Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on Transportation and Traffic

FROM:

General Manager of Engineering Services in consultation with the Director of Finance

SUBJECT:

TransLink Funding Shortfall

 

RECOMMENDATION

A. THAT Council reiterate its support of the TransLink 5 year Strategic Plan and recommend that TransLink establish, as soon as possible, a long term financial plan using stable revenue sources based on user pay systems.

B THAT Council support continued funding of construction and maintenance of the Major Road network as an integral part of TransLink's responsibility.

C. THAT Council advise TransLink that it accept the Provincial proposal to provide TransLink an additional 2 cents/litre in Fuel Tax to offset its budget shortfall.

D. THAT Council advise TransLink that it advance the planned 2003 fare increase to earlier in 2002 and that it use the residential property tax to make up the remaining revenues required to match the revenues from the Province's offer of 2 cents/litre in additional fuel tax in order to advance Choice 2.

CITY MANAGER'S COMMENTS

This report is being submitted to the Standing Committee on Transportation and Traffic to allow an opportunity for the public to speak directly to the Committee on this matter. Council will recall that last Tuesday, October 30, 2001, Pat Jacobsen, CEO of TransLink, spoke to this matter.

COUNCIL POLICY

Council has adopted CityPlan, the Livable Region Strategic Plan and Transport 2021, the Regional Transportation Plan.

Council has approved a Transportation Plan that has a number of relevant policies with respect to this subject including:

· Transit will be given greater priority to meet the needs of increasing demand for transportation across the City, including improvements to bus services generally throughout the City and the further implementation of rapid transit.

· Supporting a governance and finance structure for transit which would be more responsive to the needs of the City and the Region, for example, which would provide a guaranteed source of revenue for the acquisition of buses and rapid transit vehicles and to operate the system in response to increases in demand.

On February 17, 1998, Council recommended the GVRD Board endorse the implementation of the "Recommended Agreement on Transportation Governance and Funding for Greater Vancouver " (ie, the basis of TransLink).

PURPOSE

TransLink is near the end of a very compressed public consultation process to help in the resolution of its immediate 2002 budget shortfall. The CEO is here today as part of that process, and this report and the recommendations are a mechanism for Council to participate.

This report summarizes TransLink's proposed choices for its 2002 budget and discusses why it is important the City support the choice that moves TransLink towards achieving its 5 year strategic plan.

This report is a companion to a presentation to Council on Tuesday,October 30, 2001, by Pat Jacobsen, CEO for TransLink.

TRANSLINK BUDGET DISCUSSION

When TransLink was originally created, it was known that additional revenue sources would be required. The inability of TransLink to implement the Vehicle Levy in 2000 resulted in a shortfall to its 2001 budget. TransLink is legally required to balance its budget and this was accomplished in 2001 by cutting transit service levels and Major Road expenditures. Transit service cuts (See attached Appendix A) were implemented earlier this month.

The 2002 TransLink budget must be increased by $40 to $50 million over the final 2001 budget if it is to maintain 2001 service levels and meet its increased debt servicing commitment. If TransLink cannot find new revenues, further cuts must be made.

The Province has recently agreed to provide TransLink a 2 cent/litre increase in the Fuel Tax (about $40 million annually) if TransLink matches this from its own existing revenue sources. However, as part of this, TransLink would also be responsible for the one-time $25 million startup cost of the Millennium Line and subsequent annual operating costs (2002 net operating cost is $14 million).

TransLink is undertaking a public process to discuss how to resolve the 2002 budget situation. Two choices have been presented to the public for discussion.

Choice 1 assumes no new revenue sources and would require a further $50 million in cuts to transit service and road construction (or less depending on TransLink's success in identifying up to $10 million in "efficiencies"), as detailed in Appendix B.

The following is a summary of the cuts:

· No road funding provided to the municipalities to maintain or improve the Major Road Network.
· Bus service would be cut by an additional 15% (3 to 4 times the service cuts made this year - eg. 100 fewer rush hour buses, no replacement trolleys or opening of the Millenium Line)

Choice 2 accepts the Province's offer of an additional 2 cents/litre fuel tax and matching these revenues with an equivalent amount from their own revenue sources. This would provide TransLink with an additional $80 million in revenues and allow it to increase its 2002 budget by $27 million over its 2001 budget (depending on service efficiencies).
This means that some of the recent transit service cuts could be reinstated, or transit service levels could be increased in other areas. It also means the trolley fleet could be replaced, the Millennium Line service started and new buses ordered. Road funding for municipal roads would double from 2002 levels of $9 million to about $18 million as well as a significant increase in capital spending ($35 million) towards large projects that improve the movement of goods and people across the Region.

