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HomeMy WebLinkAboutItem 4: Ordinance on Tax on Motor Fuel ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business License Tax and Amending Section 3 of Ordinance No. 20337 Meeting Date: January 28, 2008 Agenda Item: 4 Department: Public Works Staff Contact: Kurt Corey www.eugene-or.gov Contact Telephone Number: 682-5241 ISSUE STATEMENT Council action tonight would amend or repeal sections of the Eugene City Code dealing with the Business License Tax on Motor Vehicle Fuel Dealers. The action recommended by the City Manager and illustrated in the proposed ordinance offered as Attachment A would extend the sunset provision on the two-cent per gallon fuel tax rate increase enacted in 2005 for three additional years, with the effect of keeping the tax rate at five cents per gallon through February 28, 2011. This would hopefully allow sufficient time for state legislative efforts to increase road funding for local jurisdictions and also for development and implementation of other elements of the council package funding strategy. As an alternative, the council could choose tonight to repeal the sunset provision entirely, effectively leaving the fuel tax rate at five cents per gallon indefinitely. This alternative draft ordinance is offered as Attachment B. In either case, council action on this item is needed tonight if the intent is to prevent administrative implementation of the two-cent roll-back in the tax rate collected by the City. Eugene lacks adequate funding to operate, maintain, and preserve its local street system. For FY08, the annual deficit for operation and maintenance activities in the Road Fund is projected to exceed $1.8 million, and the backlog of unfunded capital street repairs has grown to over $170 million. The two-cent per gallon increase enacted in 2005 has generated nearly $1.4 million annually, and all proceeds from that tax increase have gone to fund the city’s Pavement Preservation Program, paying for the preservation and/or reconstruction of a significant number of city streets. Until other reliable funding sources are secured, continuation of the local motor vehicle fuel tax at the five-cent level is an integral component in a package strategy endorsed by the Eugene City Council to ensure a stable revenue stream to support ongoing operations, maintenance and preservation of the city street system. BACKGROUND Previous Council Action and History The city’s first motor vehicle fuel tax was enacted in January 2003, based on a recommendation from the Citizen’s Subcommittee on Transportation System Funding. That first fuel tax was implemented at three cents per gallon and has generated almost $2 million per year since 2003. A two-cent increase to the motor vehicle fuel tax was approved in January 2005, along with a sunset provision that would cause the tax to revert to three cents per gallon on February 29, 2008. The City Council added the sunset provision, to be effective in the third year of the increase, citing the hope that three years would allow sufficient time to complete a comprehensive review of available funding options in the effort to develop a more permanent F:\CMO\2008 Council Agendas\M080128\S0801284.doc funding strategy for transportation system needs. Those solutions have not yet come to fruition, leading the council to reconsider the option to let the additional two-cent tax expire. On January 22, 2007, the City Council agreed to the formation of a council subcommittee, comprised of four councilors, to study transportation funding options and to bring back within three months a recommendation for a solution or solutions meeting certain specific criteria to adequately fund the transportation system. On May 29, 2007, the council approved code amendments which would have increased the Business License Tax on Motor Vehicle Fuel Dealers by three cents per gallon to the eight-cent level and repealed the sunset provision on the two-cent fuel tax rate increase enacted in 2005. Subsequently, the council repealed that ordinance and submitted the three cent per gallon increase to the voters in November 2007, where the measure failed at the ballot. On January 14, 2007, the Council held a public hearing for the purpose of gathering community input on the proposed ordinance to repeal the sunset provision on the two-cent per gallon fuel tax rate increase. At that hearing, nine people testified, several of them urging the council to let the two-cent tax increase expire because of the negative impact on the sales volumes for local fuel dealers. Draft minutes from that meeting are included as Attachment C. Eugene has experienced just under an 8% drop in sales volume since implementation of the City gas tax in 2003, as reported by the Oregon Department of Transportation Fuels Tax Group. According to ODOT’s final report on Oregon’s Road User Fee Pilot Program, concluded in March 2007, “Gas tax-generated revenue is eroding primarily from increases in fuel efficiency, resulting in more roadway usage per vehicle mile traveled.