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Higher fuel prices may mean less gas tax revenue for City of Prineville

Prineville City Manager Robb Corbett is getting closer to delivering his annual budget message this spring, coming at a time when the state revenue forecast for 2008 is not looking promising.
   City officials began their budgeting process for the 2008-2009 fiscal year in January, and Corbett is scheduled to deliver his annual budget message to the council on May 20.
   The budgeting news comes at a time when state revenues are down.
   "Troubles to the U.S. economy are coming from two sources: housing and energy," according to the "Oregon Economic and Revenue Forecast" from the Oregon Department of Administrative Services. "The housing market downtown and subprime mortgage problems are working their way through the financial sector. As home prices are starting to retreat, consumers are not tapping their home equity values. Consumer spending may also slow due to tighter credit criteria, and energy prices are pinching budgets." According to the Department of Administrative Services, the March 2008 forecast for state general fund revenues is $12.92 billion, a decrease of $183.1 million from the December 2007 forecast.
   Additionally there may be a slight drop in the gas tax state revenue that the City of Prineville receives, but city leaders do not anticipate significant changes in light of a decreasing state economic forecast. Corbett said there might be a reduction in the amount of the gas tax to the city because of increased fuel prices and "apparently there's been some funding issues that could require ODOT (Oregon Department of Transportation) to amend their monies. That could impact cities. The state provides us with projections on our revenues that we get from the State of Oregon. I have not seen any corrections to those estimates as a result of the recent news and would expect to receive something in the next few months." The city receives liquor tax and cigarette tax money, which goes into the general fund. Additionally, the city receives gas tax revenues that go into the city's street fund "and then we receive state revenue sharing that typically goes into the transportation fund."
    This week, Corbett spoke with Andy Shaw, who is an associate at the League of Oregon Cities (LOC) in charge of governmental relations. Shaw said the state is looking at a cut in payroll taxes, and these do not significantly affect the revenue the city receives.
   "I believe that the state revenue share monies that we get will be impacted by the fall of income tax revenue to the state, but I don't think it would be significant," Corbett said. "The revenue sharing is about 10 percent of the overall revenue coming into the city, so we might see a slightly less revenue sharing than planned. I think we budgeted $50,000, so it might come in less than that."