exports and sales
to the city in such detail as may be required.
(6) In support of any exemption from taxes on account of sales of motor
vehicle fuel [~'-' ~'-"~,,~'~. ,°' ..... ""'~o '-": :nn ,-,o.. ..... ,,~ool for export by
the purchaser, the dealer shall retain in his/her files for at least three
years, an export certificate executed by the purchaser in such form and
containing such information as is prescribed by the tax administrator.
This certificate shall be prima facie evidence of the exportation of the
motor vehicle fuel to which it applies only if accepted by the dealer in
good faith.
Section 5. Section 3.483 of the Eugene Code, 1971, is amended to provide:
Ordinance - 2
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3.483 Refunds.
(1) Refunds of tax on motor vehicle fuel will be made pursuant to
[applicable] any refund provisions of Chapter 319 of the Oregon
Revised Statutes, including but not limited to ORS 319.280 and
319.831. Claim forms for refunds may be obtained from the Tax
Administrator's office.
(2) A holder of a weight receipt that certifies to the city that the motor
vehicle fuel upon which the tax was imposed will be used only for
fueling vehicles subject to the State of Oregon's weight-mile tax,
may apply for a refund of 80 percent of the tax imposed by Section
3.467 of this code on motor vehicle fuel purchased in bulk for
distribution at the weight receipt holder's facility located within the
city. This subsection applies only to motor vehicle fuel purchased
by the weight receipt holder on or after February 23, 2005.
(3) Ail claims for refund under subsection (2) of this section shall be
filed within 15 months of the date that the fuel was purchased and
may not be filed more frequently than quarterly. The minimum
claim for refund filed under subsection (2) of this section shall be
not less than $25.00.
Section 6. Section 3.484 of the Eugene Code, 1971, is amended to provide:
3.484 Examinations and Investiqations. Pursuant to section 2.019 of this code,
the tax administrator, or duly authorized agents, may make any examination
of accounts, records, stocks, facilities and equipment of dealers, service
stations and other persons engaged in storing, selling or distributing motor
vehicle fuel or other petroleum product or products within this city, and such
other investigations as it considers necessary in carrying out the provisions
of sections 3.465 through 3.489. If the examinations or investigations
disclose that any reports of dealers or other persons theretofore filed with the
tax administrator pursuant to the requirements herein, have shown
incorrectly the amount of gallonage of motor vehicle fuel distributed or the tax
accruing thereon, the tax administrator may make such changes in
subsequent reports and payments of such dealers or other persons, or may
make such refunds, as may be necessary to correct the errors disclosed by
its examinations or investigation. The dealer shall reimburse the city for the
reasonable costs of the examination or investigation if the action discloses
that the dealer paid 95 percent or less of the tax owing for the period of the
examination or investigation. In the event that such an examination or
investigation results in an assessment by and an additional payment due to
the city, such additional payment shall be subject to interest at the rate of [$8]
.0329 percent per [yea~] day from the date the original tax payment was due.
Section 7. The City Recorder, at the request of, or with the concurrence of the
City Attorney, may administratively correct any reference errors contained herein or in
Ordinance - 3
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other provisions of the Eugene Code, 1971 to the provisions added, amended or
repealed herein.
Passed by the City Council this Approved by the Mayor this
~ day of ,, 2004 ~ day of ,, 2004
City Recorder Mayor
Ordinance - 4
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