…” In the ODOT June ’07 forecast, their chief economist identifies gas price and economic activity as the two critical drivers for sales of gasoline, although “…the far most dominant factor in gas consumption statewide is the pace of overall economic activity.” Representatives of the fuel dealers and the business community also stated at that public hearing their commitment to working towards a more sustainable road-funding solution for cities and counties in the form of a legislated state-wide gas tax increase. In a parallel effort, Eugene is also working together with a coalition of cities for a higher level of support from the State Highway Trust Fund. According to ODOT, however, the reality we face is that the State of Oregon has been unable to garner support for raising the state gas tax since 1991. Furthermore, voters rejected the legislature’s last attempt to raise the gas tax in 1999. Eugene simply cannot continue to passively wait for long-expected relief from either the state or the county while the cost to address the city’s backlog of needed street repairs grows larger every year. The City Manager-recommended revisions to the Eugene Code with regard to the motor vehicle fuel tax are set out in Attachment A. In that proposed ordinance, the sunset date on the two-cent tax increase would be extended by three years. This would allow time for Eugene to work together with a coalition of cities, counties and business partners to achieve legislative funding relief through a state gas tax increase which, were it to replace the revenue generation from Eugene’s local gas tax, might warrant the council repealing the local gas tax altogether. It would also allow Eugene, along with other Lane County cities who are struggling under the same burden of street funding needs, to reinitiate conversations with Lane County about a potential county-wide motor vehicle registration fee. In the meantime, the additional two-cent local gas tax will generate nearly $4 million over that three-year period to ensure continuation of a reliable revenue stream to support ongoing street operations, maintenance, and preservation while efforts continue at the county and state levels to enact new road maintenance revenue mechanisms. For these reasons, the City Manager recommends that the council extend by three additional years the ordinance provision which would otherwise forfeit two cents of the five-cent city gas tax after February 29, 2008. F:\CMO\2008 Council Agendas\M080128\S0801284.doc Proposed Uses of Funds, Legal Analyses and Implementation Issues Repealing or extending the sunset provision would effectively continue collection of the local motor vehicle fuel tax (“gas tax”) at the five-cent per gallon level, thereby preserving nearly $1.4 million in annual street funding revenue. Capital Pavement Preservation Needs – The current five-cent gas tax has allowed the City to complete nearly $16.5 million in street preservation project work since 2003, with additional contracts in progress. This past year, more than 17.4 lane miles of slurry seal projects and 20.5 lane miles of rehabilitation projects were completed, including the overlay of portions of 18th Avenue, Chambers Street and Bailey Hill Road. Project th plans for 2008 include portions of East 13 Avenue, Barger Drive, Chambers Street and Roosevelt Boulevard. In spite of these accomplishments, the backlog of needed repair work continues to grow in the face of rapidly rising construction costs and insufficient revenues. In late 2001, the City was facing an estimated $67 million backlog in pavement preservation work. By spring of 2007, the estimated cost of that backlog had grown to nearly $170 million and, with no new funding, is projected to grow to $282 million within the next 10 years. With the impending loss of the additional two-cent tax, which provides 40% of the current fuel tax proceeds, the growth in the backlog of street repairs would accelerate even more rapidly. According to the American Public Works Association, the cost of reconstructing a road on which maintenance has been deferred is five times as much as the cost to perform a timely overlay on the same road several years earlier. This is borne out by the Eugene’s own experience in recent years, which shows that it costs approximately four times as much to reconstruct a road as it would to overlay the road and extend its life for 20 years. One of the most cost-effective uses of pavement preservation dollars is to perform overlays on roads which are identified as likely to fall into the much more expensive “reconstruct” category if the overlay treatment is not performed in the upcoming year. The nearly $1.4 million of of annual gas tax proceeds at stake in this decision would help fund the pavement preservation overlay program and leverage those community dollars to avoid many times those repair costs in future years. One of the primary goals of the pavement preservation program is to rehabilitate streets with an overlay before they require the most expensive level of repair, a reconstruction. Additionally, when streets go through reconstruction, the community and adjacent property