Tag: Taxes

Ask Pat: tax increases

Posted on . by Patrick Johnstone. Leave a comment.

RA asks—

This past year the assessed value of my property has increased by $150,000. Approximately a 30% increase. Using the property tax estimator, entering a rate increase of 0% results in an increase of my tax payment of 18% due to assessed value increase alone. Therefore this more than covers the 2.67% the city proposes. I understand that many homes faced similar increases this past year. For these reasons, I am not in favor of the tax increase proposed.

Can you tell me how the city has factored in the large assessed value increases into its budget and resulting proposed tax increase?

Wow. 30% in one year is crazy. It would be nice to think you made $150K this year just sleeping in your bed, but that doesn’t do you much good if you can’t sell – you have to put that bed somewhere. However, the short answer to your question is: it hasn’t. The longer answer is below.

Your assessed increase was significantly above the average increase in property values for the City over the last year, which was 11.7%. This means you are going to get dinged by the property tax system more than most. However, that doesn’t mean the City is getting extra money, it means someone out there in New West must have got an assessment increase less than the average, and they will see a relative tax savings this year.

The better way to answer your question is by going through a quick example of how the Assessment/Mil rate tax math works.

First off, the City has not yet settled on a tax increase this year. The current draft of the 5-Year Financial Plan that needs to be done by May (the “budget”) is built around a 2.73% increase. That is (more likely than not) the number that is going to come to council in the form of a Bylaw sometime in April. This means the City plans to collect about $1.8M more this year than we did last year in order to balance the budget. About $1.3M (1.97%) of that is “base budget” increases – inflationary increases that, if not approved, would result in a reduction in existing programs and services. The other approximately $0.5M (0.76%) is new departmental requests: things like additional staff to enforce and administer the Tree Bylaw.

Using the City’s handy tax estimate calculator, you can enter 2.73% and your assessed values from 2015 and 2016, and get an idea how much your taxes are likely to rise this year. For the fun demonstrative value of it, I entered several values for property assessment increases and City tax increases, and plotted out the results:

grahp

On the Y-axis (vertical) is the property value increase from BC Assessment. I don’t think many properties went down in value, and your 30% is the highest increase I have heard of, so this should cover most of the range of residents in the City. The average increase City-wide was 11.7%, which I show with the thick grey line. On the x-axis (horizontal) is the amount your tax bill will increase based on the three scenarios represented by the green line (City tax increase of 0%), the blue line (the City’s proposed 2.73% increase) and just for comparison, a 5% tax increase shown with a red line.

You can see that for the average assessment increase (11.7%) the tax increase is equal to the City’s set increase. As your assessment increase is an astounding 30%, your tax increase is going to go up much more than this, and the relationship is linear: if we raise taxes 0%, you will pay 18.3% more, raise taxes 2.73% and you will pay 21% more, raise them by 5% you would pay 23.3% more. My assessment went up about 17%, so my numbers would be 5.3%, 8.0% and 10.3% respectively.

However, 11.7% is the average increase for the City, so for every property that increased more than 11.7% there is one that increased less than 11.7%. For the owner of a property that went up 10% in value, the proposed tax increase is about 1% (less than inflation), and any property that increased by less than 8.7% in 2016 will see their taxes go down. I know you are sitting on a 30% increase and the regional real estate numbers are crazy, but by the virtue that your property went up almost 3x the average, there must be a large number of properties in the City whose increase was less than the average, and even below that 8.7% threshold.

To sum up, the big point here is that the City does not look at the assessed property value increases when calculating the tax increase required for the year. We look at our budget and determine what our need is to deliver the services required. This year it looks like about $1.8Million, so for every $100 we took in from property taxes last year, we need to take in (about) $102.73 to deliver those services and balance the budget. If the average property assessment was 1% above last year or 100% above last year, it does not change that 2.73%, and the only thing that increases or decreases your tax burden is the amount your property increased or decreased in value relative to the city-wide average.

If you think a 30% increase is not realistic, then you are able to appeal it. Too late now for 2016, but 2017 is just around the corner. The BC Assessment office doesn’t work for the City, so we have no say in how they do their work, but there is an appeal mechanism, and if you think your out-of-scale assessment is wrong, you can appeal. If you were to get your 30% increase appealed down to 20%, you will cut in half the amount of tax increase you experience. As a City, we have no skin in that game (because every one of your neighbours’ taxes will go up slightly to offset your reduction), but as homeowner whose assessed value went up 17% last year, I’ll be sharing your pain.

More taxes – with colour!

Posted on . by Patrick Johnstone. 2 Comments.

My main argument last post was that New Westminster’s property taxes, on a per capita basis, are not out of line with the rest of the region, and are actually significantly enough below the average that the difference works out to a pretty nice chunk of money.

However, it was noted to me that we don’t actually pay property taxes on a per-capita basis, we pay per household. So I took the same sets of statistics from the BC Government site to see how much each City was collecting in taxes from Residential properties only (not business or industry), and compared it to the number of Households in each community, which is a statistic collected by Metro Vancouver for their own purposes.

table1crop
Total residential taxes collected by Municipality per Household (BC Gov’t and Metro Vancouver data)

As you can see in this colourful chart, New Westminster slips down into one of the lowest-taxed communities in the Lower Mainland in this comparison. We have a relatively low number of residents per household (2.28, compared to a regional average of 2.73) likely because of the larger number of rental suites and apartments in New Westminster than other Municipalities.

Although the presence of taxes irritates some people, the issue really arises whenever taxes are raised, so how do we measure up in the constantly-increasing-taxes department? Every year Council discusses a potential tax increase to keep up with inflation, growth, wage increases and paying for new programs. Again, the Province’s annual reporting is a useful dataset for comparing these increases between Municipalities, in this case the table called Schedule 703, which lists the annual “Total Property Taxes and Charges” for all Municipalities. I calculated the % increase every year for all 21 Municipalities, and to facilitate comparison between Belcarra’s $2M budget and Vancouver’s $1.4B budget, I indexed all of the taxes to the 2005 baseline, which I arbitrarily set at $100.

table 2
Taxes and fees collected by Municipalities, 2005 to 2015, as a percentage of the baseline amount collected in 2005.

As you can see, between 2005 and 2015, New Westminster’s taxes went up about 65%, which puts us right about the middle of the pack regionally. Anmore was off the scale in their increases, and Vancouver was (perhaps surprisingly to some) one of the most conservative in their tax hikes. To answer your question, I have no idea why Langley Township has that big jog in 2014, except to say that’s what the stats report, and it was an election year in Jordan Bateman’s riding!

These numbers, however, mask that over those 10 years, there was a lot of regional population growth, so as taxes went up, so did the number of taxpayers. Your individual tax increase as a resident of one of these Cities is not represented here, so I took data from Schedule 201 to track the rate of population growth with the same set-2005-as-100 indexing, and the same line colours:

table 3crop
Municipal population, as a percentage of the 2005 baseline population.

The data here is, unfortunately, a little choppy, as the BC Government does estimates between census years, and the 2014 Census leaves something to be desired. Why they reported no changes in population in 2013 or 2015, you will have to ask them. Perhaps most surprising are the 6 Municipalities that saw their population shrink since 2005 (we need to sit down and talk about the Regional Growth Strategy here, folks). As you can see, New Westminster was one of the fastest-growing communities, behind Surrey and Port Moody, and quite a bit faster than all of the municipalities to the north and west of us, even those with similar dense urban cores and rapid transit access.

So combining those two charts together, I calculated the “Total Property Taxes and Charges” (from Schedule 703) and divided by population (from Schedule 201), then again indexed the resultant taxes per capita to the 2005 rate, which I arbitrarily set at 100:

Taxes and fees per capita, as a percentage of the 2005 value.
Taxes and fees per capita, as a percentage of the 2005 value.

