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~~'„ EUGENE CITY COUNCIL AGENDA ITEM SLTMMARY Work Session: Road Fund Status and Service System Stabilization Strategies Meeting Date: September 26, 2005 Agenda Item: C Department: Public Works Staff Contact: Kurt Corey www. ci. eu~2ene. or. us Contact Telephone Number: 682-5241 ISSUE STATEMENT This work session provides an opportunity for council to review and discuss the financial status and forecast for Eugene's Road Fund and to provide advance input for development of a FY07 budget with the goal of achieving greater long-term financial stability for the operations and maintenance (O&M) component of the city's transportation service system. On the capital side of the program, the implementation of a 3-cent-per-gallon local motor vehicle fuel tax in August 2003 (raised to 5 cents in January 2005) has allowed the city to begin addressing the significant backlog of p'avement preservation projects in Eugene. However, this backlog continues to grow, and additional funding is still needed to reverse this trend and to do the repair work necessary to ensure the efficient and safe operation of our local transportation system. At the same time, the on-going operations and maintenance activities for the city's road system have been hampered by growing problems related to a structural imbalance with historic funding sources for the city's Road Fund. BACKGROUND Previous Council Action and History In September 2001, the Citizen Budget Subcommittee on Transportation System Funding presented its Final Recommendation on Transportation Funding Issues which contained among its conclusions the assertion that "In the face of projected O&M shortfalls and service reductions beginning in FY03, ensuring adequate funding for the operation and maintenance activities of the City's transportation system is absolutely essential." Now, four years later, the most significant financial management challenge for this fund continues to be the ability to generate adequate, sustainable revenue to appropriately fund the O&M activities for Eugene's transportation system. Financial and/or Resource Considerations Revenue Trends and Financial Forecast The Road Fund accounts for operations and maintenance (O&M) of the city's street system. Resources are provided from Eugene's share of State Highway Trust Fund allocations, payments from Lane County under the County/City Road Partnership Agreement, direct allocations of state Oregon Transportation Improvement Act (OTIA III) monies, and other small miscellaneous grants, fees and pertnits. The majorify of the Road Fund revenue comes from Eugene's share of the State Highway Trust Fund, which is derived from Oregon motor vehicle fuel taxes as well as state motor vehicle registration fees and weight-mile taxes. Revenue growth in the State Highway Trust Fund has been relatively flat since FY00, at which time the city was receiving about $6 million per year in allocations. The projected revenue for FY07 is $6,240,000, which represents only a 4% growth over the entire seven-year period. 1.