According to Opponents of Gas Tax Bend’s Proposed Gas Tax is Bad for Business

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Former Bend Mayor Jeff Eagan responds to proponents of gas tax measure… The city can and should maintain our streets without a new tax.

After initially reducing the money spent on paving, the City Council recently “found” enough money to begin improving our streets this year without a new tax. With growing city revenues, the Council should treat streets as a priority for existing funds, and not ask small businesses and residents for even more.

The proposed tax would be the highest fuel tax in the State of Oregon, tied with Eugene. The vast majority of cities in Oregon do not have a city fuel tax at all. Bend should learn from other cities how to better prioritize its spending, rather than sticking Bend drivers with the highest gas tax rate in the state outside Eugene.

Higher gas taxes hurt people who are struggling with Bend’s high cost of doing business. We all know that it’s not cheap to live and work and run a business in Bend. With soaring property prices, the last thing many families and small businesses need is to pay more to fill up. If we are going to make Bend more affordable and improve our economy, the last thing we should do is raise taxes on people and small businesseswho are struggling most.

A higher gas tax is really just a subsidy for administrative costs and other Council projects. The city already receives approximately $4.5 million per year from the state gas tax, but only plans to use a fraction of that for paving. Spending on administration from the streets department has more than doubled in the past several years. More gas tax revenue will simply allow the City Council to shift other funds away from paving to pay for administration, more staff and other Council projects.

On February 10, Yes for Bend Roads PAC issued a press release which misstates the facts regarding the gas tax issue. What follows is a response to those allegations:

Yes PAC’s Claim: “[A]ll of the increased revenues from property taxes, tourism, and even excess reserves that can be used are already allocated to road improvements.”

Truth: The City of Bend’s General Fund Budget for Fiscal Years 2015-2017 is projected to increase by 11%, or around $9 million. The Budget gave significant increases to most funds, such as code enforcement, but cut funding for street preservation. The City Council chose not to make street preservation a priority. We think they should.

Yes PAC’s Claim: The roads department is not a bloated bureaucracy. “Overhead” includes street lighting and “re-categorized” programs and services.

Truth: Administrative costs are growing rapidly, and are taking away from street preservation. The problem is with the Support Services line item for the Transportation Operations budget. Support Services are the funds that are transferred out of Transportation Operations to support the city’s general administrative functions. The Support Services line item was $2,248,678 for the 2011-2013 budget. For the 2015-2017 budget, it’s $5,137,895. That’s a 128% increase over the past two budget cycles. See p. 71: http://bendoregon.gov/Modules/ShowDocument.aspx?documentID=24314.

Further, the City’s Budget Director Sharon Wojda, in a May 27, 2015, email, admitted that administrative and personnel costs were in part driving the reduction in street maintenance and preservation funding in the City’s 2015-2017 budget:

“As we discussed on Friday, it sounds like your primary question is why the budget for the entire street fund is going up while funding for street maintenance and preservation is doing down. There are a couple of things driving that. In addition to the contractual annual increases in personnel costs, there is also an increase in city-wide administrative costs associated with the replacement of the City’s ERP [ed. – software] system that resulted in an increase in overhead transfers from all operating departments, including streets. In addition, the City is constructing a new fuel station because the existing fuel tanks are over 30 years old and is it becoming more difficult to insure them on the secondary market from an environmental risk management perspective. As a result, streets will see an increase in their transfers related to the cost of the fuel station. Also, transfers to facilities have increased due to an increase in operating costs and facility improvements. As I mentioned the other day, the 2015-17 biennial budget assumes a $1.4M decrease in reserves which is due in part to the increase in these administrative costs.”

Yes PAC’s Claim: The City Council is spending $70,000 to hold a special election in March in order to receive more revenue from tourists this summer.

Truth: This is a justification manufactured after the decision was made to spend the money to hold the vote in March. In fact, politics was the sole rationale for holding the vote in March discussed according to the records of public City Council meetings. In two instances, political advisors to the Bend City Council urged them to hold the election when there would be fewer conservatives voting. Specifically, the Council was urged not to hold the election in May, when it was thought more conservative voters would turn out for a competitive Presidential primary. The Council took that advice, and spent $70,000 to avoid the May election.

Yes PAC’s Claim: Good roads are good for business.

Truth: We agree! The City Council should use their rapidly increasing budget to fix them without raising taxes. Higher taxes are bad for business. With current gas prices, taxes make up more than 25% of the price of a gallon of gas. The State of Oregon is actively considering a gas tax increase of up to 10 cents per gallon. The state’s low-carbon fuel standards regulation is (conservatively) projected to add another 19 cents per gallon. All of these costs add up, and they add up to more expensive costs of operation for Bend businesses, and higher prices for consumers.

Yes PAC’s Claim: The No Bend Gas Tax PAC is funded by “fuel companies.”

Truth: The No Bend Gas Tax PAC is mostly funded by companies that own gas stations in Bend, as well as other local businesses like Mt. Bachelor, The Loft, Sun Mountain Fun Center, and others that are concerned about the impact of the gas tax.

The proposed fuel tax requires fuel providers to do the dirty work of the City in collecting the tax. They don’t want to do that, for the same reason brewers fight increases to the State of Oregon’s beer tax. It’s bad for business and bad for the consumers.

The Yes PAC is largely funded by developers who frequently have land use issues decided by the same City Council that proposed the gas tax, and by City Councilors who cut funding for street preservation in the adopted budget.

Yes PAC’s Claim: Over half of the population of Oregon lives in cities with a fuel tax.

Truth: Only 24 out of Oregon’s 242 cities have a fuel tax – less than 10%. The population of those cities (which does not include Portland) is well short of half the population of Oregon. The Yes PAC is just plain wrong about this.

Ninety percent of cities in Oregon have figured out how to maintain their streets without a city gas tax. Bend should do the same.

Yes PAC’s Claim: The City needs the gas tax before it moves on to “better solutions,” like public transit and bike lanes.

Truth: If the goal in seeking the gas tax is to increase spending on public transit and bike lanes, the City and other gas tax supporters should be honest with the voters.

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  1. Avatar

    The big picture is that a gas tax involves tourists being a part of the solution. Gas prices have not been this low in how many years? We don’t blink an eye when they go up every season well more than the proposed tax. Now, when we won’t even feel the difference and our huge tourism population will assist, as they should, we are to overlook that? I am really tired of every single improvement needed in our area being political. Our streets are an embarrassment and dangerous and obviously their have not been enough funds in a long time to maintain them. Central Oregon is unique in every way and to compare what other cities are doing in Oregon is irrelevant.

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    Gas tax opponents are grasping at straws to justify their political battle against the gas tax. Jeff Eager should not be called “former Mayor,” but rather what he is — a paid lobbyist working for four big gas station chains who are financing 75% of the opposition’s expensive effort to kill the tax. Anyone interested in the facts without political “spin” should attend Bend City Manager Eric King’s presentation next Monday, February 29th, at 6:00 PM at the Council Chambers in City Hall, 710 NW Wall Street

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