Eugene city councilors implemented in 2005 a 2-cents-per-gallon gas tax increase that was designed to sunset at the end of February 2008, but now councilors are debating whether to make the tax permanent.
A number

of local gas station owners are unhappy with the idea of keeping the tax at 5 cents per gallon, and they have been joined by the Oregon Petroleum Association in their efforts to reduce the tax to its original 3 cents per gallon by Feb. 28.
The station owners and the OPA have already threatened city councilors with a petition, which if successful would put the tax on the May ballot for voters to decide if the tax will remain. With the defeat of a gas tax increase last November, the petitioners may have public momentum on their side.
“We’re prepared to petition,” Ron Tyree, owner of Eugene-based Tyree Oil, said speaking for himself and other local gas station owners. “We’ve already had meetings… and we’re ready to go if they keep the tax,” he added.
Station owners and the OPA are currently lobbying for a statewide gas tax increase so no city’s stations are at a disadvantage, Tyree said.
City officials find themselves in a dilemma. They can rescind the tax and lose out on the approximately $1.4 million this year but hope for the statewide tax increase to pass in 2009. Or they can vote to keep the extra 2-cent-per-gallon tax now and face a public vote in May that could build animosity between the city and the public.
Eugene’s current tax is the highest of any city in Oregon, and Tyree said the high tax creates a disadvantage for local gas stations.
Springfield’s gas tax is 3 cents per gallon, and Lane County does not implement a fuel tax.
Tyree owns a gas station on the corner of 29th Avenue and Willamette Street near Interstate 5, and said people can pass his station to get out of the city limits, where prices are lower.
“It creates an unfair business advantage, and puts dealers and their employees’ jobs at risk,” Tyree said.
City councilors have argued they need to keep the extra 2-cent tax to fund street maintenance, or the city’s $170 million backlog of repairs will only grow larger.
“Losing the 2 cents would result in a loss of about $1.4 million dollars a year in street repair money. That translates into a lot of streets that were on the list to get fixed but won’t,” City Councilor Chris Pryor said in an e-mail.
The 2-cent increase has provided the city with approximately $1.4 million annually since it was enacted in 2005, and with the 3-cent-per-gallon tax established in 2003, the city receives $3.4 million each year in gas taxes.
Funds generated from city gas taxes support street maintenance, pavement preservation and road repairs, but the city has not been able to make headway on the backlog of repairs, which is estimated to grow to $280 million in the next 10 years.
Eugene’s Public Works department maintains and repairs the roads, and Eric Jones, spokesman for the department, said over the past several years the revenue of road repair has decreased while expenditures have increased.
“We can’t put road repairs on a credit card, we’re not allowed to operate in a deficit,” Jones said.
Tyree and other gas station owners understand the tax is needed to fix city roads, and say they don’t want to do away with it completely – they just want an even playing field, Tyree said.
“Gasoline tax is the perfect way to fund road repair, but not an unfair gasoline tax,” he said.
The Oregon Petroleum Association, a statewide motor and heating fuel association, teamed up with Tyree last November to defeat the city’s proposed 3-cents-per-gallon gas tax increase, which would have brought Eugene’s fuel tax to 8 cents per gallon. The group has been working with other state organizations to put together a state-wide gas tax increase.
By implementing a state-wide increase, the group says local gas stations would be able to offer competitive prices. However, any state-wide tax increase could only be passed by state legislators, who do not meet again for their regular session until 2009.
The City Council will vote on Jan. 28 whether to keep the tax or allow it to sunset on the original deadline of Feb. 28.