While this additional revenue does not match the planned Strategic Plan service level increases, it moves in that direction.

Impact of the TransLink Budget Choices on the City Budget

The municipalities receive funds from TransLink to pay for operating, maintaining and rebuilding those major streets in the City that are part of TransLink's Major Road Network (MRN).

The original agreement with TransLink was that by 2002 each municipality would receive $12 000 per lane-km of Major Road. In 1999, TransLink provided 70% of that amount, and had planned to increase that to 100% by 2002. By 2002, on this basis, the City should have received $6.6 million.

The failure to implement the Vehicle Levy in 2000 resulted in the 2000 level of road funding to the municipalities held at the 1999 level of 70% of costs. This was reduced to 59% in 2001. This has resulted in the City receiving about $3.8 million in 2001 ($1.6 m. in operating and $2.2 m. in capital)

Even though the City has not received the funds it originally expected, it has allowed the City to undertake significant street maintenance projects (158 lane-km of new pavement overlay) and safety projects (Clark and 1st Ave., Knight and 41st Ave., and Marine and Cambie).

As mentioned above, Translink Budget Choice 1 would eliminate road funding to the municipalities. This would mean the City would automatically lose close to $2 million in revenues that accrue to the Corporate Operating Budget.

There will be no impact on the 2000-2002 Capital Plan as the amount of funding anticipated from TransLink has been committed. However, if Choice 1 is adopted by TransLink then future capital plans would be impacted.

Choice 2 could result in street maintenance funds being returned to planned levels of about $7 million annually from TransLink. As a result, maintenance of the Major Road Network would be funded on a user-pay basis.

Why TransLink Must Increase Transportation Services.

The CEO of TransLink noted in a recent speech to the Council of Councils on September 8, 2001 that TransLink is "at a critical crossroads in the mobility of goods and people in the Region and if we cannot move people, goods and services as well as they can in Seattle, Portland and Los Angeles, we and our economy and livelihood will suffer". (A copy has been provided to Mayor and Council and is on File with the City Clerk.)

This observation is particularly true for Vancouver City. Regional and City populations continue to increase. Our downtown continues to undergo dramatic changes as its residential nature grows. These population increases mean greater demand for personal travel.

City Council has concluded that it is not possible to expand the Vancouver street network to meet increased person travel by automobile. As well, the City does not want other agencies or governments to increase the automobile capacity of crossings into the City and thus attract even more traffic onto City streets. Rather, as provided in the Vancouver Transportation Plan, increases in car trips and truck trips (to meet the complementary increase to move more goods) must be accommodated through only minor adjustments to, and continued maintenance of the existing street grid. And further, if Vancouver is to maintain its quality of life, a continually expanding transit system that meets the increasing personal trip demand within the City is absolutely necessary.

Therefore, TransLink must continue to move forward in the direction outlined in Transport 2021, the Livable Region Strategic Plan, the Vancouver Transportation Plan and its own Regional Strategic Plan. To do this, it must first resolve its immediate budget shortfall and then achieve an ongoing stable funding formula that allows for steady increases in levels of service (both on the transit and road side) and revenues to cover the costs.

Choice 2 does this and provides for some increase in transit and road spending. TransLink is falling behind the Strategic Plan schedule but can begin to recover with this budget and resolution of a future, stable budget environment.

Is There a Better Combination of Revenue Sources?

TransLink has a number of options for raising the needed funds, but there are limitations on the availability, timing and suitability of most sources.

· Fares, as a user-pay revenue, are an appropriate source. About 40% of the TransLink budget comes from fares. A fare increase was recently implemented in 2000 and another is planned for 2003.

· Fuel tax is an appropriate source that is user-pay based and currently provides about 33% of TransLink's funding. The Province has offered an additional $40 million from fuel tax, but requires that TransLink match this from other, existing sources.

· Federal Fuel Tax is also a user-based source that is collected in the Region, and retained by the Federal Government. Although this remains a potential source for the future, it has not been made available at present.