Not surprisingly, taxes didn’t go down per capita in any Municipality over the last decade, but Vancouver’s rapid growth combined with its relatively conservative tax increases make them look pretty good, and they were the only Municipality whose tax increases were (at least until 2014) on pace with the National Inflation Rate, which I added as a dashed line, mostly for Ed’s benefit. Notably, only 4 municipalities (Vancouver, North Vancouver City, Langley City and Surrey) have increased their taxes at a lower rate than New Westminster. It is interesting that these are amongst the most “urbanized” municipalities, and that taxes are increasing fastest in more rural/suburban municipalities, a correlation I have no theories to explain.

As a summary, New Westminster is far from the most-taxed municipality, and are trending towards being one of the lowest-taxed. Based on BC Government data, I am confident that our taxes, no matter how you count them, are comparatively low, and our increases to date are low relative to the other municipalities in the Lower Mainland.

Tax time again

Posted on . by Patrick Johnstone. Leave a comment.

As it is budget time again at New Westminster Council, people will soon be asked to provide some feedback to our somewhat byzantine financial planning.

The feedback the City receives during tax time can usually be summed up in one phrase: Stop raising taxes. Unfortunately, that advice usually offers a paucity of practical suggestions of how to save the money, with the exception of a general idea that we need to fire some number of “gold-plated staff”. For every suggestion of a practical way to save money (“stop wasting money on flowers”), there are other suggestions or how poorly we prioritize our spending (“what happened to the flowers that used to be on the boardwalk?”)

This is an area where the City’s public engagement process could definitely be improved, but it may be the most challenging part of community engagement, because there are a variety of barriers between making municipal financing understandable to most people, while still providing a complete enough picture of how our budgeting works and where our your money actually goes. The City’s books are, by regulation and practice, completely open, but that doesn’t mean the data presented is put into a context that is useful for most people. This is augmented with a general lack of understanding of how municipal financing works, including the Public Service Accounting Standards, auditing, and formal reporting that is done by every City in the Province.

So to start the conversation here about the 2016 budget plan, I want to put to rest, once again, one of the myths we commonly here in New Westminster: that we are “The Highest Taxed City” in the Lower Mainland. To challenge that idea, I am once again going to the standardized financial reporting data that every City provides to the Province.

I have already talked about Mil Rates, and not much has changed since I wrote that blog post all them years ago – Mil rates are still a terrible way to compare taxes between Cities. Actually, pretty much any way to try to compare taxes between Cities is a terrible way. Every comparison includes some confounding variables hidden in the data, because (back to the top) municipal budgeting and taxes are a complicated topic.

So for the purposes of this post, I will provide a couple of charts showing that we are not, as some would assert, the highest-taxed City in the Lower Mainland. Again, all data from the BC Government sources cited above, which is about the most impartial source of data available for local government finances.

Table1
Residential property taxes collected in 2015 per capita.

Table 1 shows the amount of residential property tax paid to the Municipality per person who lives in the Municipality. This does not include taxes paid by industry or businesses, or other fees the City collects, but right off the top, you can see that New Westminster is no-where near the most taxed Municipality.

But this is only Residential Property taxes, and Cities vary somewhat in the amount of industrial and commercial taxes they collect relative to residential taxes.

Table2

As a bit of an aside, Table 2 shows how much of the taxation burden is carried by residential homeowners, relative to how much of the present assessed land value is residential. In every City (except those few lacking commercial or industrial taxpayers), the business community subsidizes the homeowners. The few Munis with almost all of their revenue collected from residential land are the anomalies, but the “gap” between tax burden and assessed land value here in New Westminster (~25%) is not out of line with that of our “competition” with similar tax rates.

Table3
All municipal taxes collected in 2015 per capita.

If we widen our focus away from only taxes collected from residential property owners, and put all municipal taxes (residential, commercial, industrial, etc.) into the bin, we end up with Table 3, the amount of municipal taxes collected from all sources per capita. Again, New Westminster is somewhere in the middle, skewing slightly (but probably not significantly) towards the lower-tax side of the spectrum. The Cities that moved up are (naturally) those with the largest commercial and industrial land bases. Vancouver moved up 11 places from one of the lowest-tax cities to 5th from the top, Delta from the middle of the pack to the second highest (thanks to their low population and the Annacis Island cash cow), while residential bedroom communities like Anmore, Lions Bay and (sorry) Maple Ridge move way down to where they look more like comparatively lower-tax communities.

However, there is one more way these comparisons of taxes are not fair between jurisdictions, and that is in the other ways some municipalities choose to collect money from residents and businesses. Fees, Local Area Service Taxes, and Parcel Taxes are ways that tax burden can be kept off the “Mil rate”, but still appear on your bill. These are, fortunately, reported to the Province, which allows a more fair comparison between the Cities (Surrey, Burnaby, Coquitlam) that collect millions in Parcel Taxes with others (Vancouver, Richmond, New Westminster) that collect none.

Table4

Table 4 shows what happens if these additional taxes are included with your variable property taxes, and the Cities are compared, again on a per-capita basis. Not only does New Westminster compare well against out neighbours, we are significantly below the average per-capita taxes for the region, shown by the dashed red line.

For the fun of it, I calculated what it would mean for New Westminster to raise its taxes to match the per-capita regional rate. To get there, we would have to collect $18.5 Million more every year, or $264 per resident. To put that in perspective, an extra $18.5 Million per year would pay outright for a new Canada Games Pool in 3 or 4 years, a new Animal Care Facility in less than 6 months, or enough money to raise our annual grant fund for festivals and other services by 20 times. That is a crazy amount of money, and that is the amount we are below the average for the region.

Do all cities charge too much taxes? Some would argue that, while other question whether cutting municipal costs to the bone is really worth the erosion of livability that usually results. And threading that needle, my friends, is where we need to have a better discussion around the City’s budget.

Talking Taxes (pt. 2)

Posted on . by Patrick Johnstone. Leave a comment.

A little while ago, I blogged about Property Taxes, and tried to put some context to where New Westminster compares regionally around residential property tax levels. I used this dataset provided by the Province, as comparing the financial documents of all 21 Lower Mainland municipalities from their on-line reporting is a bit of a challenge. I demonstrated (I think) that New Westminster is neither the highest of lowest taxes municipality, but was either in the top third (if you take a very raw measure) or right about in the middle (if you actually count how much the typical household or resident pays).

But what about businesses? During the last election, it was suggested in print by one of the (unsuccessful) candidates that taxes charged to businesses in New Wesmtinster are “the highest in Metro Vancouver”. This did not make sense to me at the time, but didn’t rise to the point, as I wanted to be able to put number to the issue. The simplest method, of course is to compare how much is collected from businesses of every type on a per-capita basis:

Table3

You can see that New Westminster is 8th in the crazy category of most taxes per capita from businesses of all types. If you look only at commercial businesses (blue), we are the 6th highest. This is where you can see some of land use choices affecting the numbers. Delta has huge tracts of industrial land on Annacis Island that provides almost half of its non-residential taxes, and Port Moody hosts a lot of major industrial use. Meanwhile, Vancouver is truly post-industrial, with their largest “industry” being non-industrial commercial businesses. There is nothing here that makes New Westminster anomalous.

However, this is a rather useless comparison. Unlike residential taxes, you cannot evaluate business taxes on a per-capita basis. With the varying levels of residential/business mix, you can’t really count up the number of businesses or business owners or leasable square footage and divide the taxes collected between those groups, as the variables are way too…uh…variable. So how do we compare apples in this diverse bowl of fruit?