owners are subject to considerable delay and inconvenience. With the funding provided by the additional two-cent gas tax over a three-year period, the City would be able to fund an estimated $4 million worth of overlay projects that are otherwise at risk of falling into the expensive reconstruction category. This is the same strategy followed by the Eugene Budget Committee when they allocated $1.5 million to help fund the pavement overlay program in FY08. This funding would allow an estimated additional 20 lane-miles of street to be overlayed over three years, which would prevent these streets from further deterioration, thereby avoiding expensive reconstruction. The nearly $4 million generated by the additional two-cent gas tax over the next three-year period would save an estimated $16-20 million (today’s dollars) in future reconstruction costs. Legal Uses of Revenue - The restrictions on the use of local fuel tax revenues for street system operations, maintenance and preservation is provided in Eugene City Code 3.489 (2): “The net revenue shall be used only for the reconstruction, repair, maintenance, operation and preservation of City-owned roads and streets within the city, roads and streets for which the City is contractually or legally obligated to operate and maintain, or roads and streets for which the City has accepted responsibility under intergovernmental agreement. No revenue shall be used for capacity-enhancing street improvements.” Use of local motor vehicle fuel taxes is also limited by the Oregon Constitution (Article IX, Section 3a), which states that F:\CMO\2008 Council Agendas\M080128\S0801284.doc “revenue from taxes on motor vehicle use and fuel … shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state.” Road Operations and Maintenance Needs - The City’s Road Fund accounts for the operation and maintenance of Eugene’s street system. Due to flat growth in state revenues and loss of historical county road partnership revenues, the Road Fund is currently expected to have an annual operating deficit of over $1.8 million for FY08 (growing to $2.3 million by FY10) for ongoing activities such as street lighting, pothole patching, street tree maintenance, signing and striping of city streets. At some point, the council will be faced with a decision to either reduce the current service levels of road operations and maintenance activities or dedicate a portion of new or existing funding sources to maintaining the service levels. Implementation Timeframe - Our tax administrator, the ODOT Fuels Tax Group in Salem, suggests that notice provided them as of the end of January for the repeal of the sunset provision would be optimal for their administration of this change in code and also provide adequate time for notice to Eugene fuel dealers. For that reason, action is requested on one or the other of the proposed ordinances tonight. 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 The council has the following options: 1. Council could decline to take action on either proposed 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; 2. Council could approve the proposed code amendments as shown in Attachment A to extend the sunset provision for three additional years to February 28, 2011, leaving the fuel tax at five cents per gallon for an additional three years, in order to allow sufficient time for state legislative efforts to bear fruit and for development and implementation of other elements of the council package funding strategy; or 3. Council could approve the proposed code amendments as shown in Attachment B to repeal the sunset provision enacted in 2005, effectively leaving the fuel tax rate at five cents per gallon for an indefinite period. F:\CMO\2008 Council Agendas\M080128\S0801284.doc CITY MANAGER’S RECOMMENDATION The City Manager recommends Option 2 for the adoption of these proposed amendments to the motor vehicle fuel tax code to extend the sunset provision in Section 3 of Ordinance No. 20337 for three additional years to February 28, 2011, leaving the fuel tax at five cents per gallon for that period. SUGGESTED MOTION Move to adopt an ordinance concerning motor vehicle fuel dealer’s business license tax and amending Section 3 of Ordinance 20337 to extend the sunset provision for three additional years to February 28, 2011. ATTACHMENTS A. An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business License Tax: Amending Section 3 of Ordinance No. 20337 B. An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business License Tax: Repealing Section 3 of Ordinance No. 20337 C. Draft Minutes from Public Hearing held January 14, 2008 D. Memorandum from City Recorder regarding election timeline FOR MORE INFORMATION Staff Contact: Kurt Corey Telephone: 682-5241 Staff E-Mail: kurt.a.corey@ci.eugene.or.us F:\CMO\2008 Council Agendas\M080128\S0801284.doc ATTACHMENT A ORDINANCE NO. __________ AN ORDINANCE CONCERNING MOTOR VEHICLE FUEL DEALER’S BUSINESS LICENSE TAX AND AMENDING SECTION 3 OF ORDINANCE NO. 20337. The City Council of the City of Eugene finds that: A. In January 2005, the City Council enacted Ordinance