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HomeMy WebLinkAboutItem B - Transportation FundingEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Transportation Funding for Pavement Preservation Meeting Date: September 27, 2004 Agenda Item Number: B Department: Public Works Staff Contact: Kurt Corey www. cl. eugene, or. us Contact Telephone Number: 682-5241 ISSUE STATEMENT The implementation of a 3-cent-per-gallon local motor vehicle fuel tax in August 2004, together with the reimbursement component of the transportation systems development charge, has allowed the City to begin addressing the significant backlog of pavement preservation projects in Eugene. However, this backlog continues to grow. Additional funding is needed to reverse this trend and to do the repair work necessary to ensure the efficient and safe operation of local transportation systems. This work session provides an opportunity for council to review the progress on preservation program funding efforts, to hear updates on cooperative efforts with partner agencies, and to discuss the potential implementation of additional funding options or increases in the levels of existing funding mechanisms. BACKGROUND Previous Council Action and History_ In October 2001, the Citizen's 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 December 9, 2002, the council approved an ordinance establishing a transportation system maintenance fee (TSMF). On January 29, 2003, a related transportation revenue measure, the local motor vehicle fuel tax ("fuel tax"), was approved by the council. On September 8, 2003, the council voted to repeal the TSMF ordinance, citing the recent repeal by the Springfield City Council of that city's TSMF and concerns about equity between the two cities, as well as concerns raised by the Eugene Chamber of Commerce about the structure and impact of the TSMF on Eugene businesses. The council also cited continued hope for collaborative solutions with partner agencies, with particular reference to upcoming discussions with the Lane Board of County Commissioners and other local officials around the potential distribution of new street maintenance monies being made available to the County as a result of recent State legislation. Status of Current Funding and Project Accomplishments As a result of those interagency discussions, Lane County chose not to continue at this time exploration of either a county-wide motor vehicle registration fee or a county-wide motor vehicle fuel tax. L:\CMO\2004 Council Agendas\M040927\S040927B.doc However, the Board of County Commissioners authorized in May 2004 the transfer of all of Lane County's road operations, maintenance and preservation allocation from the 2003 Oregon Transportation Investment Act (OTIA III) to the cities of Lane County for up to three years. For the City of Eugene, this allocation resulted in a $438,000 payment from the County in August 2004 and is expected to generate additional annual funding in future years of at least $700,000 to be applied to reducing the backlog of pavement preservation projects. The 3-cent local fuel tax implemented by the council in August 2003 generated revenue in the $2 million range for FY04, as projected. Additional dedicated preservation project revenue from transportation reimbursement SDCs, from the new County/City OTIA III revenue sharing agreement and from other fund sources has allowed the City to complete $3.5 million in street preservation project work to-date since the implementation of the fuel tax and the transportation reimbursement SDC, with additional contracts in process. Lacking extensive collection history on the new, dedicated pavement preservation funding sources (i. e., local fuel tax, county OTIA III revenue sharing, reimbursement transportation SDC), staff is nonetheless estimating that over time these sources, along with federal STP monies, will generate $4 million to $4.5 million in ongoing annual revenue. These revenues, together with $4.5 million in proposed additional new revenue, would bring the total funding level very close to the Budget Subcommittee recommendation for $9 million in annual ongoing pavement preservation funding. When the Budget Subcommittee on Transportation Funding presented its report to the council in late- 2001, the City was facing an estimated $67 million backlog in pavement preservation work, as confirmed by an independent consultant. As illustrated by Attachment A, that backlog has since grown to a current level of nearly $94 million. Furthermore, in the absence of council action to identify and secure new additional street preservation funding, it is projected that this backlog will continue to grow to nearly $180 million within the next decade. However, as further illustrated by Attachment A, with additional street preservation funding of $4.5 million (bringing total projected annual preservation funding to approximately $9 million), the City could not only stabilize the growth in the backlog but also begin to make significant progress in reducing this substantial future community liability. Continuing Discussions of Transportation Funding City staff continues to work with the Eugene Chamber of Commerce and other community groups in exploring alternative street maintenance fee models and potential refinements to the City model reflecting more accurate trip data and greater recognition of pass-by and diverted-linked trips. In a commitment to interagency collaboration and support, Eugene staff also continues to meet and communicate with City of Springfield and Lane County staff to share progress reports on transportation funding efforts and accomplishments and to look for opportunities for mutual cooperation and support in transportation funding strategies under consideration by the cities. 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 L:\CMO\2004 Council Agendas\M040927\S040927B.doc on a fair and equitable system of taxation and other revenue sources and are adequate to main 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." It was based on this charge that the Citizen' s Subcommittee on Transportation System Funding began meeting in September of 2000 to study this issue and develop its report and recommendation. Additionally, the City's FinancialManagement Goals andPoficy, 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 Option 1: The council could choose to take no action at this time with regard to the need for additional pavement preservation funding. Option 2: The council could direct the City Manager to bring back for discussion an ordinance to increase the local motor vehicle fuel tax by 7 cents, to a total 1 O-cent tax, to address unmet pavement preservation program funding needs; Option 3: The council could direct the City Manager to bring back for discussion an ordinance to reinstitute a transportation maintenance fee to generate an additional net $4.5 million annually for pavement preservation funding; or Option 4: The council could direct the City Manager to bring back for discussion ordinances which would implement a combination increase in the motor vehicle fuel tax, along with a more modest transportation system maintenance fee, in order to generate an additional net $4.5 million annually for pavement preservation funding. Each one-cent incremental increase in the fuel tax is estimated to generate $650,000 to $700,000 in additional net revenue. Attachment A illustrates the projected consequence of no additional funding for the pavement preservation backlog. CITY MANAGER'S RECOMMENDATION The City Manager recommends that the council hold additional work sessions and public hearings prior to the end of the calendar year to consider the implementation of a two-cent increase to the existing local motor fuel tax and the reinstitution of an ordinance imposing a Transportation System Maintenance Fee. The goal for this initiative would be to raise an additional $4.5 million annually for critical pavement preservation needs. This new revenue, together with existing dedicated revenue sources, would generate approximately $9 million annually to address this high-priority funding need. This overall target revenue goal is consistent with the funding level recommended by the Citizen Subcommittee on Transportation System Funding in its report to the council in October 2001. This funding level continues to be an appropriate target because it would allow the City to make effective progress in addressing the backlog of pavement preservation projects while also mitigating the disruption to the transportation system and the community due to the number of street projects going on in any one construction season. L:\CMO\2004 Council Agendas\M040927\S040927B.doc SUGGESTED MOTION Move to direct the City Manager to return to the City Council prior to the end of the calendar year with draft ordinances increasing the local motor vehicle fuel tax by an additional 2 cents (to 5 cents per gallon) and establishing a Transportation System Maintenance Fee. ATTACHMENTS A. Projections of Pavement Preservation Project Backlog at Various Funding Levels FOR MORE INFORMATION Staff Contact: Kurt Corey Telephone: 682-5241 Staff E-Mail: kurt. a. corey~ci, eugene, or. us L:\CMO\2004 Council Agendas\M040927\S040927B.doc $180 $160 $140 $t20 $100 $60 $4:0 $20 $0 2004 2005 2006 2007 20082009 2010 2011 2012 2013 ~ $4 m ~ on per year® $9 million per year September 2004