One way would be to look what proportion of the total property tax revenue is paid by residents, and what proportion is paid by businesses. To index this, you need to compare it to the proportion of assessed land value that is zoned Residential vs. that zoned Commercial. This allows you to recognize anomalies like Anmore and West Vancouver (which have almost all of their land in residential use) and compare them to places like Langley City and Port Moody, where commercial land use is proportionally large.

First, compare the percentage of land value that is in residential property with the percentage of tax revenue drawn from that residential land:

Table1

You can see that in Anmore 100% of the property is residential, therefore that is the only source of revenue. At the other end of the “best fit line” is Burnaby, where 80% of the land is residential, but only 50% of the tax revenue comes from residential taxes. Note the green line, which represents an even balance between proportion of residential land value and tax revenue. The best fit around which all municipalities cluster is well above that, which makes sense as all municipalities charge a higher Mil Rate for businesses and industry than for residents. The amount more they charge is the “Multiplier”.

In New Westminster, our Multipliers in 2015 are shown on the table below. The first number is just New Westminster taxes, the second includes all the School, GVRD, MFA, etc. taxes that the City has no real control over.

Property use    Multiplier (City Only)     (all taxes)
Residential                            x 1                               x 1
Business                                x 3.475                       x 3.403
Light Industry                      x 4.566                      x 4.131
Heavy Industry                    x 8.102                      x 6.444

But back to the graph above. If a municipality charges less to residents in proportion to their property value than they do to business and industry in comparison to other municipalities, then they appear below the best fit line. For lack of a less-pejorative term, I’ll call these municipalities “resident friendly”. Those above the line are more “business friendly”. Langley City is anomalously “resident friendly”, where North Van City and Port Moody are more “Business Friendly”.

However, much of what controls the proportion of industrial land is structural to the economy and geography. Today’s Delta won the lottery in 1955 when the island was designated as the region’s first Industrial Park, and the high-multiplier property taxes started rolling in. Another way to look at the above graph is to flip it over looking only at commercial business taxes:

Table2

This time the best fit is under the (green) equality line because every business in every municipality pays more than its share of property taxes. The further under the best fit line, the less “business friendly” a Municipality may be considered. Vancouver is the obvious standout (the attractiveness for major businesses of being located at the central business district of the metropolis demands a premium), but New Westminster, Coquitlam, and the District of North Vancouver also appear a little below the line, and have very different land use proportions when looking at residential vs. industrial vs. commercial.

This raises a question which is completely rhetorical, but well worth asking: what should be the balance between residential and business taxation? Should a City like New Westminster give business owners a bit of a break to encourage job creation, or should we keep residential property taxes lower to manage the affordability of living here? Should businesses subsidize residents, or vice versa? If “neither”, what is the balance?

Just for the fun of it, I plotted every municipality’s details on the same graph. Population is on the X axis, and the total land assessed value on the Y axis. The area of the pies represent the annual tax revenue, and the colours of the pie charts represent the tax revenue by land use. Note that Vancouver and Surrey are both way off the chart here. Both their populations (640,914 and 504,661 respectively) and assessed land values ($221 Billion and $85 Billion) put them in a range that is out of scale with the rest of the graph.

Table6

I don’t have much to say about this graph except that New Westminster is snugly right in the middle on pretty much every measure. The amount of tax revenue collected and the proportion of residential vs. other types of taxation is pretty much right where you would expect for a City of our size and population. It is clear that we do not, by any measure, have the highest taxes in Metro Vancouver, nor are we the lowest, regardless of whether you are a business or a resident. We are somewhere in the middle, proportionate with our land use and population size.

All of this data is from 2014, and the new 2015 reporting to the Provincial government is starting to trickle in. This year, New Westminster Council approved a 2.42% tax increase, which is higher than the 1.3% increase in the Consumer Price Index over the fiscal year 2014-2015. This raises the question of whether our tax increases are happening at an anomalous rate. I’ll try to dig out some data for that and bring you a Part 3.

Talking Taxes (pt.1)

Posted on . by Patrick Johnstone. 1 Comment.

For those who were paying attention, the City of New Westminster’s new 5-year Financial Plan just went through public hearing, and passed three readings at Council. After months of work, several reviews by Council, and a not-terribly-exciting public engagement process, the Bylaw that supports the Plan will likely be adopted by Council this Monday.

But we really haven’t talked about it as a community. When you measure column inches in the local paper, hours of council delegation time and discussion, or conversation at coffee shops and pubs, Parkades and Lancers have by far outstripped this. Which is probably not good, as this is arguably the most important thing Council ever does – scheduling the spending of your money.

We, as a City, need to have a better conversation about this, and I hope the Mayor’s Public Engagement Taskforce can figure out how to make this issue front and centre in the City’s conversation for the next budget cycle.

It’s not like people in New Westminster don’t talk about taxes. It comes up every local election, and there will be a few letters to the editor complaining about the increase approved this time around. There was even a Facebook page that *mysteriously* popped up during the last election all about the untenable tax situation in New West. The general opinion is that New Westminster is either one of the highest-taxed communities in the Lower Mainland, or the highest. This spectrum of opinions is only partially true.

A few years ago (long before Council was a glimmer in my eye) I wrote a series of blog posts on taxes in the City compared to the rest of the region. I wanted to understand where we stand and wanted to cut through the rhetoric. I talked about what a mil rate really is, I expanded by talking about how that compares to actual taxes you pay based on typical house values, and for the fun of it, threw utilities into the mix. My conclusion at the time was that we were not the highest-taxed community in Metro Vancouver, but somewhere in the middle. As a general rule, people north and west of us paid more, people south and east paid less.

Now I have a new role, and although I do not agree with the opinion that taxes are “out of control” (as people continue to ask for the services that taxes provide), I do think I need to be more cognizant of how the tax system in the City relates to other municipalities with whom we compete for businesses and residents (with taxes being only one of the many factors that influence location choices for both of those).

So I started to gather data on taxes from various Cities’ 5-year Financial Plans. However, if you start to search through them, you quickly realize the varying ways financial statements are presented in the published plans. For fun, compare recent 5-year plans of Burnaby and Port Moody.

Fortunately, local governments are required to make disclosures to the provincial government every year, and through that process, a standardized set to statistics are collected. You can read them here. I’m not saying they are the perfect Stats to evaluate whether we get full value for our taxes, but it does give us a level playing field through which to compare New Westminster to our neighboring jurisdictions. And comparison, I will do.

This first graph below shows what a typical household should have paid in all property taxes to their municipality in 2014, and breaks it up by different categories. The number on the top of each column is the assessed home value deemed “typical” for that community by the province, and the value used to calculate the tax amounts based on mil rates.

Table1

By this analysis (and this is the province’s data, not mine), the typical New Westminster residential property tax bill is the 12th highest of the 21 municipalities in Metro Vancouver. Obviously, a huge driver of this placement is that New Westminster’s “typical” $675,000 home value is below average (14th of 21) and our Mil rate is higher than typical (5th of 21, but in a virtual tie with those that are 4th through 7th):

Table2

Recognize, these are averaged numbers, the Mil rate multiplied by the “typical” value. What about what people actually pay? You can calculate a “True Mil Rate” paid in a City by taking all of the Property Taxes collected by the City (in New Westminster in 2014 that was a bit over $65 Million) and divide it by the assessed property value of all taxable property in the City (in New Westminster, that number is just north of $12 Billion), then divide by 1,000. That makes our “True Mil Rate” about 5.32, which is the fourth highest in the region:

Table3

Note that municipalities with low land values cluster towards the left side of the graph, and higher-land-value places cluster towards the right, so this graph more displays relative land value than it does level of service provided or efficiency of the operation of local government.

