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A challenging road ahead: TransLink’s 2012 financial picture

Cycling and transit: two modes that play a key role in our transportation future.

As you may have heard, news of TransLink’s financial situation has popped up in the media over the past few days. (Here’s the Globe and Mail, Frances Bula’s blog, and Jeff Nagel in the North Shore Outlook).

So I thought we’d take a moment to look at our financial road ahead, and hopefully give everyone a better grasp of where we’re coming from.

Primary sources: our reports to the Mayors’ Council

So first: why are we in the news right now? Well, the Mayors Council had one of their scheduled public meetings on Tuesday, May 22, 2012 and TransLink made a presentation at the meeting outlining our financial status.

All the documents from that presentation are online, so you can have a look at all the details for yourself. Find them at the main Mayors’ Council meeting page, under “Reports” for the May 22 meeting.

Or, grab them at the links I have conveniently set up below:

It’s obviously your choice how to dive in, but I found it easiest to understand by reading them in the order above. The memo, then the appendixes, and then the Commissioner’s Report.

What are the key points?

Here are the highlights:

  • We currently don’t have stable funding sources to pay for our current system maintenance and planned improvements for the system. Key factors include:
    • The Regional Transportation Commission has rejected our requested increase in FareSaver prices for 2013 onward, although not increases on cash fares (more about this here)
    • The Mayors’ Council has passed a resolution indicating that a temporary property tax source that had been put into place for 2013 onward is no longer available, and we don’t have a replacement for this funding yet.
    • Our fuel tax revenue is declining. Fuel tax is a key revenue source, providing 1/4 of of our annual funding, and is estimated to be about $120M less over the next three years than we expected.
    • Also, increases in the cost of fuel impacts our operating costs.
  • We have made some progress on our latest investment plan, Moving Forward, but the Mayors’ Council’s recent decision on property tax requires us to re-examine priorities and develop a new plan.
    • Based on the Moving Forward plan, we have invested in the Evergreen Line, some bus service expansion and additional SeaBus hours, as well as restoring $17 million to municipal road upgrade and cycling programs.
    • But we need to make decisions on key projects that are on hold, including Main Street SkyTrain station, King George B-Line and the Bus Rapid Transit on Highway 1 over the new Port Mann Bridge. These have significant senior government and partner investments, and we need to match funding.
    • As well, to remove the previously approved property tax from the 2012 strategic plan requires us to write a new supplemental plan.
  • By law, we have a limited number of funding sources that we can draw on for money.
    • Among these sources are property tax, transit fares, real estate, and other fees related to transportation like parking.
    • Oakridge Transit Centre, a former bus depot at Oakridge and 41st, could be a source of some revenue for the future. We have been considering selling this property since 2009.
    • However, we don’t know for sure exactly when Oakridge might sell, or at what price. As well, funds from this sale will go straight back into operating costs.
  • We have identified $84 million in efficiencies and these have already been considered in our plans. Further efficiencies may impact service and our customers.
    • The provincial audit is underway and we look forward to any opportunities for efficiency that are identified through this process.
    • The Regional Transportation Commissioner also performed an efficiency review of TransLink in March 2012, and we are reviewing the Commissioner’s observations to determine if it is practical to accelerate implementation suggestions. There are already several suggestions in the review that are already captured in TransLink’s efficiency plans (see appendix C for more detail).

In the long-term, TransLink’s CEO Ian Jarvis points out that our current financial challenges stress the need for everyone—the Mayors’ Council, the Province and TransLink—to work together to establish sustainable and enduring funding sources for Metro Vancouver’s transportation network.

Questions?

Well, this is a weighty topic and I’m certain you have questions. Please do put them in below and I shall endeavour to find you the answers in a timely fashion, as always!


14 Comments

  • By Tom, May 25, 2012 @ 9:32 am

    I like the fact that Translink will be getting the money from the fare evasion fines issued!

  • By Chris, May 26, 2012 @ 10:40 pm

    How much is TransLink subsidized, by which levels of government, and how does this compare to other transit agencies in North America and Europe?

    Virtually all public transit agencies run at a loss and require support from general government revenues. Where does Translink stand?

    I’ve wanted to know this for a while but never knew who to ask.

  • By Bob Prosser, May 27, 2012 @ 6:19 pm

    It seems like the BC Liberal government is always scuppering Translink’s plans and looks to be always unwilling to help Translink achieve stable funding. I hope (future) Premier Dix will rectify this situation early in his new mandate.

  • By Jhenifer Pabillano - Buzzer Editor, May 28, 2012 @ 3:42 pm

    Chris: a good question. You can find a detailed breakdown of our revenue with charts and numbers on page 5-6 of our 2010 annual report. I’ll also quote the text below (and update the gas tax figure).

    TransLink has a diverse set of revenue sources, including some that are not currently utilized:

    TAXATION REVENUE
    Property Taxes
    TransLink assesses property tax on the net taxable value of land and improvements within the 21 municipalities and rural areas within Metro Vancouver

    Fuel Taxes
    Purchasers of gasoline and diesel fuel sold within Metro Vancouver include a 17 cent per litre tax which goes to TransLink

    Parking Tax
    TransLink charges a tax on the purchase price of a parking space

    Power Levy
    A levy to every residential dwelling in Metro Vancouver. The power levy is added to the dwelling’s power bill and collected by BC Hydro on behalf of TransLink

    USER REVENUE

    Transit Fares
    TransLink collects revenue directly from the Metro Vancouver residents using the system

    Bridge Tolls
    TransLink may asses toll charges to recover the costs associated with a designated project or major crossing

    UNUTILIZED REVENUE SOURCES

    Vehicle Levy
    TransLink has the authority to assess motor vehicle charges on owners of vehicles used principally in the Metro Vancouver service region

    Area Benefitting Tax
    A contribution from property owners directly benefitting from transit improvements

    PS: While the vehicle levy and area benefitting taxes are in our legislation, they may require other legislative changes to enable them. (For example, while our legislation gives us the power to enact a vehicle levy, we don’t have the power to enforce it.)

