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V • <br /> Council Memo <br /> Public Works Department <br /> No. 2026-03 <br /> DATE: 1/20/2026 <br /> TO: Honorable Mayor Julie Moore Wolfe and City Council Members <br /> FROM: Melissa Hon,Interim City Manager <br /> Matt Newell,Director of Public Works <br /> SUBJECT: <br /> Ordinance Amending City Code, Chapter 51.4, Local Motor Fuel Tax <br /> SUMMARY RECOMMENDATION: Staff requests that Council approve the proposed ordinance amendment <br /> regarding City Code Chapter 51.4, Local Motor Fuel Tax,which increases the City's motor fuel tax rate on <br /> diesel from one cent per gallon to 5 cents per gallon and eliminates Section 12, Termination. <br /> BACKGROUND: <br /> The City's Local Motor Fuel Tax was established as Chapter 51.4 of the City Code on February 16, 2016, with <br /> a 5 cent per gallon tax on non-diesel fuel and a 1 cent per gallon tax on diesel fuel sold within the City. Since <br /> its inception,the City's Local Motor Fuel Tax brings in approximately$1.8 million each year dedicated to the <br /> capital improvement of the City's streets. <br /> It is recommended that the City's motor fuel tax on non-diesel fuel and diesel fuel be equalized at 5 cents per <br /> gallon. The tax on non-diesel fuel will remain unchanged at 5 cents per gallon and the tax on diesel will <br /> increase by 4 cents,to 5 cents per gallon. The recommended change will increase the City's revenue directed <br /> toward the capital maintenance of streets by an estimated$700,000 per year. It is proposed that the tax change <br /> will begin on April 1, 2026. <br /> When Chapter 51.4 was adopted, a 10-year sunset clause was included that requires the Council to take <br /> affirmative action to extend the Local Motor Fuel Tax beyond 10 years from its enactment. With the ongoing <br /> and ever-increasing need to maintain and improve City streets, staff recommends that the Local Motor Fuel Tax <br /> be extended indefinitely and that Section 12 be removed from Chapter 51.4. <br /> LEGAL REVIEW: <br /> PRIOR COUNCIL ACTION: <br /> February 16,2016 -Chapter 51.4, Local Motor Fuel Tax was added to the City Code establishing a five cent <br /> per gallon tax on non-diesel fuel and a one cent per gallon tax on diesel fuel sold within the corporate limits of <br /> the City. <br /> POTENTIAL OBJECTIONS: Potential objections are not currently known. <br /> INPUT FROM OTHER SOURCES: <br /> None <br /> STAFF REFERENCE: Matt Newell, Public Works Director,will attend the City Council meeting to answer <br />