Up to now, we have only been looking at taxes as compared to land value. Land doesn’t pay tax, people do. So it might be more meaningful to look at how much tax we pay per resident in the City. Lucky, the same provincial data provides population estimates by municipality projected from the 2011 census to 2014, so that is also an easy comparison to make. Here, again, New Westminster is up in the top quarter, finishing 5th of 21 municipalities.

Table4

However, the comparison here is (yet again) not fair, because all taxes are not paid by residents. Businesses and industry also pay property taxes. The Province helpfully divides out local government tax revenue by land use, and if we limit the comparison of residential property taxes paid per resident in their municipality, we see that New Westminster falls back down to the middle – coincidentally 12th place among 21 municipalities:

Table5

I say coincidentally because although New West finishes 12th in the first and last graph here, none of the other 21 municipalities fall in the same location on both graphs. There are many ways to look at the numbers, but by various apropos analysis, New Westminster residential property taxes are pretty much in the middle regionally. Our $572 per person in 2014 puts New Westminster well below the $660 regional average, and essentially equal to the regional median of $573 represented by Langley Township.

So why do some graphs show New West so high? That has to do with how we use our land in New West, and how we tax residents, businesses and industry differently. To see more analysis of that, you will have to stay tuned for Part 2, coming soon.

On Spending our Reserves

Posted on . by Patrick Johnstone. Leave a comment.

A candidate for Council in 2014 wrote one of those letters to the local paper that I just have to respond to. I know Harm, am a customer of his business, curl with him at the Royal City, and respect him very much. However, this letter is so full of wrong, I need to reply in my customary paragraph-by-paragraph basis. I like to quote people directly, because I don’t want to be accused of misquoting them. However, if I err in fact or in representation, I invite Harm (or anyone else) to reply here.

“In response to both Mr. Lundy’s (Why I’ll be voting ‘No’ in referendum, Inbox, Jan. 23) and Mr. Johnstone’s (Why I’m voting yes, Inbox, Jan. 28) letters about the transportation needs and plans for Metro Vancouver. The reality here is that the governance of Metro Vancouver is a mess! Twenty-two city governments, police departments, fire departments, and unelected Metro regional government and TransLink: A gong show that needs a serious overhaul.”

An interesting argument, but not apropos of the current Metro Vancouver Transit and Transportation Plan referendum. Since the Kevin Falcon era, many have been asking for a review of TransLink governance and a return to a more accountable elected board – no-one has called for that more often and vociferously than the Mayors’ Council. However, the Provincial government has made it clear they are not interested in exploring this at this time, and there is no reason to believe a NO vote will bring this about any more than a Yes vote will. I think I made that point in my earlier letter to Mr. Lundy, so I won’t belabour it here.

“The reality is that Metro cities are sitting on a massive cash reserve in the order of $5 billion as reported in annual financial reports to Dec. 31, 2013. Of the $5 billion, the five cities most serviced by SkyTrain hold $3.4 billion.”

Let’s talk about reserves. If you would like to follow along, you can look at this document from the City website. The City of New Westminster has (or had at the end of fiscal 2013) about $15.7 Million in its bank account (“net financial assets”, Page 1 of the Financial Statements). That is derived from subtracting all of the things the City owes money on (invoices in our inbox + revenue we have deferred + money immediately payable on our debts, etc.) from the financial assets of the City (Cash in the bank + money people owe us + the money we have invested, etc.).

If you take away the fact we owe people money, and people owe us money, there are two more important numbers when thinking about the amount of money we have on hand. One is the “Cash and cash equivalents”, which was about $12 Million. The other number which kind of represents what we have in the bank is found on Page 8: $102M in Investments. When discussing “reserves”, this is the money we have set aside in various reserve funds, prudently invested and earning us a bit of interest income.

When we talk of “accumulated surplus” (Page 13), that is a different number, but $622M is a bit of a funny number, because it includes the depreciated value of most everything the City owns, including skating arenas, light posts and the furniture in the Mayor’s Office. I guess we could sell it all, but we wouldn’t really have a City anymore, would we?

“The reality is that the development of public transit infrastructure creates growth and, unlike traditional sprawl growth, does not cost municipal governments massive amounts of money to support. In fact the direct costs for public infrastructure directly related to density growth is charged back to the developers in the form of development cost charges, in reality a pre-paid tax which then becomes part of the purchase price of the units that are developed.”

Correct, the City collects DCCs from development to pay for present or future infrastructure and amenity cost related to the new population pressure. By necessity, we do not spend the DCC the day we get it. We can’t, because most of the needs are cumulative, and many of them carry operating costs that cannot be carried until the population increase happens. See Page 8 where the deferred Development Cost Charges are itemized:

DCCs1

This is money we collect from DCCs, and have put aside for specific uses. In the meantime, the DCCs sit in – wait for it – reserve. While the growth happens, we strategically draw from this reserve to continue to fund portions of capital costs for projects required to provide the services people demand. But you can’t build $100 worth of sewer every time someone moves to town, you need wait for a bunch of people to move to town, then pool their money to upgrade the sewer as needed
However, it isn’t enough. We simply do not collect enough DCC to pay for all future infrastructure needs, nor should we. People living in the existing housing stock have some use for future infrastructure as well, so the City puts a bit of money aside every year, the amount determined by our long-term capital plan based on projected needs, and fiddled with a bit by council (just because we can). We keep the money in the bank earning interest. Look at Page 13…
dccs2

…and see how reserve funds are set aside for everything from Affordable Housing to Equipment Replacement to Water and Sewer funds (I don’t want to get into the whole Tax vs. Utility thing here as this is already too complicated, so for simplicity, assume it is all tax). I’ll come back to this discussion of reserves in a bit below.

“So, while we all know that municipal spending growth has far exceeded the increases in the cost of living, municipal tax revenues in the cities that benefit directly from transit infrastructure development has even outstripped these massive increases in spending.”

This sentence is simply false. A graph from Woldring’s own website shows how expenses have gone up between 2003 and 2013.

dccs3

Indeed, all of those upward trends look concerning. However, Cities are subject to two types of continual growth: population and inflation. To understand the effect, I set an “index” value for City spending at $100,000,000 in 2013, and increased this value annually, factoring in only the inflation rate (which ranged from 0.3 to 2.9 over those 10 years) and the population growth rate in New West (based on census data, projecting the 2006-2011 trend up to 2013):

dccs4
If we superimpose these numbers on to the earlier graph, note how this line is ever so slightly shallower than the City’s actual expense increases over the same amount of time. Spending growth in New Westminster has only just matched population and inflation growth over the last 10 years:
DCCs5

If you want to stop inflation and stop population growth, then we need to have a serious sit-down about Capitalism as an economic model, but this is probably not the right time or place for that.

“What we have here is a giant power struggle and a fight about taxpayers’ money.”

Well, no. What we have here are two levels of government trying to NOT tax at their own level to pay for services that people want. Mayors don’t want to increase your property tax, and the Province doesn’t want to raise your other taxes, but they both agree the project should be funded. Why? Because they are tired of having to explain to people that public services cost money to provide, because every time they say so, Jordan Bateman steps up and calls them all wasteful incompetents, to the cheers of a hundred CKNW phone-in “men on the street”. This letter to the editor is an example of that phenomenon.

“If transit development creates a “development dividend” for cities, some or all of that dividend should be spent on the continuing development of public transit infrastructure across the district instead of simply fattening the coffers of individual municipalities.”

Far from fattening the coffers, that dividend goes to providing the services people who are living in those developments will need – hence DCCs and expenses going up in parallel to population growth and inflation as seen in the graph above.

