HomeMy WebLinkAboutCC Minutes - 02/18/09 Work Session
NAME OF MEETING: Eugene City Council Work Session
DATE OF MEETING: February 18, 2009
TO: Vicki Cox
RECORDED BY: Lynn Taylor
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R O U T I N G I N F O R M A T I O N
2/28/09 lt Draft to City Manager’s Office
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3/24/09vc Council Amendments Incorporated
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M I N U T E S
Eugene City Council
McNutt Room—City Hall—777 Pearl Street
Eugene, Oregon
February 18, 2009
Noon
COUNCILORS PRESENT: Chris Pryor, Betty Taylor, Andrea Ortiz, Mike Clark, Alan Zelenka,
George Poling, George Brown, Jennifer Solomon (via telephone).
Her Honor Mayor Kitty Piercy called the work session of the Eugene City Council to order.
A. WORK SESSION:
FY10 Budget Strategies to Maintain Road Fund Service Levels
City Manager Jon Ruiz stated that the goal of the work session was to discuss the matter, but he was not
asking the council to take any action. He said funding for road preservation, as well as operations and
maintenance, had been the subject of difficult budget discussion over the past several years. He noted that
the City was trying to fill an $8 million gap in the General Fund and there were gaps in other funds as well,
including the Road Fund. He said that meant there was no money in the General Fund to help provide
services in other funds and in order to develop a sustainable budget the organizational footprint would be
reduced. He introduced Public Works Executive Director Kurt Corey to present the topic.
Mr. Corey described the three-pronged approach to transportation system funding: operations and
maintenance (O&M), capital preservation and construction of new streets adding capacity to the system. He
said there were no funding concerns with new streets, but there was a $170 million backlog of deferred
preservation projects. With respect to the preservation backlog, he said that $9 million annually was needed
to prevent the backlog from increasing and $18 million annually would eliminate the backlog in 20 years.
Mr. Corey explained the activities that comprised O&M and said revenue to support them was somewhat
limited; the primary source historically had been the State Highway Trust Fund, which was derived from the
State’s gas tax. He said the gas tax had not been adjusted in 16 years and during that time the yield on the
tax was down. He said $2.5 million had come to the City annually from Lane County for roads, but was no
longer available and the loss of revenue, coupled with increased operating costs combined to create a
funding gap of approximately $4 million.
Mr. Corey reviewed the work of the council’s Subcommittee on Transportation Funding and the status of its
recommendations. He said the proposals now before the council were twofold: a right-of-way use fee on
stormwater and wastewater utilities and a transportation surcharge on solid waste haulers. He said both
could become locally controlled sustainable components in a broad package of transportations system
funding mechanisms. He said the proposals would fully fund the O&M gap in perpetuity. He said next
steps would be to move forward with public hearings on each of the proposals if the council wished. He
said there was a clear nexus between providing utility systems and garbage service and having a viable
transportation system.
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Mr. Corey estimated the monthly assessments for standard residential customers at $1.44 for the combined
right-of-way use fee and $1.97 for the garbage surcharge. He reminded the council that the recent bond
measure was very prescriptive in terms of how those funds could be used on specific road projects; O&M
costs were excluded. He said federal economic stimulus funds could be available for capital preservation
and transportation enhancement, but it also excluded O&M as a use, and legislative action on transportation
funding was uncertain.
Ms. Piercy assured the public that the council was committed to road repairs and preservation of the
investment represented by the transportation system. She said traditional funding for road preservation was
no longer available and cities across the State faced the same problem with lack of resources. She welcomed
the opportunity to discuss all options before moving forward.
Mr. Clark indicated he was willing to consider all options. He saw the O&M funding gap as a short-term
problem in the current year that had to be addressed, but solving the long-term institutionalized O&M deficit
by increasing revenues should be delayed until later in the year when there was a greater sense of what was
happening in the local economy and how the City could respond to those conditions. He said the recent bond
measure carried the implicit message that the City would prove worthy of the public’s trust in how it used
those funds. He felt the City should earn some of that trust before trying to solve the systemic deficit.
