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TransLink 101: Where does TransLink get its funding… and how do we spend it?

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For February 2013, we’re going back to basics with TransLink 101 [1]—explaining TransLink and its work!

One of the questions we often hear is, “How are TransLink and the transportation network funded?”

People usually think first of transit fares as one source of revenue, but fares make up just one piece of the revenue pie. So, as part of our TransLink 101 series, we’re looking at TransLink’s existing revenue sources, and where our revenues are spent. Let’s go!

What are TransLink’s existing revenue sources?

TransLink Revenues

TransLink’s available revenue sources as of 2013

Our revenue sources are broad and diverse, which is a benefit because it makes us better able to weather a changing economy, and gives us the capacity to deliver stable and predictable transportation services.

It also comes out loud and clear in our credit ratings – TransLink has maintained an “AA” credit rating even in the face of the financial pressures we’ve faced recently. This means investors, who take into account our revenue sources along with our governance structure and management, rate our organization well and consider our organization stable and well-managed.

There are two main “streams” of revenue that fund TransLink’s services: taxation revenue and user revenue.

Taxation revenue

User fees

These revenues add up! Our 2012 revenues were $1.42 billion, with the majority of our revenue coming from property tax, fuel tax and transit fares (please note this is an unaudited figure; we haven’t finalized 2012 year-end yet).

2012Revenue

TransLink’s revenue in 2012 (not yet audited)

Our revenues are outlined in our legislation

It’s worth noting that we can’t just take money from any type of revenue source. TransLink’s funding sources are specifically outlined in the South Coast British Columbia Transportation Authority Act [3], the provincial legislation that governs TransLink.

Any changes to the revenues TransLink can collect – or how they can be collected – require many levels of approval, typically from the Province, Mayors’ Council, Regional Transportation Commissioner, or some combination of these. They also require a process of extensive consultation with the public and our customers.

Our legislation also includes revenue sources that we don’t currently use. One of these is a vehicle levy, which is a charge on vehicles used in our service region. Although it’s in our legislation, a vehicle levy would only go into effect if the Province tables enabling legislation outlining how such a charge could be collected and protecting privacy.

The second revenue source loosely outlined in our legislation is something called an area benefitting tax. This would be a contribution from property owners who benefit directly from transit improvements. An example of this would be properties integrated with the transit network, such as Plaza 88 at New Westminster Station. However, because it’s essentially a property tax, it could only be put in place in close coordination with the municipalities. It’s not something TransLink is currently exploring.

What are TransLink’s expenditures?

Not surprisingly, the majority of TransLink’s expenditures are for transit operations. The keen observer will notice that 60 per cent of our expenditures in 2012 went toward transit operations, while just 32 per cent of total revenues come from transit fares.

Transit fares alone don’t cover the cost of running transit; the other tax dollars that make up the revenue pie – particularly property and fuel taxes – are critical for us to be able to deliver transit service in the region.

The next largest group of expenditures (25%) goes toward debt repayment: interest expense and amortization of capital assets. Like mortgage payments a homeowner might make, this is basically debt repayment for service and infrastructure we already have in place.

Next are our roads and bridges [4], which make up eight per cent of expenditures; administration at four per cent, which includes information technology costs, planning, finance and human resources; and Transit Police at two per cent.

AirCare [5] operates as “net zero”, meaning the cost of running the program is balanced by the revenue it brings in.

2012Expenditures

TransLink’s 2012 expenditures (not yet audited)

In conclusion

So there you have it – a quick overview of TransLink’s revenues and expenditures! And as we wanted to just give you the basics, there’s much about our finances that we didn’t cover, so your questions are more than welcome in the comments. We’ll do our best to find out the answers for you.

Author: Tina Robinson