“The reason I’m voting ‘No’ is that the money is already there and the provincial government should wrest our money away from those municipalities and invest it in regional transit infrastructure with the emphasis being on moving people and goods using transit infrastructure like SkyTrain, LRT and short sea shipping instead of building more roads, tunnels and bridges. The people are ready; isn’t it about time politicos and bureaucrats stopped protecting their own turfs and do what we pay them for: serve the taxpayer!”

I ask the simple question: if the 5 cities cited above convert the entirety of their reserve funds, 100% of them, to the 10-year Mayors Plan (which would only provide 47% of the needed funding, so let’s assume the Federal Government matches those funds, and we get this done): Now what? (I’m going to, for the sake of argument, ignore the fact that some of these reserves are Statutory, meaning the Community Charter or other legislation limits our ability to spend them on whatever we want).

If we drained our reserve and DCC funds to zero, what would that do to those things listed on Pages 8 and 13 of those financial statements? Money we have earmarked for the Canada Games pool replacement? Gone. Money for the required (and incredibly expensive) storm drainage separation project? Gone. Future electrical utility maintenance and upgrades? Money to re-build Massey Theatre? Future support for daycare, affordable housing, roof replacements on City buildings? Money set aside for future fleet vehicle replacements, computers, the cemetery reserve, or paving of roads? All of it gone. How does that serve the taxpayer?

The letter invokes a picture of City hall having this big vault in the back where Mayor and Council occasionally roll around in piles of cash, all for shits and giggles. In reality, consecutive Councils have created and supported a long-term financial plan that will provide for the ever-increasing needs of the community (a problem made worse by downloading of so many senior government coasts to local governments) while assuring that future councils have the capital required for the huge pile of inevitable big-ticket items the City will need in the future without the sudden need for sharp tax increases whenever a capital project is needed. It is responsible governance.

“p.s. The new bridge to replace the Deas tunnel isn’t as much about cars and trucks as it is about getting bigger ships farther up the Fraser River, and since that’s the case, shouldn’t Port Metro Vancouver and the federal government be funding that one?”

This is hardly a PS. This is the central point. But I’ve been banging that drum for so long I’m tired of the rhythm.

*My turn for a PS: This is a good time to have the discussion about the City’s reserves, not because they would be better served bailing out the Province from their responsibility toward TransLink, but because we are going into a budgeting cycle in the City where Council may ask taxpayers for yet another increase, and some of the money that increase will bring in will go towards reserves. The letter writer clearly believes these reserves are getting too big, I have talked to a Charted Accountant who has some experience in Municipal finance, and (after a cursory review of our 2013 Financial Statements, and admitting he didn’t know much about the pressure on New Westminster’s physical resources) he suggested they were moderate, or perhaps a bit low, and he is not alone in that feeling. We need serious talk about reserves and how we use them, for the long-term good of the City.

Fare Evasion and Jordan Bateman

Posted on . by Patrick Johnstone. 4 Comments.

There was furious action on the War on Public Transit this week, as our local Libertarian hypocrite from the misnamed Canadian Taxpayers Federation again got unexplained media saturation by suggesting that fare evasion on lower mainland transit is some sort of a scandal, or worse – proof of incompetence at TransLink. It sounds compelling, but it is just predictable CTF misinformation.

Allow me to explain.

The latest CTF anti-transit rhetorical volley is based on data released on the “no fare paid” button on TransLink buses. This is the process through with bus drivers account for improperly paid fares (fare evaders, those paying too much, those crossing a zone boundary without paying the premium, etc). Drivers counted 2.76 Million incorrect fares in 2013, which is an increase of 250,000 over 2011. This, in the rhetorical world of the CTF, proves that TransLink is irresponsible, inefficient, and cannot be trusted with the public’s purse. It is further implied that if they could only solve this simple problem, TransLink may not need those new funds being requested through the upcoming referendum.

There are several problems with this narrative, and I might be accused of senseless idealism when I expect our “liberal media” to point them out instead of just parroting Bateman talking points.

For example, the media could put the numbers in perspective. 10 seconds on Google, and one can find TransLink’s financial disclosures, and find that there were 355 Million boardings in the TransLink system in 2013. That means 2.76 Million “non-fares” represent 0.8% of the boardings. In a rational world, an organization as worried about the public purse as the CTF would be touting TransLink’s phenomenal record of collecting fares from 99.2% of passengers on a crowded, chaotic, distributed system with literally thousands of moving fare collection stations comprising what is, essentially, an honour system*.

The CTF makes further hay out of the trend. A 10% increase in “fare evasion” since 2011 sure sounds like a trend should be worried about. Except again, no. TransLink collected $433Million in fare revenue in 2011 and $481 Million in 2013. Over those two years, ridership basically flatlined (356M boardings to 355M boardings, thanks to “rationalization” of routes) but fare revenue went up by 11%. Again, the CTF fails to tout that TransLink is doing an 11% better job squeezing users for revenue, reducing the burden on the poor taxpayer the only way they can without senior government approval.

What about the lost money though? Surely this means TransLink is hemorrhaging money due to scofflaws and lazy drivers? Again, the data says something different. Assuming those fare evaders would have paid if forced to (instead of just walking or hitchhiking or dying where they stood, whatever) that would have resulted in about $7 Million more revenue. Compare that to the $481 Million in fare revenue collected in 2013, and it represents a 1.4% revenue bleed, which is not unsubstantial, but hardly breaks the bank. In comparison, the Congestion Improvement Tax (ugh, still hate that stupid moniker) will raise about $250 Million per year, all of which will go to Capital Projects, not operations.

When Bateman says “TransLink can’t properly manage the system they already have – they certainly can’t be trusted with another $7.5 billion of our money,” he is suggesting not just that this fare evasion is a huge problem, but that TransLink is incompetent at stopping it. What he doesn’t suggest is a way to close that gap, and there is a good reason for that: diminishing returns.

Yes, we could put an armed guard on every bus enforcing payment and issuing receipts, and fare evasion would approach zero, but it would be prohibitively expensive, and the return on revenue would not cover the cost. This has been the central story all along on the Falcon Gate fiasco – TransLink was forced by the Former Minister of Transportation to install an expensive faregate system that TransLink knew would never cover the cost of the fares evasion it was meant to prevent. (Oh, and it is just a coincidence that that the guy who tried to get that same Minister of Transportation made into the Premier is now going to lead the NO campaign for the CTF, but I digress).

Any rational person has to understand that fare-evasion-zero is not possible (just like Zero Tolerance on parking meter violations or speeding or drugs is impossible). A rational person with any business sense at all says that reasonable effort should be made to push that evasion towards zero, up until the point where the cost of those efforts exceeds the money saved through enforcement. Pushing past that point makes no monetary sense if the goal of fares is to earn revenue. I frankly don’t know what that magic point is – at what point further enforcement costs more than it is worth – but if I was a betting man, I would put my money on something around 1%, because that is a common number the tolerance TransLink and other transit systems gravitate towards. Bateman thinks it is a different number (closer to zero), but I’d like to see him (a person with no experience running a multi-modal transit system) demonstrate what that number is, and explain his rationale.**

But he won’t, because he is not interested in public policy or rational discussion. He is interested in getting headlines by making irrational arguments that clip well in order to get donations for his organization. And our media provide him that free advertising every day.

If you think I am being mean to Jordan Bateman, you are right, because he used to be someone I respected. As a City Councillor in Langley, he was a voice of reason and an excellent communicator. I didn’t often agree with his politics, but always liked the way he tried to explain his thought process through contentious issues. I know people who worked for him, and he had a reputation as a Councillor who did his homework, collected the data he needed to understand issues, and defended his decisions based on that knowledge. He knew that there was an objective truth and that good governance required it. He was the kind of City Councillor I want to be. This makes him a disappointment whenever I see him acting like a clown for the TV cameras.

