Metro Vancouver’s mayors are “very close” to a deal with the provincial government to cover a funding gap for a transportation plan that includes a new Pattullo Bridge and rapid transit lines in Vancouver and Surrey.
Discussions, which must come to fruition within the next six weeks, are around how TransLink will find money for $60 million to $70 million in annual costs for the second phase of the mayors’ 10-Year Vision for regional transportation.
The province is prepared to approve one or more new revenue streams for TransLink to pay for up to $40 million of the annual shortfall, according to people familiar with the negotiations. This could include anything from a vehicle levy to a parking or gas tax hike. The rest would have to be paid for through property taxes and transit fares, the two funding tools TransLink can leverage without provincial approval.
Mayors’ Council Chair Derek Corrigan didn’t confirm the amounts or the funding mechanisms involved, but said the province has been fair and agreed, in principle, to share the responsibility for the gap.
“The province has clearly said that they’re coming to the table to help us through this gap, and we’re looking to be able to cover our share of that gap once the province has made a commitment,” Corrigan said.
The funding gap is about 15 per cent of the total cost of the Phase 2 plan. The federal government has committed to paying up to 40 per cent of the capital costs for major projects and the province has agreed to pay for 40 per cent of all projects. TransLink is responsible for the remainder, plus all of the operating costs, and has funded more than half ($130 million per year) from existing revenue sources.
The Mayors Council previously refused to use property taxes for transit funding, but reluctantly approved a property tax increase of about $3 per household per year and a fare increase to fund the first phase of the plan. They came into effect in June 2017.
Many mayors have since expressed their opposition to using property taxes for further transit improvements.
“For the last number of funding increases that we’ve provided to TransLink, property tax have always been a major portion of that and we just cannot continue to rely so heavily on the property tax,” said Port Coquitlam Mayor Greg Moore. “In addition to that, it’s not the best funding tool for transit system — it has very little to do with the transit system. When you’re taxing you should try to find taxing revenue that parallels the service that’s being delivered.”
Moore said he’d like to see mayors given “a tool kit” with a number of different funding options from which they could choose the best combination.
New Westminster Mayor Jonathan Coté said mayors have been firm that the vast majority of the funding gap, if not all of it, has to be covered with a funding source other than property taxes.
“I think the mayors have quite rightly put forward that we really do need a more diversified funding source for transportation investment and continually going back to the only funding source that local government have is really not the appropriate funding source,” Coté said “To me, unless a significant portion of the fund gap is being covered by another funding source I think property taxes would be a non-starter.”
However, Corrigan, who voted against approving the first phase of the plan in part because it used property taxes as a funding source, said although mayors have clearly said they don’t want to go to property taxes, it’s not out of the question for Phase 2.
Burnaby Mayor Derek Corrigan
“I think in any set of negotiations you don’t take anything off the table without being ready to accept the consequences, so we continue to leave everything on the table from both perspectives, hoping that we’re going to find a resolution,” he said.
Options for covering the gap — other than property taxes and fare increases — include many that have been proposed in the past and at least one new idea.
A vehicle levy, increasing the gas or parking taxes and increasing the hydro levy are among those options. Giving TransLink a portion of the carbon tax is an old idea that was proposed during budget consultations in October, but Corrigan said he doesn’t believe it will be approved.
With the removal of tolls from the Golden Ears Bridge and the fact that the province is now reimbursing TransLink for lost toll revenue, the option of taking ownership of the bridge and removing the need for TransLink to subsidize the bridge debt repayment to the tune of $40 million per year is available. This would free up the money to be applied to the funding gap.
“We’ve proposed almost every possibility that’s come to the minds of our staff or any of the members of the Mayors Council and we’ve been looking to the provincial government for any solutions they might propose to be able to take some of that gap away,” Corrgian said. “Eventually, like many negotiations, it’s going to involve compromise.”
It’s expected that an agreement on closing the regional funding gap will be in place by the end of next month — in time for a public announcement with Prime Minister Justin Trudeau — and the draft investment plan for Phase 2 approved in April. It’s expected that the final investment plan would be approved in June or July and implementation would begin in July.
If an agreement is not reached in time, there are three alternatives: reduce the scope of the Phase 2 plan, stretch out the 10-year plan over more than 10 years or delay Phase 2 until 2019 or later. Each month of delay could add $10 million to the cost of the plan, said council executive director Mike Buda.
Corrigan said he’d love to see an announcement in next week’s budget, but that will likely be too soon. The mayors are under “big pressure” with the March deadline approaching, but he’s confident a deal will be done in time.
“Sometimes having a date you need to finish things by … can sharpen the senses and focus the attention, so that’s what we’re doing right now,” Corrigan said. “We’ve got to find a solution and the time is now.”
On Friday, the provincial government has scheduled a news conference in New Westminster with Premier John Horgan, Minister of Transportation and Infrastructure Claire Trevena and Minister of Municipal Affairs Selina Robinson to make an announcement related to the Pattullo Bridge, which is slated to be replaced by 2023.
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