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to operate and maintain, or roads and streets for which the city has accepted responsibility under <br />intergovernmental agreement. No revenue shall be used for capacity-enhancing street improvements." <br />Use of local motor vehicle fuel taxes is also limited by the Oregon Constitution (Article IX, Section 3a), <br />which states that "revenue from taxes on motor vehicle use and fuel ... shall be used exclusively for the <br />construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, <br />roads, streets and roadside rest areas in this state." <br />Road Operations and Maintenance Needs - The city's Road Fund accounts for the operation and <br />maintenance of Eugene's street system. Due to flat growth in state revenues and loss of historical <br />county road partnership revenues, the Road Fund is currently expected to have an annual operating <br />deficit of over $1.8 million for FY08 (growing to $2.3 million by FY10) for ongoing activities such as <br />street lighting, pothole patching, street tree maintenance, signing and striping of city streets. At some <br />point, council will be faced with a decision to either reduce the current service levels of road operations <br />and maintenance activities or dedicate a portion of new or existing funding sources to maintaining the <br />service levels. <br />Implementation Timeframe - Our tax administrator, the ODOT Fuels Tax Group in Salem, suggests that <br />notice provided them as of the end of January for the repeal of the sunset provision would be optimal for <br />their administration of this change in code and also provide adequate time for notice to Eugene fuel <br />dealers. For that reason, action is requested on one or the other of the proposed ordinances tonight. <br />RELATED CITY POLICIES <br />The council's Vision and Goals Statement with respect to Fair, Stable and Adequate Financial <br />Resources reaffirms commitment to "a local government whose ongoing financial resources are based <br />on a fair and equitable system of taxation and other revenue sources and are adequate to maintain and <br />deliver municipal services." In January 2007, council identified a new council goal to "Develop <br />mechanisms to adequately fund our transportation system for cars, trucks, bikes, and pedestrians <br />including maintenance and preservation and capital reconstruction." Additionally, the City's Financial <br />Management Goals and Policy, A.4, states that the City's municipal service priority Leve12 (second <br />only to the preservation of the public safety system) is to "maintain and replace the City's fixed assets, <br />which includes... infrastructure...so as to optimize their life." <br />COUNCIL OPTIONS <br />Council has the following options: <br />Option 1: Council could decline to take action on either proposed ordinance, choosing to make no <br />changes to the Eugene Code and' effectively allowing the city's motor vehicle fuel tax rate to revert to <br />three cents per gallon; <br />Option 2: Council could approve the proposed code amendments as shown in Attachment A to extend <br />the sunset provision for three additional years to February 28, 201 l, leaving the fuel tax at five cents per <br />gallon for an additional three years, in order to allow sufficient time for state legislative efforts to bear <br />fruit and for development and implementation of other elements of the Council package funding <br />strategy; or <br />Option 3: Council could approve the proposed code amendments as shown in Attachment B to repeal <br />