Back then, Bateman not only had a much more rational approach to taxation, he was a supporter of increased capital funding to TransLink to provide improved light rail and transit service, specifically so his children would not be cursed with another generation of entrenched motordom. Unfortunately, he is now the one person in the province most interested in leading the campaign against exactly what he called for 7 years ago. And he has yet to provide any meaningful reason why he changed his mind.

And that is a shame. For him, for his kids, and for all of us who want to improve our region.

And I know just by responding to him, I am falling for some sort of Streisand Effect trap he is setting. The result? Just watch, 4 months from now, when the referendum campaigns are in full swing, scofflaw fare evaders and TransLink’s refusal to address this issue are going to be major points repeated uncritically in the media, as Bateman and his ilk keep hitting that drum while providing no actual context to the discussion, until it becomes just another part of the “common sense” that no-one can deny. The lie will become truth, thanks to a guy who used to know the difference.

*Actually, the ever succinct Canspice points out bus boardings in 2013 were actually 228 Million, my number includes SkyTrain boardings. I’m not sure which number is better to use, but I guess whether you are trying to make the point that Bus Drivers are useless or that TransLink is incompetent. As noted by Canspice, if your argument is simply the CTF’s standard “ALL TAXES BAD!”, then I guess it doesn’t matter.

** In looking for this number, I found two fascinating research papers, one using Game Theory to determine if Fare Gates make sense for a public transit system (Optimal choices of fare collection systems for public transportation: barrier versus barrier free: Yasuo Sasaki, Transportation Research Part B: Methodological Volume 60, February 2014, Pages 107–114) and another using multi-variable calculus and economic modelling to determine what the optimum fare inspection rate is for a proof-of-fare transit system like SkyTrain (Fare evasion in proof-of-payment transit systems; Deriving the optimum inspection level: Benedetto Barabino, Sara Salis, and Bruno Useli, Transportation Research Part B: Methodological, Volume 70, December 2014, Pages 1–17).

    

Who pays for roads?

Posted on . by Patrick Johnstone. 5 Comments.

Once again, a casual conversation I had around a transportation issue led me to look for the data to support my long-held belief. I think I already had this data, as I like to convince myself that data is what most of my long-held beliefs are based on, but I’ve been wrong before, so it never hurts to check yourself, in case you are caught in the same conversation again. Run-on sentences are cool.

In this case, it was a version of the old “There is no need for road pricing, because I already pay for roads through gas taxes” or “Cyclists have no right to the road unless they register and pay a tax” narrative that I was arguing against. The central narrative is that gas-burners pay for roads, ostensibly through Gas Taxes or some other tax that non-drivers don’t pay. My long-held belief has been that gas taxes don’t pay for your roads, nor do ICBC rates or drivers licence renewal fees. The average cyclist likely pays just as much tax as the average car driver, they both pay for the roads (or, more likely, the average cyclist and the average driver are exactly the same person, as pretty much everyone I know who rides a bike also drives a car sometimes… but I digress). It did get me thinking – how much of what the average Lower Mainland driver pays for a car actually goes to maintain the road?

The first part of this is to determine just how much the average Lower Mainlander pays per year to drive the average car. Luckily CAA collects this data on an annual basis, so there is a single source for this number.

Click to make Bigger, borrowed from BCAA, probably illegally. 

Let’s start setting assumptions, lots of people drive compact cars ($9,543 per year) and lots drive SUVs ($12,666 per year), most of the other categories are between these, so let’s pick the vehicle that is closest to the mid-point between these, which is a “Crossover” at $10,745 per year to operate. We have to also assume the average person drives an average amount, and their cost breakdowns are about average. You can see where I am going here, so I am going to try to reduce the use of the word “average” from here on in, and you are not going to use anomalous end-member data to criticize the following analysis. Deal?

Click to make Bigger, borrowed from BCAA, probably illegally. 

According to the Car-Knobbling Council BCAA, your Crossover will cost you about $1,831 a year in fuel, $1,760 in insurance and registration, and about $7,198 (!) in depreciation and maintenance. Neither Esso nor Canadian Tire build roads (excepting, of course, in that they pay taxes, and that goes to roads, but that is true no matter where you spend your money- at the Chevy dealership or the bike shop, so that argument goes nowhere), so we can assume that when we talk about paying for roads through our cars, we are talking about the paying tax for through using things that are part and parcel with using the road. The ICBC part is a special case I’ll have to hit on later, as this is already getting long.

Let’s figure out how much tax you pay to run your car.

For that $1,831 you spend in a year for fuel, the calculator assumes your gas costs you $1.25 per litre, which works out to 1,465 Litres of fuel (I know gas is more expensive now, but I’d rather use numbers from an independent source than make shit up). According to the most independent source I can find, struggling gasoline retailers, $704.42 of this (just over 38%) is taxation at the retail level. This includes $146.50 in Federal excise tax, $97.15 in carbon tax, $249.05 in “transit tax”, $124.53 in Provincial gas tax, and $87.19 in GST.

Per-litre cost of fuel, according to Petro-Canada. Click to read.

These are each individual revenue streams, so I apologize in advance for the complicated stuff below.

The Federal excise tax goes into the Consolidated Revenue Fund – it all gets stuck in a big pile and mixed infinitely with all the other money the federal government collects, from the 16% duties on Ecuadorian wool socks to the income tax that came off your last paycheque. However, the Feds do pull $2 Billion a year out of that fund, (misleadingly) call it the “Gas Tax Fund” and transfer that directly to municipalities through a slightly convoluted allocation formula. Considering about 40 billion litres of gasoline are sold in Canada every year (not including diesel – which has an excise tax of $0.04/L on sales of 17 Billion litres annually), somewhat less than half of the Federal excise on gasoline is reinvested into this infrastructure fund (which makes the name misleading). Of that less-than-50% approximately 28% is spent on local roads and bridges.

So crunching the numbers, the $146.50 of federal “gas tax” spent by the average person, about $20 goes towards roads.

The Carbon Tax is much simpler to work out. Exactly 0% of it goes to roads. The Province has been quick to point out and reinforce that the carbon tax is “revenue neutral” – it only goes to offsetting income and corporate taxes, and to providing a $200 cheque to rural British Columbians who own a house. All that just to kill a few jobs.

The “Transit Tax” is the TransLink gas levy, and some portion of that does directly go to maintaining roads and bridges. Looking at the TransLink Base Plan for 2014, we can see that TransLink collects $331 Million per year on its gas tax (on about 2 Billion litres of fuels sold in the TransLink area annually), which is 23% of its total revenue. Of this total revenue, about $119 Million (or about 8%) is spent on Roads, Bridges, and Cycling. So just as the federal money goes in to one big consolidated fund from which road money is drawn, the money TransLink gets is pooled and re-distributed (otherwise, their road spending would be decreasing as the gas tax revenues decrease, and that is not happening).

So of the $249.05 of Transit Tax, about $19.92 goes to the roads your drive that car upon.

The Provincial tax is much harder to estimate, as it all also goes to General Revenue, as does the GST hit, of which even a smaller proportion is transferred to the Province for roads spending. So let’s ignore the usual whinging about deadbeat have-not provinces and assume 100% of the GST comes back to the Province, and is pooled with the PST. How much does the Province spend on Roads? According to their recent financial plan, the annual Ministry of Transportation budget is about $800 Million, and a further $1.3 Billion on Infrastructure investment for transportation, meaning $2.1 Billion is spent on transportation. Of course that includes roads and bridges, along with cycling, transit, rail, Ferries (coastal and interior), gondolas, and the Mountain Pine Beetle Strategy (!?). This sounds like a lot, but it is only 4.7% of BC’s annual revenue. Given these very, very generous estimates, something like $10 of the average PST/GST cost of the annual gasoline bill goes to transportation.

