05-26-2015 Council Work Session Packet

Home Browse Search

Budget. In August 2014, council directed staff to add $30K to the roads maintenance budget for 2015. On October 27, 2014 the council adopted the PMP. At the April 27, 2015 Work Session the Council directed me to provide a by year maintenance and reconstruction plan for the next five years. 2. Maintenance and Reconstruction Plan. Exhibit A shows how the maintenance and reconstruction activities would occur over the next 10 years. This represents all of the activities outlined in the Pavement Management Plan with one exception. I replaced the seal coating projects for higher volume roads with a thin overlay process. Thin overlays are more expensive but more durable and are required less frequently than seal coating. The methodology I used to distribute the work over time was to first place the streets with the lowest PCIs early in each category; then to evenly distribute costs across years; and finally to group work geographically; and then distribute. 3. Funding Options. At the April 27, 2015 Work Session the council was presented with four funding methods available to address annual street reconstruction and maintenance, General Fund Allotment (Tax Levy); Bonding, Assessments and Utility Fees. As result of the meeting I continued to explore options for funding road maintenance and reconstruction using General Funds (Tax Levy). After distributing the requirements over time, the additional required resources as $550,000/ yr for Maintenance and $500,000/yr for Reconstruction. The first table below shows the impact of these costs on the Levy. At the April 27, 2015 meeting some council members expressed a willingness to consider a $ 400,000/yr increase for maintenance. The second table shows the impact of that on the levy. $400,000/yr is roughly enough to cover mill and overlays but not any chip sealing or thin overlay maintenance. Tax Levy Impacts of Fully Funding Street Maintenance & Reconstruction Requirements Type of Street Work Annual Cost ($) Levy Increase (%) Tax Rate Increase (Percentage Points) Tax Impact on $250K Home Tax Impact on $546K Home (Median) Tax Impact on $1M Home Tax Impact on $2M Home Maintenance 550,000 11.53% 2.02 $47 $100 $227 $480 Reconstruct 500,000 10.48% 1.84 $43 $91 $207 $436 Total 1,050,000 22.00% 3.86 $90 $191 $434 $916 Tax Levy Impacts Partially Funding Street Maintenance & Reconstruction Type of Street Work Annual Cost ($) Levy Increase (%) Tax Rate Increase (Percentage Points) Tax Impact on $250K Home Tax Impact on $546K Home (Median) Tax Impact on $1M Home Tax Impact on $2M Home Maintenance 400,000 8.38% 1.47 $34 $73 $165 $349 Reconstruct 500,000 10.48% 1.84 $43 $91 $207 $436 Total 900,000 18.86% 3.31 $77 $164 $372 $785 4. Recommendation. I recommend that Orono develop a method / policy for funding both road reconstruction and maintenance in time to be included in the 2016 budget process. The method must include a dependable source of resourcing in order to allow for predictability and advanced planning. Request: Discussion and direction on how to provide reliable funding for the City’s streets as part of the 2016 and beyond budget processes. 2 Page 12 of 30