    I should also add a few more notes to add to ensure the picture of our financial state is more clear.

    – First, TransLink was created in 1999 to manage Metro Vancouver’s transit and roads — you can get the full story in our history book here. The region was in a transportation crisis, and the province and Metro Vancouver felt the best response was to create a regional body with authority for transportation management. A key component of creating TransLink was searching for sources of stable funding, so TransLink could properly manage the region’s network without unexpected budget swings every year. Property tax and fuel tax were two key sources of the formula established to deliver this stable funding.

    – TransLink is a quasi-governmental organization: it was formed by a specific provincial law that continues to govern our work. That law outlines what specific revenue sources are available to us in tremendous detail. By this I mean we’re not actually a provincial body under the governance of the province — we’re an organization that gets funding as outlined by a provincial law. So the province can’t just pass money to us out of general revenue.

    – We don’t have power to just impose taxes unilaterally to raise money. On taxation issues, the Mayors’ Council needs to approve of any proposed increases. The province needs to approve any new revenue sources and put it into provincial law. And Regional Transportation Commission must approve of any proposed increases to fares. (They are two bodies that oversee TransLink’s work: more about our governance structure here.)

    – Last, there’s a process behind our budgeting. Every year we have to propose what we want to do in the region, and identify where the money will come from. By law, we’re not allowed to spend any more than the revenue sources that we have.

    I hope that helps illuminate our financials a bit!

  • By Sheba, May 28, 2012 @ 6:28 pm

    What exactly is the Area Benefitting Tax? I looked at the report and there’s no description of what it is.

    Btw I had to download the file and rename it as a pdf file so that I could view it.

  • By Jhenifer Pabillano - Buzzer Editor, May 29, 2012 @ 8:25 am

    Sheba: I’ll ask our planning team for specifics on the area benefitting tax. Sorry about the PDF thing, that’s an ongoing issue for Firefox users that isn’t quite resolved yet: I’ll pass your note on to our web team about that as well.

  • By Jhenifer Pabillano - Buzzer Editor, May 29, 2012 @ 1:53 pm

    Sheba: here’s the answer from our planning team.

    Under Part 3 – Funding, Section 25.7 of the SCBCTA Act currently provides for the Benefiting Area Tax, and includes the following language:

      (7) In a bylaw under subsection (2), the authority may
      (a) establish zones in the transportation service region, and
      (b) adopt different tax rates for land and improvements in different zones based on the benefit that the authority considers accrues to the land and improvements in a zone as a result of proximity to a transportation station, or to another major transportation facility, that has been constructed or funded by the authority.

    The general concept is that the BAT (or ABT) is an incremental property tax or special tax assessment based on the benefit that accrues to land and improvements in Metro Vancouver as a result of proximity to a major transportation facility. There are no specific details about exactly how the tax would be assessed, administered and collected.

  • By Jeff Dean, July 19, 2012 @ 3:32 pm

    I think the benefiting area tax is a good idea, a fair and efficient way to pay for rapid transit projects. Is Translink pursuing this in any way? Are you doing studies or looking into it?

  • By Jhenifer Pabillano - Buzzer Editor, July 24, 2012 @ 5:02 pm

    Jeff: I’ll pass that along. Response soon!

  • By Jhenifer Pabillano - Buzzer Editor, July 24, 2012 @ 5:04 pm

    Sheba: ps: the Firefox PDF thing is resolved now. PDFs should work!

  • By Jhenifer Pabillano - Buzzer Editor, July 26, 2012 @ 2:38 pm

    Jeff Dean: Aha—I finally have an answer.

    I’ve asked the planning team and they say that as one of a the few financial tools available to us, the benefiting area tax is something that has been reviewed as a possibility for the future. But as of now, there are no plans to move forward with applying the benefiting area tax. Here is a little more from planning about the topic:

    The Benefiting Area Tax has been used in other jurisdictions as a means of generating revenue, and is permissible under TransLink’s legislation. A preliminary assessment of the strengths and weaknesses of the Benefiting Area Tax have been undertaken, along with those of other revenue generating tools, as part of the Province, Mayors’ Council and TransLink’s assessment of future funding tools. We continue to do background work to understand if and how it could be used to generate revenue and support land use objectives. TransLink continues to work with both the Mayors’ Council and the Province on a stable long-term funding strategy that will enable allow the region to maintain and expand our infrastructure and services, as needed.

  • By Jeff Dean, August 28, 2012 @ 11:10 am

    Thanks Jhenifer. I hope Translink does the work because it’s the best way to pay for infrastructure. Infrastructure like rapid transit increases nearby land values. Without taxing some of that increased value, landowners get a windfall profit without doing any work, while others have to pay for it through income, sales and property taxes or higher fares!

  • By Anieca G., July 27, 2015 @ 8:40 am

    Does anyone know where I can find a blank financial status form to fill out?

Other Links to this Post

  1. The Buzzer blog » True or false: TransLink can afford to provide all the transit service that people want — October 4, 2012 @ 10:34 am

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