That’s it: $50. That is the “toll” the average British Columbian pays every year for using the roads through gas taxes. Notably, this amounts to a “road tax” equal to one half of 1% of the annual cost of owning and operating a car.

There are, of course, major flaws with the above analysis, but none of them change the underlying premise.

First, most of the roads you use every day are paid for and maintained by your municipality, whose revenue sources do not include gas taxes (excepting the transfers from TransLink for the Major Road Network, and a portion of that Gas Tax Fund infrastructure money).

Thirdly, this analysis assumes that people who don’t buy gas do not pay even more for roads and bridges through their other expenditures. A daily driver gives $249 a year to TransLink in gas tax, but a daily 2-zone Transit Pass user gives $1,488 to TransLink in the same year. A daily SkyTrain user pays 6 times as much towards TransLink’s roads budget than someone who drives their car on a road every day. Of course, they both use the roads, just like pedestrians and cyclists and squirrels (who get off comparatively Scot free), but only the transit riders uses the Skytrain. Except that being on the SkyTrain gets her out of the way, “freeing up traffic”, which benefits the road driver.

The big exception is that people who don’t spend $1,831 a year on gas – or $7,000+ a year on a depreciating piece metal – don’t usually stick that extra money in the mattress. They usually spend it on other things. Like bicycle parts, or shoes, or peanut butter sandwiches (which is pedestrian fuel) or iPhone apps or pez dispensers or lottery tickets, beer and popcorn. Every dollar not spent on gas is likely spent in other ways, and when spending on things (be they car things or non-car things) they provide revenue in the form of sales taxes and in income taxes of the people who are selling stuff. That is the nature of our economy. Through the magic of “General Revenue”, just as much of those taxes go to funding roads and bridges as the sales taxes on gasoline does. In this sense, the more you use the roads, the less you likely pay for your share of their use.

As a bonus, that money is most likely not spent on things that destroy the atmosphere, as few things in our society have the same atmosphere-destroying capability on a dollar-by-dollar basis, than 1,400 Litres of gasoline.

On Todd Stone’s letter to the Mayors (part 1)

Posted on . by Patrick Johnstone. Leave a comment.

Less than 24 hours after I wrote this piece on the ongoing fiasco that is the Transportation Referendum*, the Minister of Transportation threw a great big wrench into the already significantly muddled works. Unfortunately, instead of providing helpful guidance during a time of confusion, he brought down a little monetary blackmail, told the Mayors to do his work and make a choice, then took away most of the choices the Mayors may have had.

This was not a good day for the Mayors, the Minister, or the region.

It was a 4-page letter, so I cannot address it all here, and much of it was a repeat of talking points with which the Mayors should already be very depressingly familiar (“ensure traffic congestion is reduced to improve everyone’s commute”… ugh). That said, there was enough new stuff offered that is worth discussing in detail.

The letter starts with the idea of delaying the referendum:

“Some members of the Mayor’s Council have stated…that not enough time remains before November to adequately deliver a referendum…”

This is an interesting piece of rhetoric. That “some of the members” have suggested this is to downplay the entire Mayors Council spoke nearly unanimously on this topic, and their opinion was supported by TransLink management, the business community, organized labour, the media from left and right, and every transportation and regional planning expert asked. The only people who thought this was a good idea were the Premier, Jordan Bateman, and Lois Jackson: A dangerous combination on the best of days.

It also seems to absolve the Minister of any responsibility for having done absolutely nothing to make the Referendum a possibility in November 2014. This referendum was announced by his Boss in a fit of pre-election scrambling, and the election that made the vapid promise “policy” occurred a full human gestation ago. What has the Ministry done in this time to set the parameters for the referendum? Where is the question? Where are the policy ideas? Where is the public discourse on the topic of transportation options? After squandering those 9 months doing nothing, the Minister is now tasking the Mayors’ Council with drawing up a Referendum that they don’t want within 4 months, off the sides of their desks while they already have full-time jobs running their damn cities.

To reinforce that this terrible idea scribbled on a bar napkin by his Boss a year ago is now their problem, he follows up with a little fiscal blackmail:

“If a vision is not ready by June 30, 2014, the next date the provincial government is willing to consider a referendum is in conjunction with the subsequent local government election. This later date would require the Mayor’s Council to use existing funding sources if it wishes to expand transit in the interim period. If the referendum is held… prior to June 30, 2015, the provincial government will compensate local governments for any related administration costs.”

Translated: If they don’t do within the next 4 months what he hasn’t accomplished in the last 9 months, they won’t see a lick of new money until 2017 or 2018, and they will have to not only run the referendum they don’t want, they will have to pay for running it!

“I believe the Mayors’ Council… is best placed to develop and articulate a clear regional transportation vision, ensuring it balances the region’s priorities. Is affordable and supports the movement of people and goods”

Really? Slowly, now: Then. Why. Have. A. Referendum?

So the Minister decides to pass all of the difficult policy development, forecasting, cost estimating, and priority setting to the Mayors. Once he has them lined up, the Minister decides to throw a curveball, followed by the knuckler:

“First, if new funding sources are identified and proposed, they must be generated within the region, and not subsidized by taxpayers in the rest of the province…”

So the rest of the province will not pay anything to support the movement of people or good in the Lower Mainland. Because we all know people in the rest of the province don’t use roads or transit in Vancouver, and no goods moving through this region support businesses or people in the rest of the province? Bullocks.

As an aside, see this graph that shows how BC Transit is funded. This is the agency that provides public transportation everywhere outside of the TransLink catchment, including transit servicing Todd Stone’s new office in Victoria and his home in Kamloops (not that he would ever use these, of course).

So the Lower Mainland is able to pay into general revenue that funds half of the BC Transit System, but none of the rest of the Province is expected to pay one red penny to support TransLink. Can we at least vote on that?

“[second], the provincial government will not permit new funding to be collected from the provincial transportation system situated in the region”

So that, in one short sentence, does it for any creative new ideas that have proven to work elsewhere and serve Transportation Demand Management purposes as well as revenue generation. No tolling of all the major crossings, for a dollar or ten, and absolutely no regional road pricing.

Note both of these decisions were made without the benefit of a Referendum and without consulting those local leaders he so trusted to create a clear vision.

To the Minister’s benefit, there is some potential good news in this letter around a return of some TransLink governance powers to the Mayors. It is too early to tell what the Minister really means by the changes he mentions obliquely – does this mean the Mayor’s rubber stamp will now just precede the non-elected Board’s approval instead of following it, or that they will actually have new  or restored power? Until some draft legislation is sketched up and the Mayors can get a grip on it, no-one can say except Todd Stone.

However, looking at the list of responsibilities the Minister is giving the Mayors (“approval of fare adjustments… oversight of customer satisfaction…sale of major assets…establishing remuneration of TransLink’s Executive”) it seems that the Mayors are being passed a satchel full of political hand grenades without knowing if any still have pins in them.

The question now is how do the Mayors react to this significant shuffling of the deck? I will talk about that in my next post….

*This entire mess is not helped by the uncertain language being used around this referendum on transportation funding for the region. The colloquial in the media has been to call it either a “Transit Referendum” or a “TransLink Referendum”. In fact, the Minister himself used the latter term in his Editorial last week, although all of his subsequent discussion was about “reducing congestion for commuters”. I have been chewing on this, and have decided “Transportation Referendum”” is the fairest term. It is being foisted upon TransLink and the region by the Minister of Transportation, and the decision we are making here is not merely the future of TransLink, it is the future of the region’s transportation infrastructure.

