Covington was looking to plug a hole in its street fund by creating a transportation benefit district, but the City Council Tuesday cut the plan off without any discussion.

The idea was to set up a transportation benefit district inside the city limits. The city would have added a $20 license tab fee to pay for road maintenance.

The council was to consider a public hearing on the issue, but when Mayor Margaret Harto asked the members if they wanted to proceed, all but Councilwoman Marlla Mhoon voted to have the discussion closed at this time.

Mhoon said she thought the vote was “very short sighted.”

Councilman Wayne Snoey said, “I don’t support the transportation benefit district for two reasons. One, it is not the time to be adding taxes and two it creates another layer of government within our city boundaries.”

To keep the street fund in the black, explained Finance Director Rob Hendrickson, the city was looking at adding a $20 license tab fee by creating a transportation benefit district.

Transportation benefit districts have been a tool available to cities since it was created by the state Legislature in 1987.

“I think the idea has caught on more recently with the cities because of the economy,” Hendrickson said. “It’s another source of revenue for the street funds.”

This fund has been hit hard, Hendrickson explained, since the passage of Initiative 695 and Initiative 776.

“A lot of cities general funds have been subsidizing street funds over time,” he said. “That puts a lot of pressure on the general fund.”

On Jan. 12, Hendrickson and City Manager Derek Matheson gave a presentation to the City Council about the TBD concept, and as a result of questions brought up by council members they planned to present follow up information to the council at the meeting Tuesday.

The council chose to table the idea and didn’t hear the presentation.

If the council had been interested in pursuing it as a funding source, the city would then host a public hearing to explain it to residents and gather feedback.

The idea behind creating the district and collecting the fees when people renew their vehicle tabs is so that people who are driving on the roads in Covington can help pay to maintain them.

During the course of a full year of collection, Hendrickson said, the city could collect between $180,000 and $280,000.

“We have decreasing revenues and increasing costs in the street fund,” he said. “In 2010 we had several layoffs in the street fund. The public works director also scrubbed his budget very carefully and took out $100,000 out of his budget before the layoffs.”

Despite those efforts, the costs to maintain streets are still exceeding the money coming into the street funds, and the general fund will subsidize the street fund to the tune of $215,000 this year.

“Without the benefit district we’re looking at a street fund balance of zero in 2011 and by 2012 it would just escalate from that point in a bad way,” Hendrickson said. “The transportation benefit district would ease some of the pressure on the street fund.”

Hendrickson said that if the city can’t find another funding source then road maintenance may be deferred but that’s “never a good idea, it costs you more in the long run.”

If the council had moved forward, then after the public hearing an on ordinance would need to be written to create the district which would encompass the city limits, with the council serving as the governing board and Hendrickson serving as treasurer.

“We’ve provided them with all the information that we can,” Hendrickson said. “We’ve asked some of the cities that have this. There’s about 10 cities that already use (a TBD).”

Hendrickson said that if the council chooses not to go with the TBD then staff will have to come up with another approach.

“I know the council wants to provide a high level of service,” he said. “We want to give the biggest bang for our buck because the people who live here deserve it.”

The council members knew they’d have to come up with some other resolution.

Mayor Pro-Tem Jeff Wagner said, “We don’t want our streets to go into disrepair. We will have to find something to take care of the streets.”

Councilman Jim Scott said the council “will revisit it, I think.”