No. 20337 approving a two- cent increase to the motor vehicle fuel tax from three to five cents per gallon. Section 3 of Ordinance No. 20337 contained a sunset provision with respect to the two-cent increase. The sunset provision will cause the tax to revert to three cents per gallon on February 29, 2008. B. In adding the sunset provision, the City Council anticipated that the three years would allow sufficient time to complete a comprehensive review of available funding options and to develop a stable funding strategy to meet the City’s transportation system needs. C. Although substantial street preservation work has been completed utilizing the five-cent per gallon motor vehicle fuel tax, the backlog of needed repair work continues to grow and construction costs continue to rise. By early 2007 the estimated cost of that backlog had grown to nearly $170 million, and without new funding, is projected to grow to more than $280 million within the next 10 years. D. The Council subcommittee studying the City’s transportation funding needs and options recommended that the current five cent per gallon motor vehicle fuel tax be increased by three cents per gallon to eight cents per gallon. E. On May 29, 2007, the City Council approved Ordinance No. 20384, which increased the motor vehicle fuel dealer’s license tax by three cents per gallon and repealed the sunset provision contained in Section 3 of Ordinance No. 20337. This ordinance was subject to a referendum petition, and the Council subsequently repealed Ordinance No. 20384. In lieu of that ordinance, the Council submitted to the electors of the City a measure to increase the motor vehicle fuel dealer’s business license tax by three cents per gallon. F. At the election held on November 6, 2007, the electors of the City rejected the measure to increase the motor vehicle fuel dealer’s business license tax by three cents per gallon. G. The City Council finds it would be in the public interest to extend by three years the sunset provision in Section 3 of Ordinance No. 20337, so that the motor vehicle fuel dealer’s business license tax as set forth in Section 3.467(b) of the Eugene Code, 1971 remains at five cents per gallon until February 28, 2011. NOW, THEREFORE, based on the above findings, Ordinance - 1 S0801284-attA.DOC THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Section 3 of Ordinance No. 20337 (the sunset provision) adopted by the City Council on January 24, 2005, is hereby amended to read: “Unless otherwise extended by the City Council, the amendment to Subsection (b) of Section 3.467 shall sunset on February 28, 2011, and the tax will revert to three cents per gallon.” Section 2. A copy of this Ordinance shall be appended to Ordinance No. 20337. Passed by the City Council this Approved by the Mayor this ____ day of ____________, 2008 ____ day of ______________, 2008 ___________________________ _____________________________ City Recorder Mayor Ordinance - 2 S0801284-attA.DOC ATTACHMENT B ORDINANCE NO. __________ AN ORDINANCE CONCERNING MOTOR VEHICLE FUEL DEALER’S BUSINESS LICENSE TAX AND REPEALING SECTION 3 OF ORDINANCE NO. 20337. The City Council of the City of Eugene finds that: A. In January 2005, the City Council enacted Ordinance No. 20337 approving a two- cent increase to the motor vehicle fuel tax from three to five cents per gallon. Section 3 of Ordinance No. 20337 contained a sunset provision with respect to the two-cent increase. The sunset provision will cause the tax to revert to three cents per gallon on February 29, 2008. B. In adding the sunset provision, the City Council anticipated that the three years would allow sufficient time to complete a comprehensive review of available funding options and to develop a stable funding strategy to meet the City’s transportation system needs. C. Although substantial street preservation work has been completed utilizing the five-cent per gallon motor vehicle fuel tax, the backlog of needed repair work continues to grow and construction costs continue to rise. By early 2007 the estimated cost of that backlog had grown to nearly $170 million, and without new funding, is projected to grow to more than $280 million within the next 10 years. D. The Council subcommittee studying the City’s transportation funding needs and options recommended that the current five cent per gallon motor vehicle fuel tax be increased by three cents per gallon to eight cents per gallon. E. On May 29, 2007, the City Council approved Ordinance No. 20384, which increased the motor vehicle fuel dealer’s license tax by three cents per gallon and repealed the sunset provision contained in Section 3 of Ordinance No. 20337. This ordinance was subject to a referendum petition, and the Council subsequently repealed Ordinance No. 20384. In lieu of that ordinance, the Council submitted to the electors of the City a measure to increase the motor vehicle fuel dealer’s business license tax by three cents per gallon. F. At the election held on November 6, 2007, the electors of the City rejected the measure to increase the motor vehicle fuel dealer’s business license