Davis City Council Urged to Increase Funding for Pavement Maintenance Program

photo by David M. Greenwald

Summary: The Davis City Council has been directed to provide $14 million per year in funding, including an increase in General Fund resources of $5.5 million per year from Measure Q sales tax increase funding, for support of the Pavement Maintenance Program. The funding identified by city staff in a December 2024 presentation to Council that would be needed over four years to make up for previous shortfalls in funding for road and bike path maintenance that have occurred in recent years. The Council has been directed to restore the process for commission review and oversight of the Pavement Maintenance Program.

• Direct City staff to provide funding in the forthcoming two-year budget of $14 million per year (from all sources), including an increase in General Fund resources of $5.5 million per year from Measure Q sales tax increase funding approved by Davis voters, for support of the Pavement Maintenance Program. The $14 million amount represents the funding identified by city staff in a December 2024 presentation to Council that would be needed over four years to make up for previous shortfalls in funding for road and bike path maintenance that have occurred in recent years.
• Direct city staff to return to Council with a recommendation in regard to the additional staff and contract resources, if necessary, that should be incorporated into the 2025-27 budget plan to implement the program at the funding level provided above.
• Restore the process the Council established in 2019 for commission review and oversight of the Pavement Maintenance Program. The Fiscal Commission should:
  • Examine why the reported condition of street and bike path pavement improved significantly in recent years, nearly reaching the original goals set by Council, despite significant funding shortfalls, and evaluate whether future technical adjustments are warranted to reassess the model used to project the level of funding required for the program.
  • Evaluate the potential impact of the planned Cool Pavement federal grant program to determine whether any further increases or decreases are warranted for city funding levels for pavement management, due to improvements to roads expected to be achieved under the federal grant program.
  • Review the specific proposed funding components of the 2019 Council- approved plan for pavement maintenance to:
    • Determine whether, and to what degree, they have been implemented by city staff, and why;
    • Determine which, if any of them, are still feasible and available to assist in future funding of the Pavement Management Program;
    • Estimate the fiscal impact of frontloading rather than backloading funding to maintain roads and bike paths over the next ten years.         The Council

should direct city staff to assist the Fiscal Commission in all four areas of this review.

Background

Based on the findings of the Council’s roads and bike paths task force (a panel comprised of Council members Gloria Partida and Dan Carson, a city finance commissioner, and city staff), the Council updated the city’s Pavement Management Plan in 2019 to provide $84 million over ten years to achieve the Pavement Condition Index (PCI) targets set by Council in 2013. The PCI targets were never achieved (63 overall for roads and 68 for bike paths). A surge in inflation nationally, a disruption to energy markets caused by the Russian invasion of Ukraine, and various other city budgetary decisions meant the 2019 plan has been substantially but not fully implemented, in part due to funding shortfalls.

Under the 2019 pavement plan, amounts ranging from about $7 million to $12 million per year were to have been budgeted from the General Fund and other funding sources to support the program from 2019-20 through 2028-29. A December 2024 city staff presentation to Council about the potential future use of the proceeds of Measure Q (see Slides 11,12,13 attached below) subsequently documented a series of shortfalls in funding for pavement management in the years 2021-22 through 2024-25. The funding shortfall was identified by staff to be $2.5 million in 2021-22, $2.5 million in 2022-23,

$1.5 million in 2023-24, and $2.2 million in 2024-25.

As it anticipated voter action on Measure Q, Council further reduced the General Fund support available for pavement management. It reduced program support by $776,000 for 2023-24 (thus providing a total of about $7.7 million from all funding sources for the program). Council further reduced General Fund support for this program by $1,448,000 million for 2024-25 (thus providing a total of about $6.5 million from all funding sources for the program).

The same city staff presentation in December 2024 indicated the city would need to spend about $14 million each year from 2025-26 through 2028-29 to make up for these persistent funding shortfalls. Accordingly, we recommend the Council address the shortfalls identified by staff and deliver on the promises made during the Measure Q campaign to fix our streets and roads.