Ms. Taylor liked the concept of shifting some funds to O&M if the City received economic stimulus funds
for preservation projects. She objected to the garbage haulers fee and felt it would discourage people from
having garbage service. She thought the City should provide garbage service. She said the right-of-way fee
sounded like a transportation utility fee. She said the General Fund should support street maintenance and if
all the tax exemptions were halted funds would be available. She noted that many users of the transporta-
tion system were not local residents and there should be at least a county-wide revenue source, such as a
vehicle registration fee. She hoped that cities could collaborate on a regional funding mechanism.
Mr. Pryor remarked that the conversation about long-term, stable and secure transportation system funding
needed to include the public. He recognized the need to move more quickly to fill the 2010 funding gap. He
noted that the subcommittee had agreed that a combination of funding solutions would be needed and he was
willing to consider a range of options including a solid waste fee at some level, structural cuts and a
transportation utility fee, which other communities were already using. He stressed the importance of
involving the public in the discussion of long-term solutions.
Mr. Poling said, based on inquiries he had received, it appeared the general public was still somewhat
confused about transportation system funding and did not understand why there was still a shortfall when a
bond measure had been passed in November 2008. He said ongoing education was an important part of
involving the public. He would not support a surcharge on garbage haulers as it singled out one industry
unfairly when other heavy vehicles were using the roads. He said a surcharge should be more broadly
distributed.
Mr. Brown asked about the financial impact of a garbage hauler surcharge on businesses. Mr. Corey
replied that commercial service was typically a 2- or 3-yard container. The monthly rate for a 2-cubic yard
container was $127.20 and for a 3-cubic yard container was $186; monthly surcharges would be $12.72 and
$18.60 respectively. He said the estimated monthly surcharge for a typical “big box” store would be $288
and for a medium-sized commercial store it would be $55.
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Ms. Solomon echoed remarks about the importance of educating the public. She asked why the proposed
surcharge was almost double what the subcommittee had recommended and what next steps the council
should be considering.
Mr. Zelenka commented that the State’s gas tax was last increased in 1993. He said that revenue was
declining, as was other revenue from the County, State and federal levels while at the same time material
and labor costs were increasing. Given that help would not be forthcoming from either the State or federal
governments, he said funding solutions would have to be found at the local level. He stressed that the bond
measure addressed only a small percentage of the backlog of road maintenance projects. He said most of the
City’s revenue was subject to restrictions on how it was used, in part because the public insisted that certain
funds be used for certain purposes, typically related to how the revenue was generated.
Ms. Piercy wanted to see a clear direction for solving the entire transportation funding problem, not just
pieces of it; that would require a conversation with regional partners. She was not certain how to deal with
the immediate short-term funding needs, but felt the public wanted to see what package of long-term
solutions the council would propose.
Mr. Clark thought the public did not clearly perceive the differences between O&M and preservation
institutional deficits, which complicated the council’s efforts to find solutions. He said it was a problem not
only of communication, but also of priorities, and the community needed to discuss that as part of solving
long-term problems. He was not interested in a garbage surcharge at a time when people were struggling
financially. He felt a gas tax was the most equitable approach; a creative approach might be a large, short-
term increase instead of a permanent increase at a lower rate.
Mr. Pryor remarked that there were two core concepts: increasing revenue or scaling back services. He said
any of the options for increasing revenue ultimately took money from the pockets of local residents and it
was essential to clearly demonstrate the need and benefits to obtain public support. He underscored the need
for a permanent source of funding to preserve and maintain the transportation system and the importance of
involving the public in that discussion.
Mr. Zelenka agreed with Mr. Pryor about the need for a permanent solution as the City could not cut or
reprioritize its way out of the problem; it was too large and long-standing. He said funding solutions should
demonstrate a nexus with street use, have low administrative costs, capture non-resident usage, reduce
greenhouse gases and consist of a package of options, not one funding source. He supported a gas tax and
garbage hauler fee. He would lower the garbage surcharge to $1 per month and felt that amount would not
cause people to halt their garbage service.
Ms. Solomon asked for additional information about a potential transportation summit.
Ms. Piercy said there had been discussion about the need for a summit to discuss the broader issues of
transportation for the entire region, including transit. She agreed that some of the funds for transportation
came with restrictions on use and those could not be changed by the City. Regarding prioritization, she
noted that much of the General Fund was used for public safety and many other services important to the
livability of the community were also supported by General Fund dollars. She said to this point the public
had indicated a desire to have a basic level of service in those areas and there would need to be a discussion
of tradeoffs if funds were diverted to the transportation system. She reminded the public that the bond
measure included an audit process to assure accountability.