tax by three cents per gallon. G. The City Council finds it would be in the public interest to repeal the sunset provision in Section 3 of Ordinance No. 20337, so that the motor vehicle fuel dealer’s business license tax as set forth in Section 3.467(b) of the Eugene Code, 1971 remains at five cents per gallon. NOW, THEREFORE, based on the above findings, Ordinance - 1 S0801284-attB.DOC THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Section 3 of Ordinance No. 20337 (the sunset provision) adopted by the City Council on January 24, 2005, is hereby repealed. Section 2. A copy of this Ordinance shall be appended to Ordinance No. 20337. Passed by the City Council this Approved by the Mayor this ____ day of ____________, 2008 ____ day of ______________, 2008 ___________________________ _____________________________ City Recorder Mayor Ordinance - 2 S0801284-attB.DOC ATTACHMENT C Draft Minutes from Public Hearing Held January 14, 2008 6. PUBLIC HEARING: An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business License Tax and Repealing Section 3 of Ordinance No. 20337 Ms. Jones asked Director of the Public Works Department, Kurt Corey, to introduce the item. Mr. Corey explained that the hearing sought to solicit public input on whether or not to maintain the status quo with regard to the Eugene gas tax, presently set at 5 cents per gallon. He reviewed the timeline to present; the first 3 cent component of the gas tax was implemented in January, 2003, and an additional 2 cents was added in January, 2005, the latter planned to sunset after three years. He underscored that the backlog of street maintenance was now in excess of $170 million. He said after three years there were no additional state, county, or regional solutions at this point. He noted that the committee convened by the Mayor had confirmed that a gas tax was a fair and equitable component of a comprehensive package of funding solutions. He stated that action on this item was scheduled for January 28. He listed the potential actions the council could take, which ranged from reinstituting the gas tax to taking no action with the 2 cent component subsequently sunsetting. Mayor Piercy opened the public hearing. William Ivanoff , 1810 Harris Street, #336, noted that fuel stations had indicated a move to rid the City of the tax. He believed the City should save legal and ballot costs by repealing the tax when it sunsets. He averred that automobiles were becoming more fuel efficient while wear and tear of the streets increased. He said every time the City annexed more lane miles for public use the maintenance costs for the City increased while funds did not increase commensurately. He asked if the City Council was willing to “starve” the rest of the City to insure that the people who lived on the edges of the City or outside of it could drive on smooth roads. He asserted that the only people who used roads on the outsides of the City were the people who lived there and their guests. He felt the streets that were closer to the core of the City were used by everyone. He suggested that the City allow the people who lived on the periphery of the City to maintain their own roads as private streets. He said if that was not an option, the City should tax each square foot of parking area and remove minimum parking standards. Zachary Vishanoff , Patterson Street, questioned whether there was truly a $170 million backlog. He wondered if a consultant was saying that because he or she wanted money and suggested that the City get a second opinion. He added that turning the cameras on for all city meetings would bring “light to all fiscal issues.” He thought the Council Committee on Intergovernmental Relations (CCIGR) had “all sorts of pork barrel spending that happens.” He felt that it was easy to turn the switch on for the cameras in the McNutt Room. He asserted that the reason the City had a backlog of street repairs was that it had “handed out premiums to developers.” He opined that selling off the parking garages would bring in income to counteract the backlog. He also thought the “nest egg” set aside for a future City Hall should be applied to the backlog. He said the taxpayers would then say “oh gee we’re not hiding money anymore” and they would be more likely support a City Hall project in the future because they perceived that the government was “willing to be straight.” He added that if the backlog of projects was addressed as part of the regular city budget then the City would not “do the Olympics first and then the potholes.” He likened this to “eating dessert before having dinner.” Terry Connolly , 1401 Willamette Street, speaking on behalf of the Eugene Chamber of Commerce, said given the likelihood that the 2 cent gas tax would be referred to voters and then repealed if the council chose to keep it, the decision before the council was whether it would be better off spending the next several months engaged in another debate about a gas tax or using the time to make the case to the public for a bond measure to pay for street repairs. He felt to do so without the gas tax competing