Less than a year after Metro Vancouver voters defeated a proposed 0.5 per cent regional sales tax for TransLink, area mayors are in secretive talks with the province to approve a new funding source to finance billions of dollars in transit expansion.
Mayors aren’t spelling out exactly which source or sources they’d prefer to tap but they acknowledge the rejected sales tax isn’t on the table, at least for now.
“We have put in a basket of options that are open to discussion,” Surrey Mayor Linda Hepner said. “We’ll have to see what is palatable and what is on the table and what is off the table.”
Besides sales tax, the major new funding sources the mayors have pushed for in the past include an annual vehicle levy or a new regional carbon tax.
The province has steadily resisted the idea of a carbon tax that would no longer be revenue neutral but would instead fund transit upgrades.
And the mayors in their late 2014 deliberations decided not to go to referendum on the vehicle levy, because it was seen as unfairly targeting drivers, compared to a broad sales tax.
The 0.5 per cent sales tax would have raised $250 million a year – enough to finance the region’s share of the $7.5-billion expansion plan – but 62 per cent of Metro voters said No to it in last year’s plebiscite.
The key difference today is that the federal government has offered to pay half of the capital costs, up from a traditional one third.
That’s expected to cut the annual amount required from the region to perhaps $150 to $175 million – as long as the cost of big projects like the Broadway subway and Surrey light-rail network don’t escalate too much from earlier estimates.
One factor driving costs up is the hot real estate market – roughly $500 to $700 million of land would have to be acquired for rapid transit stations in Surrey and Vancouver and for maintenance facilities.
Another is the low Canadian dollar, which means new transit vehicles that are generally priced in U.S. dollars cost TransLink more than was estimated when the loonie was at 90 cents.
Minister for TransLink Peter Fassbender said the immediate need for more money from the region is further reduced to about $50 million a year initially to cover the first of two phases of expansion, based on the federal government’s decision to divide its transit contributions into two stages.
Fassbender said he believes TransLink can generate that much money from its existing sources without implementing a new one, and thereby secure the roughly $370 million in federal contributions available for phase one projects.
That would continue the design work for the new Surrey and Vancouver rapid transit lines, while providing other transit improvements elsewhere in the region, from more buses, to increased SeaBus service and station upgrades.
Current funding sources that could be raised include higher TransLink property taxes, parking taxes or fares.
Increasing the 17-cent-a-litre gas tax in Metro Vancouver – one option – would require legislative change. So would the activation of an annual vehicle levy, which is currently in TransLink legislation but needs the province to direct ICBC to collect it.
Phase two will take more work, Fassbender said, because while the province hopes Ottawa would continue its 50 per cent contribution in that round, it wants rock-solid assurances.
“You can’t do something like this on any assumption, you have to have the facts,” Fassbender said. “So that’s probably the billion-dollar question.”
He said the province is now actively reviewing the viability as a funding source of capturing some part of the increase in land value that comes with new rapid transit lines.
“The benefit of that accrues to the people who are living there and there should be some investment out of that going into transit,” Fassbender said, adding he believes that could be a significant generator of funds for the regional share of costs in the second phase of expansion.
When it comes to new funding sources to finance phase two, he said, nothing should be off the table, not even a renewed push for a regional sales tax.
Fassbender said he will not speculate on whether the full two-phase expansion plan can be completed without holding another referendum.
In the longer term, Fassbender said he agrees with mayors that mobility pricing should be investigated as a source.
Hepner said none of the mayors believe it wise to have another referendum.
“I don’t think there will be a plebiscite,” she added.
Hepner said she hopes more can be revealed by the end of May.
Time is of the essence, she said, to secure the federal grants and not end up in a situation where projects from other Canadian cities leapfrog ahead of Metro Vancouver, or project costs soar.
Delta Mayor Lois Jackson, meanwhile, said she’s disappointed the talks with the province are taking place behind closed doors.
“All this in-camera stuff is not a good way to educate the public about the solution you think you have,” she said.
Jackson said she doesn’t believe there is any more support from voters than there was last year to impose higher TransLink taxes.
“We don’t have any more buses, we don’t have any more service yet they’re asking us to pay more,” she said. “Is it any different from how it was in the referendum? I’m not sure it is.”