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Hermiston looks for ways to afford street projects

Jade McDowell

East Oregonian

Published on June 15, 2017 5:36PM

Last changed on June 15, 2017 9:54PM

As the Oregon legislature looks to raise revenue for transportation projects, the city of Hermiston is working on a plan of its own.

The city’s public infrastructure committee has been working to put together a comprehensive capital improvement plan, and recently moved on to the street department portion of the project.

That could include a plan to raise franchise fees on providers of electricity, natural gas, cable and telecommunications.

“Before we start to develop what that plan looks like, we really need to have an idea of what the resources are going to be,” assistant city manager Mark Morgan said.

In a 12-page memo to the committee, Morgan recently laid out the city’s main options for raising money for street projects: increasing franchise fees to 7 percent, adding a $5 surcharge to utility bills or adopting a 5 cent gas tax.

Outside of the city’s control, but also a possible revenue stream, is the major transportation package the legislature is hoping to pass before the end of their 2017 session. If the bill passes as currently written the city would receive additional street maintenance revenue from the state’s plan to raise the gas tax by 14 cents per gallon, in addition to funding a multi-million dollar overhaul of First Place that would include traffic signals at its intersections with Highland Avenue and Orchard Avenue.

Other street projects the city’s public infrastructure committee is looking at listing in the capital improvement plan include paving roads like East Theater Lane, overlays on various worn-out streets and extending Gettman Road to Highway 395 so that it can be used as another major east-west corridor through town.

Morgan said even if the state’s transportation bill passes, the committee is still leaning toward a recommendation to raise franchise fees as well.

He said the problem with a flat $5 utility fee on city water and sewer is that the burden of paying for street projects would fall completely on residents within Hermiston city limits. Hermiston’s population is about 17,750 but there are 37,000 people living within a 10 mile radius of the city. About two thirds of the people who work in Hermiston don’t live in city limits, and more than a third of people living within Hermiston School District’s boundaries don’t live in city limits either.

Many of those people still drive Hermiston roads almost daily, however.

“They’re buying groceries, they’re bringing the kids to school,” Morgan said.

Increasing franchise fees (currently at three to five percent) to seven percent of gross revenues would leave it up to the service providers to decide how to pass the cost onto customers. It would also shift more of the burden to larger customers like Wal-Mart. Both of those factors mean some of the cost would likely be spread to people who drive Hermiston roads daily but don’t pay city property taxes.

Gas taxes would capture some non-Hermiston residents, but Morgan said Hermiston’s gas stations sell 35 percent less fuel than the an average city of Hermiston’s size. That’s because commuters heading into Hermiston usually meet a fuel station — Space Age and Pilot off of Interstate 84, Short Stop off of Diagonal Road and Umatilla stations off Interstate 82 — before they get into city limits. An extra gas tax on stations inside city limits would give highway stations an even bigger competitive advantage and likely encourage people to fill up outside of Hermiston more frequently.

A gas tax would also need to be approved by voters.

Morgan said the public infrastructure committee will know before it is done with the capital improvement plan what the legislature does with the transportation package and will be able to factor in that revenue or lack thereof into the roads portion of the plan. Other portions, including water and sewer infrastructure, will likely be paid for by utility rate increases over time.

— Contact Jade McDowell at jmcdowell@eastoregonian.com or 541-564-4536.


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