· Road pricing or tolling is identified in the legislation as a potential source of funding. However, its availability is limited as a source of capital funding for new construction only.

· Annual user fees such as the vehicle levy, increased Air Care fees, or similar fees have also been identified as potential sources. However, after much discussion and debate, the Province failed to provide the necessary legislative changes to allow these fees to be established.

· Increased access to the Hydro Levy and the Property Tax represent existing sources that are available, though potentially unpopular. An additional tax on properties benefiting from major capital projects (such as rapid transit) may represent a further source but would require further investigation as to the feasibility of this as a revenue source and the potential magnitude of revenues.

· Increasing the Parking Sales tax or implementing a separate tax on non-residential parking lots cannot be easily achieved equitably across the Region given the significant number of free parking spaces outside downtown Vancouver. An increase in the ad-valorem tax would amount to a further tax on the urban concentration area, which is contrary to the Regional Growth Management Plan.

There are only three revenue sources robust enough to provide the necessary funds for TransLink to provide the necessary transportation services required to achieve the Regional land use and transportation objectives. These are fuel tax, fares and property tax.

The Province has proposed increasing the Fuel tax, as an appropriate user-pay source.

Fares are also an appropriate TransLink user-pay source and advancing the planned 2003 fare increase to 2002 is a balance against the Provincial increase in the Fuel Tax. However, it would not be appropriate for TransLink to raise fares so high as to recover all the necessary revenues as this would be a burden on a large segment of the transit captive public. As a further balance of available revenue sources, TransLink should consider the use of the property tax.

City Council, the GVRD and TransLink have always been reluctant to use the residential property tax to pay for transportation, noting that TransLink already collects in the order of $40 million (7% of budget) from the Non-residential property tax and $55 million (11% of budget) from the Regional residential tax base, via the old Hospital Tax transferred to TransLink from the Province.

The Property tax base is not a user-pay source as would be preferred and has a myriad of other local and regional demands on it. But it is a traditional source for transportation/transit improvements in many other Canadian cities. As mentioned above, it would not be appropriate for fares alone to raise the necessary TransLink share of revenues and the property tax remains the only reasonable alternative at this time.

CONCLUSION

Staff believe it is absolutely essential that TransLink continue to work to achieve their 5 year Strategic Plan. This must start with recovering from the 2001 budget cuts. Therefore, it is recommended Council advise TransLink to accept the Province's offer of an additional 2 cents/litre increase to the local Fuel Tax and that its matching share of revenues be achieved through a balance between an increase to Fares and Property Tax.

* * * * *

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APPENDIX A

TRANSIT SERVICE CUTS IN VANCOUVER - October 2001

· Owl (Late Night) Service - Discontinue all late night bus services leaving downtown Vancouver after 1:40 a.m., including #5, 6, 8, 9, 10, 15, 16, 19, 20, 22, 35. Also discontinue all other Suburban Owl services after 1:40 a.m., including #106, 112, 150, 242, 401, 403, 410.

· #1 Beach/Waterfront - Discontinue evening, Sunday and Holiday service due to low ridership.

· #2 Macdonald/16th Ave/Yaletown - Eliminate the extension of service to Yaletown due to low ridership between Yaletown and downtown Vancouver.

· #5 Robson/Downtown - Eliminate the extension of route #5 to Robson at Hamilton near the Vancouver Public Library due to low ridership. The #5 will now terminate near Waterfront Station.

· #8 Fraser/Granville - Reduce duplication of service following the introduction of the #98 B-Line on Granville Street, by slightly reducing #8 mid-day service frequency from every 7 minutes to every 8 minutes.

· #10 Hastings/UBC - Reduce duplication of service with the #99 B-Line by reducing mid-day frequency to every 15 minutes.

· #29 29th Ave Station/Elliott/Champlain Heights - Discontinue the extension of the #29 to Fraser Lands and Champlain Heights due to low ridership.

· #41 Joyce Station/UBC - Reduce service duplication with the #43 by slightly reducing service frequency on 41 Avenue between Joyce Station and UBC.

· #42 Spanish Banks/Chancellor - Discontinue the route due to low ridership. Portions of the #42 service along 4th Ave, Chancellor, Westbrook Mall, and University Boulevard will be replaced by the reroute of the #44 UBC/Waterfront Station.

 

Appendix B on file in the City Clerk's Office

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