HomeMy WebLinkAboutItem 7: Ordinance Concerning Business License Tax on Motor Vehicle Fuel Dealers
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Public Hearing: An Ordinance Concerning Motor Vehicle Fuel Dealer’s Business
Licenses; Repealing Section 3 of Ordinance 20337; and Amending Section 3.467 of the
Eugene Code, 1971
Meeting Date: February 20, 2007 Agenda Item: 7
Department: Public Works Staff Contact: Kurt Corey
www.eugene-or.gov www.eugene-or.gov Contact Telephone Number: 682-5241
ISSUE STATEMENT
This public hearing provides an opportunity for the council to hear input from the community with
regard to proposed revisions to sections of the Eugene City Code dealing with the Business License Tax
on Motor Vehicle Fuel Dealers. The proposed amendments would increase by three cents the existing
Eugene motor vehicle fuel tax rate (to eight cents per gallon) and, at the same time, repeal the sunset
provision on the two-cent fuel tax rate increase enacted in 2005.
The intention of these changes would be that the proceeds from the additional three cents be dedicated to
funding Road Fund operations and maintenance activities. Eugene lacks adequate funding to operate,
maintain, and preserve its local transportation system. For FY08, the annual deficit for operation and
maintenance activities in the Road Fund is projected to exceed $1.6 million.
BACKGROUND
The City’s first motor vehicle fuel tax was enacted in January 2003, based on the recommendation from
the Citizen’s Subcommittee on Transportation System Funding. Its recommendation was for a
combination local motor vehicle fuel tax and transportation system maintenance fee for the purpose of
generating an additional $9 million annual to address the City’s critical transportation system funding
needs.
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 council
added the sunset provision 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 funding strategy for transportation system needs.
On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for
Eugene’s Road Fund. Based on that discussion, the council directed the City Manager to develop a
FY07 Road Fund budget at the current service level and to bring back a proposal for a new revenue
funding package which would address the projected ongoing operating deficit in street operations and
maintenance, in addition to generating additional revenue for funding the backlog of unfunded projects
in the pavement preservation program.
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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. At that same meeting, the council directed the City Manager to conduct a public
hearing on proposed amendments to City Code which would increase the Business License Tax on
Motor Vehicle Fuel Dealers by three cents per gallon to the eight-cent level and repeal the sunset
provision on the two-cent fuel tax rate increase enacted in 2005, with the intention that the proceeds
from the additional three cents be dedicated to Road Fund operations and maintenance activities. The
proposed revisions to the Eugene Code concerning motor vehicle fuel tax are outlined in Attachment A.
Financial and Legal Analyses and Implementation Issues
Increasing the local motor vehicle fuel tax rate by three cents to the eight-cent level would provide an
additional $2 million annually to address the projected ongoing operating deficits in the Road Fund
operations and maintenance activities. While the annual operating deficit is projected at $1.6 million for
FY08, that annual deficit is projected to exceed $2 million per year by FY10.
The authority to use fuel tax revenues for transportation system operations and maintenance is provided
at EC 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 further limited by the
Oregon Constitution (Article IX, Section 3a), which states that “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.”
To ensure continuation of a reliable tax revenue stream at an adequate level to support ongoing street
operations and maintenance, staff recommends that the council repeal the sunset provision enacted in
2005, which would otherwise cause the tax rate to revert to the three-cent level as of February 29, 2008.
Staff discussions with the City’s 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.
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 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.”
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COUNCIL OPTIONS
No options are offered, as this is a public hearing.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends adoption of these proposed amendments to the motor vehicle fuel tax
code to provide an additional $2 million annually to address the projected ongoing operating deficits in
the Road Fund operations and maintenance activities in FY08 and beyond and that the council consider
action on the amended ordinance on April 9, 2007
SUGGESTED MOTION
No motions are offered, as this is a public hearing.
ATTACHMENTS
A. Proposed amendments to the Eugene City 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; REPEALING SECTION 3 OF ORDINANCE
20337; AND AMENDING SECTION 3.467 OF THE EUGENE CODE,
1971.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1.
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 $.0[5 (five] 8 (eight 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 2.
Section 3 of Ordinance 20337, passed by the City Council on
January 24, 2005 and approved by the Mayor on January 26, 2005 is repealed as of
the effective date of this Ordinance.
Section 3.
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
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 ____________, 2007 ____ day of ______________, 2007
___________________________ _____________________________
City Recorder Mayor
Ordinance