In November, City of Davis voters approved an increase in the sales tax known as Measure Q. The promise by its supporters was the estimated $11 million in annual tax proceeds would be used to fix streets and roads, as well as to address other city needs. Roads and bike paths were repeatedly cited as a top city priority.

The Council created two separate Council subcommittees to recommend how Measure Q funding should be allocated in the new two-year budget proposal that will be acted upon in June. One is looking at the overall needs of the city, and one is focused on roads and bike paths.

Proposed Pavement Program Puts Off Biggest Costs To The Future

The new consultant report to Council, assessing the city’s progress in maintaining streets and roads, estimates (see page 07-4) that the overall cost to the city of meeting Council targets for the condition of streets and roads would be $109 million over the ten- year period ending in 2034. The consultant identified a $25 million funding gap for the program to be solvent. The average $10.9 million per year cost of addressing this funding gap would be about $2.5 million more annually on average than is currently budgeted each year for this purpose, according to consultant estimates.

However, the city’s consultant does not recommend budgeting $2.5 million more every year over the next decade. Instead, the consultant proposes in its new report (see page 07-40) that the city adopt an initial three-year Pavement Management Plan that only modestly increases city spending for this work for 2025-26 through 2027-28 to about $8 million per year from all fund sources. The proposal (as shown on pages 07-49 and page 07-58) contemplates that much more dramatic increases in program spending occur much later, bringing total spending for roads and bike paths to between $12 million and $14 million annually during the period from 2030-31 through 2033-34.

The report suggests that spending be backloaded because the city can reach its pavement condition goals in the first few years without spending a lot of money.

In our view this is an unwise approach that will create a formidable “fiscal cliff” for future Councils. Making only a minimal investment of additional funds in fixing our roads and bike paths now opens the door for this Council to lock in commitments for a number of expensive popular new programs and priorities using the newly available Measure Q dollars. A future Council would later be burdened with an exponentially bigger bill for addressing pavement needs beginning in 2030-31 – an increase of up to $6 million per year from the General Fund in backloaded pavement maintenance costs. That future Council would probably have little choice but to either cut existing spending for other programs and-or try to once again ask Davis voters to increase city taxes. Or, they could just let the roads and bike paths deteriorate.

In our view, the council should frontload, rather than backload, its investment in city roads and bike paths, now that ample Measure Q funding is available for this purpose. Earlier investments in this critical infrastructure could significantly reduce the outyear and overall costs of pavement maintenance. That is because it costs far more to fix serious pavement problems than it does to carry out basic maintenance before damage

occurs. A smarter frontloaded approach to fixing our roads and bike paths would likely free up future Measure Q dollars in the long term for other council priorities.

More Staff and Resources May Be Needed to Accelerate Roadwork

Appropriating additional dollars for pavement maintenance is not enough. Given the demands of the new Cool Pavement program and other city transportation improvement projects that will soon be underway, additional staffing and consultant resources may be needed to accelerate the work that is needed. Staff should provide feedback and recommendations as necessary to address this issue.

Fiscal Commission Should Provide Greater Oversight on Pavement Program

In 2019, City Council assigned the Finance and Budget Commission the duty of periodically reviewing the implementation of the Pavement Maintenance Program. That work should continue with its successor, the Fiscal Commission. With the help of city staff, the Commission should study:

• Why the city has done surprisingly well in improving its pavement condition despite unexpected funding shortfalls, and whether the model used to project the need for future funding should be adjusted to better align pavement spending with the city’s PCI targets;
• How, if at all, the new Cool Pavement grant program impacts the Pavement Maintenance Program and whether the grant program’s successful implementation could allow the city to reduce future city spending for the Pavement Maintenance Program;
• Assess how and if frontloading road and bike path maintenance funding could reduce the estimated ten-year cost of the pavement maintenance program spending timeline proposed by the consultant.

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