with the message to the public would benefit the potential bond measure. He related the Chamber’s recommendation which was to choose the latter course of action. He believed that the energy to be spent on the gas tax would be better served in working with others who were focusing on a comprehensive funding package in the Oregon Legislature to be approved in the 2009 session. He stated that the Eugene Chamber and “virtually every” leading business organization and trade association in the State of Oregon was asking the legislature to approve a package that would provide the funding that was needed for the operation and maintenance of the transportation infrastructure throughout the state, counties, and cities. He understood why the City would not want to part with the $1.7 million that the 2 cent gas tax generated per year. He felt that choosing to let the 2 cent tax sunset for the time being would allow the council and the Budget Committee to identify other sources of existing revenue or a portion of the capital reserves to offset the reduction “at least for a couple of years.” He also thought this would be looked upon favorably by the voters. Ron Tyree , 4000 Spring Boulevard, Ward 2, stated that he operated a local distributorship. He supported the upgrade needed in transportation and fuel taxes as a source of revenue for those repairs. He did not support taxes that were different throughout different jurisdictions. He averred that this caused confusion and an unfair competitive advantages or disadvantages for local gasoline marketers. He said the price discrepancy was also causing people to shift their fuel purchases to other areas. He related that the volume for the area had dropped from 80 million gallons per year to 70 million gallons per year, a 12 percent drop in volume. He attributed this drop solely to the gas tax. He reiterated that there was a consolidated group that was working at the legislative level to improve the state gasoline tax. He believed there was a “real chance” that this could be positive and successful. He declared that Eugene stood to gain $4 million per year if the tax, as proposed, went through. This was equivalent to a 6 cent per gallon tax. He thought a local tax would cause people to oppose any tax at all. He recommended allowing the 2 cent tax to sunset. He said if the statewide effort failed in 2009 he would help support a countywide gas tax. Paul Romain , 707 Southwest Washington Street, #927, representing the Oregon Petroleum Association (OPA), pledged that the OPA would work for a 12 to 14 cent increase in the state gasoline tax to be implemented immediately upon approval of the legislation. He said the part that would go to local government would be negotiated. He stressed the OPA opposition to local gas taxes. He implored the council to not “put [them] in the position of having to put the gas tax on the ballot.” John Anderson , 3340 King Edwards Court, Ward 4, voiced his opposition to the 2 cent gas tax. He felt the public had already voted on whether it wanted a gas tax by reducing the amount of fuel purchased locally. He said while people had not changed their driving habits, they had changed their purchasing habits. He averred that he would be the “first to step up” to help find a more local solution if the legislative session did not result in improved funding. Murphy McHugh , 1848 Russet Drive, echoed the comments of those in support of the sunset clause. He averred that the council had “penalized” him for being a gas station owner in the City of Eugene. He said if he sold gasoline five blocks away from his current location the fuel would be 5 cents cheaper. He related that his business was down and this had resulted in having to lay off people. He pointed out that one large chain store that sold gas would have people backed up eight cars deep just because the gas there was a few cents cheaper per gallon than in other places. He also felt that people in Florence who formerly went to Eugene to shop and purchase gas now stayed home because the gas was cheaper there. He noted that the State had decided to require that ethanol be combined with gasoline and this would result in a 30 percent reduction of emissions. He said this was good for the State. He believed that the State would choose to pursue a statewide remedy for transportation funding for the same reason. He underscored his belief that a local gas tax only hurt local dealers. Aaron Johnson , 2672 Canterbury Street, remarked that the City Council had an important decision before it: to vote with the electors or to vote against them with “blatant disregard to those who” elected them to office. He said it was up to the council to stand up and vote on behalf the people of the City. He averred that the people needed the council’s help to stop the “unfair tax burden.” He acknowledged that the roads were in a state of disrepair and that the 2 cent gas tax might sound like a good idea. He believed, however, that it would cause problems “on further issues.” He felt that a statewide fee would cause all Oregonians to shoulder the burden equally. He