Brookings City Attorney Martha Rice will draft a ballot title that would implement a 3-cent per gallon fuel tax to pay for street improvements throughout town.
Voters will face the ballot question in May 2015.
And city officials intend to hold numerous town hall meetings until then to discuss how they believe the tax will benefit residents. It is likely a lower rate will be charged to commercial vehicle drivers so the burden isn’t as heavy.
The tax was proposed in budget meetings earlier this year as a way to bolster street repair coffers.
A consultant has said the revenue from existing system replacement fees is less than half what Brookings needs to catch up with a backlog of street projects.
The city needs $300,000 a year to catch up on 10 years of backlogged street maintenance projects — and then to continue maintenance into the future.
Currently, residents pay a $2.94 fee toward system replacement on their water and sewer bill; that money goes to replace older infrastructure. That system replacement fee would be eliminated.
Currently, that $2.94 monthly fee generates $131,000 a year — less than half of what the city needs to bring its streets up to standards.
“The $131,000 we collect now is not going to do it,” said Councilor Kelly McClain. We either raise the street replacement fund, which would have a huge impact on people here, or enact the 3-cent tax that will cost less and spread the cost to get some tourists to pay for the streets.”
Councilor Brent Hodges calculated that, even as someone who drives a lot, the amount of fuel tax he would pay each year would be less than the $35 he pays for system replacement fees.
And a provision in the initiative would require the city to reduce the fuel tax rate if annual revenue exceeds $300,000, after adjusted for inflation.
Citizens have been grumbling of late about city water bills, which are about $90 per residence and include the service itself, fees to repair various infrastructure throughout the city and debt on the wastewater treatment plant.
A challenge that faces the council is that no one has an idea how many gallons of fuel are sold in Brookings. The state, Milliman noted in a report, apparently relies on retailers to correctly submit taxes collected.
City staff even contacted financial consultants to see if they had resources for developing revenue estimates, and they, too, were unable to obtain information from state or federal agencies. They all instead recommended calling cities with a fuel tax and determine how those figures compared on a per capita basis.
“Staff believes the characteristics of fuel sales in Brookings — the effect of tourism and proximity to the California border — would make any such estimates significantly inaccurate,” Milliman said.
But that traffic would provide a large portion of the revenue, as people from California routinely buy gas here as fuel is 40 to 50 cents less per gallon than that across the border.
Oregon state fuel tax is 30 cents per gallon.
Milliman noted that the city of Coquille, with a population of 3,870 and a fuel tax of 3 cents, generates $220,000 a year with two gas stations in town. Tillamook, with 4,675 residents and a 1-cent tax, brings in about $81,204.
Repeated requests for gas sales information to Fred Meyer officials — locally and at its headquarters in Cincinnati — were not answered. But, if Fred Meyer, the largest fuel retailer in Curry County, sells, say, 13,500 gallons a day — an amount an employee indicated it does — a 3-cent per gallon tax would generate $147,825 a year in revenue. And that does not include the two other fueling stations in town.
State legislation allows cities to enact a fuel tax with voter approval, but notes that revenue must be used for street improvements. In Oregon, 23 cities have done so, with 14 having enacted a tax of 3 cents per gallon. Eugene has a tax rate of 5 cents per gallon, and Pendleton’s 4-cent per gallon tax, implemented to fund debt service for an airport connector road, sunsetted in March 2013. The city might ask voters to reinstate it in November for continued road maintenance.
Voters in Tillamook, Cornelius and Woodburn, with respective tax rates of 1.5, 2 and 1 cents per gallon, all recently rejected proposals that would have increased fuel taxes by 2 more cents per gallon, Milliman said.
Taxes are a sensitive subject in Curry County, as well, with voters repeatedly rejecting proposed property tax increases to pay for everything from county services to merely maintenance and operation of the jail.
“It’s still going to come across as a tax, and I don’t like to use the ‘t’ word,” McClain said. “The message needs to be, ‘Are you happy saving money?’ Our goal is to get rid of a fee that costs the average homeowner $36 a year and institute a tax that will cost most people $30 a year — and double the amount of money to work on streets. If you do the math, this is the only thing that makes sense.”
Hodges said the fact that tourists would be contributing a substantial portion is “pretty enticing.” And if the council can convince residents they’d be saving money, that should bring more voters into the fold.
Another issue discussed was whether the tax should sunset after a set period of time; councilors ultimately decided it would not because the city will always need funds for street maintenance.
“People want a way out if something doesn’t work,” Hodges said. “It’s hard to get things like this approved.”
McClain said he’d vote against the proposal if a sunset was instituted.
“I agree it’s a tough sell,” he said. “But we’ll sell in on the fact that everyone will save money. Don’t think you’re buying votes by putting a cap on it. We have to look at what’s a good long-term policy. I don’t even like the concept of trying it for a few years.”
Even if voters indicate support before a vote, a gas tax could face additional challenges.
Sheriff John Bishop hopes commissioners will put another proposal — possibly one asking for a 68-cent per $1,000 assessed valuation — on a ballot next year, as well. Revenue raised from that would merely fund the jail.
And commissioners are debating whether to tack on an additional 3-cent property tax to pay for a second full-time veteran’s service officer.