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Mr. Zelenka agreed with Ms. Piercy that there were General Fund tradeoffs and he preferred to avoid cuts to
those services. Regarding the garbage surcharge, he said it was not singling out garbage haulers at random;
those vehicles used the system at a far greater level than other users and there was a direct nexus with
damage to streets. He said there was no practical way to assess other heavy vehicles, plus those vehicles
paid a fee to the State that was contributed to the City’s road funds. He felt the street utility fee was the
most equitable and captured government agencies, the University of Oregon, commercial and residential
users and non-residential commuters. He hoped that option would be further explored. He said the
connection between a stormwater/wastewater fee was not as clear. He urged involvement of the public in
any discussion of transportation funding.
Mr. Clark agreed the public needed to be involved in the conversation about a long-term permanent solution.
He said the City could not prioritize or tax its way out of the problem; the City could not afford to be all
things to all people, especially during difficult economic times. He thought that setting priorities was the
council’s job and the public expected it to make difficult choices with limited resources.
Ms. Piercy concurred that setting priorities was the council’s job and the services the City provided were
reflective of the community’s direction on how to spend revenue. She asked councilors to provide direction
to staff on the next steps to be taken.
Mr. Ruiz asked the council to consider ways to fill the FY10 O&M gap on a one-time basis instead of
reducing services, preliminary to the more comprehensive discussion of long-term solutions.
Mr. Clark said his best outcome would be to find creative solutions to filling the short-term gap, followed by
a longer term process that involved the public after the City had demonstrated its accountability for the bond
measure.
Ms. Ortiz did not want to reduce existing services. She agreed with the need to educate the public, but was
not certain how to provide information in a useful way. She said the community wanted to see a clear
direction for solving the problem and earning the public’s trust by completing projects funded by the ballot
measure was a step forward.
Mr. Pryor indicated he was interested in seeing what reductions might be used to fill the FY10 funding gap
if additional revenue was not available. He wanted to see a broader involvement from the community in
discussions of long-term solutions.
Ms. Taylor said the council should be educated by the public about what services it was willing to give up.
She said it was never possible to engage the entire community. She urged the council to seek a County-wide
solution.
Ms. Solomon suggested using the stormwater fund to fill the short-term gap. She said the council had been
discussing for some time going back to the community for a reprioritization of budget issues; that had not
yet occurred and therefore it was not entirely accurate to say spending currently reflected the priorities of
citizens. She hoped hearing from citizens about what their budget priorities were would be a key element of
future discussions. She strongly supported providing some General Fund dollars for roads.
Mr. Poling joined Mr. Pryor’s request for information about what cuts might be necessary to fill the short-
term funding gap.
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Mr. Zelenka commented that a street utility fee was based on the number of parking spaces, not on property
taxes. He was also interested in what specific cuts would be made in order to fill the short-term gap and
other options for generating revenue.
Ms. Piercy was in favor of hearing the public’s priorities for spending and encouraged finding creative
means to engage people, particularly using the internet to provide information and solicit feedback.
Mr. Clark suggested using the media to more heavily advertise construction projects and better communicate
that work to the public.
Mr. Corey thanked the council for its discussion. He emphasized that the FY10 budget could not be
completed without filling the revenue gap or reducing services. He was supportive of searching for creative
options to address the long-term problem with a package of solutions, but the need to address the FY10
budget shortfall was immediate and if there was interest in either of the revenue sources in the proposal the
deadline for holding public hearings on ordinances was March 9. He was not certain there were any easier
solutions to the short-term gap than those presented.
Mr. Pryor suggested bringing back for the council’s review a $4 million one-time strategy that included
whatever combination of items staff felt were necessary to fill the FY10 budget gap.
Mr. Ruiz said staff would reexamine all options and return with one-time strategies for filling the FY10 gap
and a road map for moving forward.
The meeting adjourned at 1:25 p.m.
Respectfully submitted,
Jon Ruiz
City Manager
(Recorded by Lynn Taylor)
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