Revenue shortfall from gas tax, increasing price of materials forces cities to adjust plans.

Squeezed between high asphalt prices and low revenues, cities in Jackson County face a rough road ahead in funding major street projects.

"We don't have any money for capital projects," said Bob Pierce, Central Point public works director. "We just barely have enough for routine maintenance."

Central Point is expecting about $25,000 less in revenues from road taxes because Oregonians are driving less and using more fuel-efficient cars.

By itself, that would be a minor hit in the department's $750,000 annual budget, but coupled with the higher cost of asphalt and the raw materials used to repair roads it puts Central Point in a bind.

"Our cost of asphalt has gone up 80 percent in the past couple of years," said Pierce.

What's happening in Central Point is being played out in numerous other cities, which also have been hit by a slowdown in the economy.

"It may be even worse in this city than others," said Cory Crebbin, director of Medford public works.

The city has put already put one project on hold — an extension of Columbus Avenue from Sage Road to McAndrews Avenue.

Other projects that could be postponed include rebuilding a portion of Hillcrest Road that has become destabilized and a connection between Holly Street and Garfield Avenue.

Crebbin said his department had to borrow from another city fund because it came up short in collecting its share of $13 million for the south Medford interchange project.

"We will pay it back, with interest," he said.

Crebbin said a combination of factors led to the revenue loss, in particular a reduction in fees collected for new construction.

He said the city typically builds conservative budgets, but for the first time he can remember revenues for his department were less than projected this year.

To stretch the money the city does have, Crebbin said, his department is developing a program that could radically change the way streets are maintained.

The city has 247 miles of roads, which are repaved from time to time. "We can't afford to do that anymore," he said.

In the future, the city may do fewer paving projects and instead use a solution that is sprayed on roadways to increase the lifespan of asphalt.

"I call it sunscreen for streets," Crebbin said.

The hot, dry summers in Medford take their toll on asphalt, but the slurry solution will counter those effects, he said. To work properly, all the streets in Medford would have to be treated in the next five years, he said. The city already sprays some streets with the preservation solution. Initially, maintenance costs would go up, but Crebbin said the program should show an overall savings in the next 15 years.

Crebbin said the city formerly received up to $500,000 annually from Jackson County, but that fund has also dried up as the county faces its own budget problem. The city previously took over roads that were formerly under the jurisdiction of the county, but received the money to help bring them up to city standards.

Even with the revenue problems, Crebbin said, the city will focus on preserving existing roads.

"If you defer maintenance, it just costs you in the future," he said.

While cities struggle, the state is in the midst of spending $3 billion on new bridges and highway improvements that will have to be paid off through gas taxes for the next 30 years. That cuts into the amount available for maintenance.

"We warned people from day one that we would be obligated for the future," said Dave Thompson, spokesman for the Oregon Department of Transportation.

Gas tax revenues have remained the same since 1993, generating 24 cents per gallon for Oregon and 18.4 cents for the federal government.

Thompson said motorists have reduced fuel usage by 3 to 4 percent over the past two years.

At the same time, the cost of materials has nearly doubled for some of the basic building blocks of roads such as concrete or rock.

Local jurisdictions and the state are also seeing a slowdown in federal funding. Thompson said a transportation fund was on the verge of bankruptcy before Congress recently allocated $8 billion, an amount that will pay for federally funded projects only until the middle of next year.

"It's just not stable funding at this point," said Thompson.

Reach reporter Damian Mann at 776-4476 or dmann@mailtribune.com.