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HomeMy WebLinkAboutCC Minutes - 11/12/08 Work SessionM I N U T E S Eugene City Council Work Session Meeting of the Eugene Urban Renewal Agency McNutt Room 777 Pearl Street—Eugene, Oregon November 12, 2008 Noon COUNCILORS PRESENT: Mike Clark, Jennifer Solomon, Bonny Bettman, Andrea Ortiz, Alan Zelenka (via telephone), and Chris Pryor. COUNCILORS ABSENT: Betty Taylor, George Poling Her Honor Mayor Kitty Piercy called the meeting of the Eugene City Council to order at 12:02 p.m. A. WORK SESSION: Road Fund Status and FY10 Budget Strategy City Manager Jon Ruiz noted that the budget process surrounding the Road Fund had been ongoing and required creative input to ensure the operation of the City’s street system. Mr. Ruiz introduced Public Works Director Kurt Corey, who presented “City of Eugene Transportation System Funding” chart information for the council. He reminded them of the three main components of the transportation system funding process: operations and maintenance, capital preservation and new streets/enhanced capacity. Mr. Corey further noted that his comments in the work session would focus primarily on funding issues related to Transportation System Operations and Maintenance (O&M). Mr. Corey briefly reviewed the funding sources for the O&M activities as listed in the “Financial and/or Resource Considerations” section of the agenda item summary. He commented that the projected cost of O&M services for FY08 was slightly in excess of $10 million but that projected revenues for O&M were slightly less than $7 million. Mr. Corey noted that while funds from O&M could be transferred into capital preservation and vice versa, neither of those sections could be used to fund new streets/enhanced capacity. Mr. Corey noted that the roughly $3 million revenue shortfall for O&M was the result of decreases in the State highway trust fund and Oregon Transportation Investment Act III (OTIA) revenues, the loss of funding partnerships with Lane County and various increases in operating costs. Mr. Zelenka phoned in to the work session at 12:10 p.m. Mr. Corey said that the O&M funding shortfall would need to be addressed for FY10. Mr. Corey provided an overview of Public Works’ recent strategies to assess the budget shortfall as described in the “Cost- Containment and Efficiency Initiatives” section of the agenda item summary. He added that the council subcommittee formed after the completion of those initiatives had recommended a variety of additional strategies including a 3% local gas tax, a parking transportation utility fee, lighting fees for street lights, an additional bond measure, and a solid waste collection surcharge. Mr. Corey noted that the current set of Transportation System recommendations were designed to address the $4 million O&M budget shortfall for FY10. He then directed the council to the description of the “Illustrative MINUTES: Eugene City Council November 12, 2008 Page 1 Work Session Effects of $4 Million Service Reductions” section of the agenda item summary and Attachment A to the summary, Examples of Service Impacts in a $4.0 Million Road Fund Budget Reduction Scenario by Order of Magnitude, which described the reductions in greater detail. Mr. Corey noted that the services listed in the reduction breakdown had not been prioritized, and further noted that the reductions did not appear to be scalable in any feasible way. Mr. Corey briefed the council on the two interim funding strategy revenue options from the agenda item summary: franchise fees on City and other utilities and a surcharge on garbage haulers. He noted that the garbage surcharge option had been brought before the council in 2007 and failed in a 5 to 4 vote, but that Public Works still felt it was a viable option to consider. Mr. Corey noted that the utility franchise fee option would make use of an existing billing system and subsequently require significantly lower overhead costs than other revenue options. Mr. Corey, in describing the process of the garbage surcharge revenue option, restated for the council that it was based on the assumption of a clear nexus between garbage haulers and the impact on local transportation systems. He added that the garbage surcharge option, like the franchise fees, would make use of pre-existing billing systems in order to save on overhead costs. Mr. Corey noted that lighting fees, transportation utility fees based on parking spaces, and a re-allocation of the City’s five-cent gas tax, continued to be considered as possible revenue options as well. Mr. Corey noted that the council could also chose to divert revenue from the City’s General Fund to O&M expenditures as described in the agenda item summary. Mr. Corey noted that the supplemental O&M funding that Lane County Public Works had received Lane through the County’s Secure Rural Schools program would suffer significant reductions over the next four years before potentially ceasing altogether. Therefore, revival of the historic County/City partnership payment was unlikely. Mr. Corey noted that O&M funding from the State legislature in the form of Governor Kulongoski’s proposed Jobs Transportation Act of 2009 might be forthcoming as well. Mr. Corey noted that, absent any significantly altered direction from the council, Public Works would proceed with the fourth council option from the agenda item summary: to develop the FY10 Road Fund budget based on funding assumptions to include one or more of the proposed new revenues, some modest efficiency savings and service realignments and, if necessary, and only after further Council discussion, redirection of a minor portion of the local gas tax proceeds to fund on-going street operations and maintenance services. Mr. Corey, responding to a question from Mr. Clark regarding what funding might be forthcoming from the State legislature, noted that there was endless debate regarding the matter, but that the Governor’s proposed plan included a two-cent fuel tax increase as well as increased vehicle registration fees. Mr. Corey maintained that while a City gas tax would