thought a local tax would continue to hurt the tax base. He questioned how the City could hope to repair the “decaying downtown” if people stopped coming to Eugene for the goods and services available there. He believed continuing “down this road” would hurt the people of Eugene. He predicted the coming recession would add to the strain. He related that he had 24 employees when the tax began and he now had 16. He added that several of the former employees were now on government assistance while they pursued other employment. He asserted that the City was forcing small station owners to sign long contracts with “big oil,” thus removing competition and causing prices to rise unchecked. He commented that one owner had closed his stations and “walked away.” th Howard Bonnett , 1835 East 28 Avenue, suggested an alternative political strategy: extend the tax for three more years in order to see if the State would pursue another mode of funding. He said in the mean time the gas tax would provide another $3 million more for the roads that need work. He invited anyone who drove elsewhere to buy cheaper gasoline to consider how much the drive to purchase it costs. Mayor Piercy closed the public hearing and opened the floor for councilor comments. Councilor Ortiz commented that she did not look at the City of Eugene selling less gasoline as necessarily a bad thing. She would surmise that people were living within their footprint. She felt that spending money locally in one’s own community was a good thing. She had supported the gas tax in the past because she heard the frustration of staff regarding not being able to address deteriorating roads and she heard feedback from constituents regarding the roads. Councilor Pryor thought the vote in November was something the council should pay attention to. He was uncertain as to how he would vote on it at this point. He recalled that he had debated the last gas tax with Mr. Romain and he believed Mr. Romain was sincere when he said he would work to pass a statewide gas tax. He indicated his willingness to work with Mr. Romain and others on such a tax. He had some concern that continuing the 2 cent tax would result in a situation where the council could find it voted down as the proposed tax on the November ballot had been voted. He also found it difficult to walk away from $1.4 million, which he believed was desperately needed. He wanted to have community support for the larger elements of the transportation package the committee had worked on. He was concerned that the gas tax could negatively impact a bond measure. He agreed that street repairs should not be a “sidebar issue” when talking about the budget. Councilor Bettman thanked everyone who testified. She said she did not “read” the election as the voters rescinding the existing gas tax. She acknowledged that some would disagree with an action to extend the gas tax and that those people would have a right to place it on the ballot. She appreciated hearing that people were willing to “step up to the plate” to help at the state level “if [the council] did what they wanted.” She commented that the bond would not provide enough money to fund the backlog of street repairs. She asked if it would be possible to modify the ordinance so that the sunset date could be postponed until it was triggered by a remedy implemented by the State or County that would satisfy the City’s funding need. City Attorney Jerry Lidz stated that the council could amend the ordinance but it could not make the sunset date contingent upon the action of another government body. He said the council could extend or repeal the sunset. He explained that it was a constitutional principle that a governmental body could not delegate its legislative authority to the legislature. Councilor Bettman requested ordinance language that would extend the tax by three years, indicating that this would be enough time to see if there were other remedies at the State and/or County level. Councilor Clark was pleased to hear Mr. Romain indicate he would be willing to work toward a statewide solution. He heard that the gas tax was not the right funding solution but that those in opposition to the tax were committed to finding the right one. He agreed that it was a larger issue than an individual revenue stream and that it was a larger core service issue. He believed that there was money in the City’s budget but it was not being spent as people expected it to be spent. He felt that people wanted the City to “deal with at least some of this problem” with the money that it had. He was somewhat concerned that repealing the sunset would cause there to be two political fights at the same time: one to keep the $1.4 million and the other to pass a bond which could potentially generate tens of millions of dollars. He was inclined to believe that it would be wiser for the City to seek short-term solutions with the money it already had. Councilor Zelenka stated that the gas tax could only be used on road maintenance by law. He felt that anyone who mistrusted the city government should stand “rest assured” that it would