Time to move past the Referendum

Posted on . by Patrick Johnstone. Leave a comment.

I haven’t written too much about the proposed TransLink Referendum. Yeah, I mentioned last year what a terrible idea it was, but it has come to the point where that is the consensus opinion outside of the Premier’s Office, so it seemed unnecessary a point to belabor.

Then, last week, the Minister of Transportation circulated an “Editorial” (raising the question of just what he is the editor of) outlining the need for a referendum. It seems a strange thing to do right now, as he has been saying essentially the same thing since he got the job (even if he and his boss have consistently disagreed about the form of the referendum she promised back when he was still in the private sector), and it seems meaningless to spend time convincing us that we need something that he is already committed to delivering, whether we like it or not.

What might have been more useful at this point in the discussion would be for the Minister to affirm that a successful referendum that sets a stable funding mechanism in place to build and operate a sustainable transportation system for the entire region is of utmost importance, and his #1 job this term, and he won’t let us down. That would be inspirational about now.

Instead he demonstrates what a few people have suggested: the Minister from Kamloops simply does not understand the transportation needs of the Lower Mainland.

Allow me to quote The Minister in full, with a few marginal notes:

The issue of transportation in Metro Vancouver is very topical, and that’s a good thing. Making sure that traffic congestion is reduced to improve your daily commute is important to our economy and maintaining this region’s great quality of life.

You have got to be kidding me. The Minister thinks “making sure traffic congestion is reduced” is the #1 transportation issue in the Lower Mainland? This, after they just spent $5 Billion building and expanding freeways and the widest bridge in the world, and have already decided the next $2 Billion will not be up for referendum, but will be blown on yet another oversized bridge? He still thinks the priority is yet more roads and bridges?

This opening paragraph, more than any below, demonstrates that Todd Stone has no idea what the hell is happening on Broadway, in Central Surrey, on the packed Canada Line, the increasingly unreliable Expo Line, on all those neighborhoods that are seeing their bus service cut, or on the traffic-clogged streets of New Westminster.

But to improve transportation in Metro Vancouver, big decisions lie ahead. Decisions that the people who live, pay taxes, and commute in the region need to be a part of.

I’m not one to get all grammar marm on his Honourable, but this paragraph starts with a conjunction, ends with a preposition, and contains two incomplete sentences (pretty much the perfect NWimby paragraph, come to think of it). Regardless, I wish the Minister had asked the people of the region to be part of the decision to replace the tunnel, or the decision to allow tankers to ply our northern coastal waters, or the decision to cut BC Ferry services, or…

Today, transportation improvements are supported through taxes and fees like property tax, gas tax, transit fares, and tolls for new crossings. And while there are many taxes, there is only one taxpayer—and that’s you.

Ugh. Note that the Minister is talking about transportation improvements (but not the ones he has already promised, like the tunnel) and not about maintaining the transit service we currently have. While he bickers and dithers about how to pay for any imagined transportation improvements, bus routes are being cut, major pieces of infrastructure are failing, and our communities are becoming less livable because there isn’t even enough money to maintain the overcrowded transit system that we have.

To support expanded transit and road networks for the region, many local government leaders have advocated for additional sources of funding to be created, on top of those taxes and fees you already pay.

Ok, see what he is doing here? The Minister does not want to raise your taxes! He wants to make things better for you, but he doesn’t expect you to pay for it. He wants it to be free. It’s those evil spendthrift local governments though: they are the ones who want you to pay for it!

Please, Mr. Minister, if we agree that improving transportation infrastructure is “important to our economy and maintaining this region’s great quality of life” as you suggest in paragraph 1, how will we fund the necessary “expanded transit and road networks” without increasing what people already pay? 

Further, if we agree it is important, can you assure us there won’t be a “none of the above” option on the referendum? Can you chat with your boss about that?

The provincial government does not disagree with this idea. But our position is clear. If the people of Metro Vancouver are being asked to pay new taxes or fees, on top of those that local governments and TransLink already collect, then taxpayers must have a say.

See, he did it again? No, not the starting a sentence with a conjunction (which he did do), but see how he pointed out the evil ones – it is local governments and TransLink that collect taxes and fees. It is almost as if the Province doesn’t collect any taxes or fees at all. How, exactly did we pay for those $5 Billion in freeways?

This is why the provincial government is committed to a public, region-wide referendum. It’s a commitment we made in the last election and that citizens supported. We will deliver on that promise.

Yeah, your referendum promise also said November 2014, and it looks like you might bend on that. It is clear that no-one outside of your caucus room supports the idea. One promise people did support was the money for hospital expansions in Dawson Creek, Penticton, Burnaby, and New Westminster. Your government has already admitted those were just empty promises made for votes, and you pretty much got away with it…

But let’s not get ahead of ourselves. Asking people to vote on a new transportation vision comes after governments and citizens work together to clearly determine and articulate what that vision actually is.

Please do. Because the only thing worse than this referendum idea is the stunning lack of leadership and vision from the Minister and the Premier on making this thing actually work.

If you’re following the news, you’ll have heard about passionate and important transportation projects that individual local governments are behind. The job ahead is to bring this into a common vision.

I’m not even sure what a passionate transportation project is, except maybe this? but you are starting to creep me out here, Todd. p.s.: The mayors are united in a common vision, just not the way you want them to be.

And, I would argue, success depends on a vision that is affordable for taxpayers, fair for all communities, and secures the movement of people and goods for generations to come.

(Again with the conjunctions). The worst part about this all, is that we have that vision. The region had a long term plan for a Livable Region supported by Transport 2040. It is the plan that TransLink has to keep cutting back on because of lack of funding, in part because they are stuck giving $30 Million a year to the operators of the Golden Ears Bridge because of a bad deal signed by the Minister of Transportation for a bridge that TransLink didn’t want, because of the $170 Million (so far) white elephant that are the FalconGates, and because of other short-sighted moves by the Provincial Government that would not allow that plan to be realized.

I will continue to work with the mayors to facilitate and help enable a process to bring focus to the regional transportation vision, so that the people can decide what’s best.

See, the Mayors are not interested, you screwed them enough times. You managed to do what no other Minister of the Provincial Government has done, and you have got all of the Mayors to be unanimous on a Transportation idea – the idea of killing the referendum.

If you and the Mayors did, miraculously, come up with the ultimate vision, the grand plan that will solve all, then why the hell delay and go to referendum? What happens if that great plan fails at referendum? What is the back-up plan, here. Sir?

If we work together for the benefit of the whole region, mindful of taxpayers big and small from Whalley to Whytecliff, Maple Ridge to Arbutus Drive, we will all succeed.

Arbutus Drive!? Is Whistler in the referendum zone now?

Look, Minister Stone, with all due respect and my sincere hopes that you succeed at setting a new, bold, plan in place for transportation in the region, I feel for you. I know you are new to the role, and your boss has given you an untenable task. Being a Minister means you are responsible for this file, it is time to step up and make the case. This letter didn’t do it. Read the writing on the Wall: everyone from Barbara Yaffe to Gordon Price to Vaughn Palmer is saying it is a bad idea. The Board of Trade and the major trade unions are agreed (!) that it is a bad idea. Every Mayor (except the one who just wants to destroy TransLink and replace it with a tunnel) and the management of TransLink are against it. The referendum is now only a distraction from the real conversation: how are we going to move the region forward?

Time to stop editorializing, Mr. Minister, and time to start leading.