be more favorable to Eugene than a state gas tax, gas taxes overall would most likely become a less consistent revenue source for state and local governments in the coming years. Mr. Clark noted that the council had anticipated the shortfalls for the Road Fund and the FY10 O&M budgets, but that he was reluctant to add new local taxes in light of recently passed bond measures. In addition to his measured support of the fourth option before the council, Mr. Clark noted that he was also in support of the third option to redirect portions of existing revenue sources. MINUTES: Eugene City Council November 12, 2008 Page 2 Work Session Mr. Corey, responding to a request from Ms. Piercy, clarified the State revenue proposals being discussed by noting that the distribution of the potential revenue would end up as 50% for the State, 30% for counties, and 20% for cities. Mr. Corey, responding to a question from Ms. Bettman, reported that the service impact list previously discussed had not been reviewed by the City’s Risk Services Division and that the illustrative service reductions on the list had not been prioritized or similarly evaluated by any City agency. Ms. Bettman worried that some of the proposed reduced services might expose the City to potential liabilities and that any lawsuit indirectly resulting from service reductions could completely wipe out any potential savings. Ms. Bettman said the City should investigate other previously suggested revenue options such as transportation system development charges (SDC) and a re-evaluation of the SDC credits offered to developers in the area. Ms. Bettman noted that Lane County did not charge any SDC’s and that the City might assist the County in doing so sometime in the future. Ms. Bettman felt the Public Works department should reconsider concrete as opposed to asphalt for its transportation system projects. She added that Public Works should cease its assumptions of jurisdiction over County roads as it only exposed the City to greater liability. Mr. Pryor noted he would like more information on the various issues of legality involved with imposing transportation SDC’s at the city level. He further noted that he was very concerned about budget shortfalls for the capital preservation of existing City streets, and for which SDC’s could not be used. Mr. Pryor felt that the revenue necessary to adequately provide for the Road Fund and the FY10 budget could not be found in service reductions alone and that the need to find new sources of City revenue for transportation systems was great. Mr. Zelnka agreed with Mr. Pryor’s statements and felt the service reductions put the City too deeply in a hole to rely on cuts alone. He added that the recently passed bond measures for streets might help the problem, but it would ultimately be necessary to find new sources of revenue. He noted that the street utility fee recently suggested by a council transportation subcommittee might be a potential source of revenue for transportation systems. Ms. Bettman indicated she had not read Governor Kulongoski’s proposed transportation bill, and asked if it would be dedicated to a specific transportation purpose or used towards different projects in the same manner as gas tax revenues. Mr. Corey responded that the bill would hopefully simply increase the amount of state money allocated to the cities through the State highway trust fund and, as such, could be used in a variety of ways for O&M transportation concerns. Mr. Ruiz concurred with Mr. Corey’s statement. Ms. Bettman felt the franchise fee or garbage surcharge revenue options before the council would be tantamount to asking the public to assume the debt for the O&M budgets, and indicated that she did not support either option. She maintained that the best revenue option from her perspective would be the parking space transportation utility fees previously suggested by the council transportation subcommittee. Ms. Bettman believed that the federal government would most likely begin to broaden its transportation policies in the coming years, and that subsequently the City would be wise to consider the use of streetcars should federal funding eventually be made available for such a purpose. Mr. Pryor agreed with Ms. Bettman’s comment regarding the two revenue options, and noted that the City’s interests would be best served by a combination of service reduction/reorganization and new or enhanced MINUTES: Eugene City Council November 12, 2008 Page 3 Work Session revenue sources. He commented that the parking space transportation utility fees previously suggested by the council transportation subcommittee might be difficult to fairly assess. Mr. Zelenka commented that he was not hopeful that service reductions or similar reorganizations would be sufficient to address the Road Fund and FY10 budget problems. He felt that the street utility, garbage hauler, and franchise fees would be a good place to start with regard to potential new revenue sources. Ms. Piercy recognized that it was uncertain what federal and state commitments to the support of transportation system infrastructure would be in the future, but appreciated that the council desired to present a united front with the State legislature in addressing the budget problems. Mr. Ruiz commented that a transportation utility fee was a good idea that would require further discussion. He reminded the council that the City would be moving forward with creating the FY10 budget and that they would need to be making some tough decisions regarding it fairly soon. Mr. Clark commented that the City might have a better indication about the plans of the federal government as the time got closer to finalizing the FY10 budget in the spring. Mr. Zelenka said that a street utility fee should not be postponed any longer and that the council should direct staff to begin preparations for adoption and implementation of such a fee as soon as possible. The meeting adjourned at 12:51 p.m. Respectfully submitted, Jon Ruiz City Manager (Recorded by Wade Hicks) MINUTES: Eugene City Council November 12, 2008 Page 4 Work Session