be illegal to spend it on other things. He acknowledged that the gas tax was tough for people on fixed and low incomes but this was not an increase, it was maintaining the status quo. In response to those who said the council should listen to the voters he wished to point out that the voters in Wards 1, 2, and 3 voted “overwhelmingly” in support of the gas tax increase. He thought it likely they would do the same in a vote to maintain the existing tax. He questioned whether the gas tax was truly the cause of all gas station owners’ woes. He noted that he sat on the Metropolitan Policy Committee and observed that Oregon Department of Transportation funds to every part of the state were being cut because the revenues from the gas tax had been declining. He attributed this to the increase in efficiency in cars. He stated that the 5 cent gas tax had already paid for $16.5 million in road maintenance over the past few years. He disputed any assertion that the backlog did not exist, adding that anyone who thought so should “just drive around.” He averred that the City had been “abandoned by the feds and abandoned by the State” and this was why the City had pursued a funding solution on the local level. He was skeptical that a “petroleum guy” would help promote a statewide increase in the gas tax. He asserted that half of the people who used the roads in the City of Eugene did not help to pay for the roads in property taxes. Councilor Poling believed the City needed a concentrated effort to get all of the cities on board in support of either a countywide gas tax or to submit something to the State. He believed that everyone needed to work in unison. He recalled that he and some other Budget Committee members had attempted to utilize some of the money that had been saved for the proposed City Hall complex to address the transportation infrastructure issue. He related that it had not “gone over well.” He suggested that everyone who was opposed to a gas tax to come and testify before the Budget Committee, asking that some of that money be utilized to make up for the money that the City would not be getting if the 2 cent tax was repealed. He noted that Councilor Taylor had oft suggested the institution of a countywide vehicle registration fee. He thought the time might be right to look into that. Councilor Taylor expressed appreciation for the offers to help promote a funding solution at the legislative level. She reiterated her support for a vehicle registration fee. She agreed with Mr. Bonnett’s suggestion to extend the 2 cent tax for three more years. Councilor Bettman noted that the City Council was holding a public hearing on February 19 on the council’s discretion for the timing of ballots. She wished to alert those who might ultimately place the 2 cent tax on a ballot, should it not be sunsetted. The meeting adjourned at 9:18 p.m. ATTACHMENT D City Recorder’s Office City of Eugene 777 Pearl Street, Room 105 M Eugene, Oregon 97401-2793 EMORANDUM (541) 682-5042 (541) 682-5414 FAX www.eugene-or.gov Date: January 23, 2008 To: Mayor and City Councilors From: Mary Feldman, City Recorder Subject: Potential Referendum Election This is to provide information about the timing of an election on a referendum that could be filed if council approves extension of the gas tax sunset date at its January 28 meeting. Assuming the Mayor signed an ordinance the following day or day after, petitioners could file a prospective referendum petition January 29 or 30. If that occurred on one of those two dates, petitioners would have until February 27 or 28 to gather the requisite 6,365 signatures. Should the Mayor sign the ordinance later, all subsequent dates would need to be adjusted accordingly. Lane County is allowed 15 days to complete signature verification, or until March 13 or 14. Once signature verification was successfully completed by Lane County, the City Recorder would certify the petition, likely on either March 14 or 17. Both of these dates are well past the 90-day deadline for the City Recorder's certification of a petition for the May 2008 election (that date is February 20). In order for the measure to be placed on the May ballot instead of going to a September special election, one of two things would need to occur: 1) The petitioners would need to submit their signatures for verification in less than the 30 days allowed; in fact, no later than February 4. The City has no ability to require that and since it would reduce the likelihood that a sufficient number of signatures would be gathered, there is little incentive for petitioners to do so; 2) The City Council, without knowing the outcome of the referendum effort, could take action no later than March 15 (66 days prior to the election) to refer the ordinance to the May election under the ballot title prepared (and appealed or not) at the beginning of the referendum process. The last opportunity to do that prior to council break would be either March 10 or 12. Please feel free to contact me at 682-8353 if you have questions about the election process and timing issues. May08 referendum deadlines memo