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Medford may tax meals to fund street work

The new money could close a budget gap that might reach &

36;9 million

Medford City Council members will begin researching a meals tax as a way of raising money for street projects.

Charging diners 5 percent could help curb an anticipated &

36;7 million to &

36;9 million shortfall in street funding.

— — — Other goals the council discussed

The possibility of a meals tax was among seven goals the Medford City Council discussed this week during the session it holds annually to plan for the coming year.

Council members also talked about:

Financing &

36;8 million in PERS liability, or debts to the employee retirement investment fund.

The city's share of the &

36;55 million south Interstate 5 interchange project, &

36;12.5 million paid for by system development charges and the Medford Urban Renewal Agency.

City facility upgrades, including the seismic retrofit at City Hall, &

36;650,000; building a new dispatch center, &

36;650,000; building a new police station, &

36;4 million; and remodeling City Hall, &

36;2.5 million, paid for by bond sales and assessments on each city department.

Meeting new state requirements about applying effluent to agriculture land, &

36;15 million, paid for by raising sewer fees.

Meeting new state requirements to cool treated wastewater before it's released into the Rogue River, &

36;7.2 million, paid for by raising sewer fees.

Treating storm water before it enters Bear Creek, &

36;10 million, paid for by storm-drain utility fees and system development charges.

— — Everybody wants our street problems solved, but nobody wants to pay for it, said Councilman Bob Strosser.

But Councilwoman Claudette Moore warned that a similar tax enacted in Ashland had some negative results.

A lot of people stopped going to Ashland because it made them so mad to pay a tax for food, Moore said.

Council members considered the meals tax during their annual goal-setting session Tuesday. They discussed another alternative, increasing the fuel tax by up to 5 cents as a way of raising money for Medford's 17 street projects.

I think we should form a citizens committee that could give us an indication of whether it would fly or not, said Councilman Bill Moore.

In its research, the city should identify what a meals tax would buy before pitching the proposal to voters, said Councilman Jim Key.

We should identify the projects we need funding for, then sell it to the public by saying, 'Here they are, and here's the mechanism for paying for them,' Key said.

A meals tax or fuel tax increase would be a way of taxing people who drive Medford streets but don't live here, said Cory Crebbin, public works director.

Go to Costco and look at all the out-of-state license plates, Crebbin said. We are a regional center. We need a revenue source that reaches tourists, out-of-towners who come here for appointments and shopping, truckers hauling in goods, people using our streets.

Medford has done an excellent job of maintaining pavements, and it's cheaper to maintain them when they are kept up on a regular basis. Overlays are cheaper than reconstruction ' if we fall behind, we will never catch up.

Councilwoman Moore wondered about exempting residents from the tax.

Maybe we could show our library card at the restaurant, she said.

But there may be a way to balance the scale and avoid double-taxing residents ' by lowering the street utility fee, which shows up on water bills.

That could be one mechanism to take the money out of the left pocket instead of the right pocket, but only if we had another revenue source to replace it, Crebbin said.

Whether or not the answer is a tourist-targeted tax, the council must find another revenue source if it wants to complete eight street projects left on the priority list created in 1996 by the Transportation Funding Committee, said City Manager Mike Dyal. Currently, street projects are funded with street utility fees and system development charges, or fees paid by developers and passed on to new-home buyers.

If you want to finish all the projects by 2007, you need to come up with about &

36;8 million, Dyal said.

The shortfall is a result of inflation, rising construction and materials costs and escalating land values in right-of-way purchases, Crebbin said. In addition, the 6-year-old list used estimates that did not factor in bridges, overpasses or railroad crossings. The East McAndrews extension, for example, was budgeted for &

36;5.6 million, but the actual cost was &

36;10.5 million.

Council members seemed to favor a meals tax over a 5-cent fuel tax increase, partly because raising the gas tax would require every city council in the region to approve the idea, as well as approval by all Jackson County voters, Dyal said.

The city doesn't know how much a 5 percent meal tax would generate. But the city of Ashland, which has 70 restaurants (five of them fast-food) received &

36;1.5 million in meals-tax revenue in 2001, said Jef Faw, deputy city manager of Medford. Medford has 165 restaurants, 45 of them fast-food.

At a minimum, we think our return would be three times that of Ashland's, or about &

36;4.5 million a year, Faw said.

Ashland voters approved a food and beverage tax in 1993, with 4 percent of meal tabs dedicated to state-mandated wastewater treatment improvements and — percent set aside to buy park land, said Barbara Christensen, Ashland's city recorder and treasurer.

Medford's city charter does not require a vote of the people in order to create a meals tax, Faw said.

Because the council is in only the beginning stages of discussing a meals tax, The Chamber of Medford/Jackson County has not yet formed an opinion about it, said chamber President Brad Hicks.

Our Legislative Action Committee will look at it first and make a recommendation to the full board, Hicks said.

That committee includes Steve Lytle of Gold River Distributing, a company that could be impacted by a meals tax. Others who represent the restaurant industry include board president Todd Thoreson, regional director for Red Lion Hotels; board member Dennis Ramsden, owner of McCully House restaurant in Jacksonville; and board member Jeff Barber, manager of the Rogue Valley Mall, which includes several fast-food restaurants in its food court.

Reach reporter Melissa Martin at 776-4497, or e-mail