Making Better Choices: Moving Forward on Regional Transportation

Transcription

1 Making Better Choices: Moving Forward on Regional Transportation A POSITION PAPER prepared by Better Environmentally Sound Transportation (BEST) October 2001 BEST

2 Making Better Choices: Moving Forward on Regional Transportation 1. Introduction TABLE OF CONTENTS 2. Neither of TransLink s Choices are Acceptable 2.1 Transit Users Pay More for Less Service 2.2 Inconsistent with Strategic Transportation Plan 3. Back on Track: Towards Sustainable Transportation Services 3.1 Transit Spending 3.2 Road Spending 3.3 Bicycle Spending 3.4 Delivering Cost Efficient Service 3.5 Communications 4. Moving Forward on Revenues: Beyond Choice Transit Fares 4.2 Property Tax 4.2 Parking Taxes 4.3 Gas Tax 5. Other Options: Current and Future 5.1 Summary of Proposed New Options 5.2 Longer Term Issues 6. Appendix Illustrative Chart of BEST s Proposed Options BEST

3 1. Introduction TransLink s Strategic Transportation Plan (STP) was adopted in June 2000 with the explicit purpose of supporting the Livable Region Strategic Plan. Central to the development of the STP were the principles of a priority on transit investment and a move towards user pay for both transit users and road users. The STP states that fare increases are appropriate because substantial improvements have and are being provided under the Plan. Indeed, the June 2000 fare increase was sold to transit users under the banner it s amazing what you get for 25 cents -- the promise of substantial immediate improvement to transit services. The STP also states that the proposed vehicle levy would begin to address congestion and other problems caused by failing to signal to vehicle operators the full costs of their use of the transportation system. 1 This fall, following the failure of the vehicle levy, TransLink is presenting the public with a stark choice. Cut back the transit and road system to match current revenues, OR pay more to improve and expand the regional transportation system. Choice 1 would result in unprecedented cuts to transit between 15 and 20 per cent and a major reduction in road budget; some roads would be revert to municipalities. Choice 2 outlines increases in gas taxes, property taxes and transit fares. Together, this totals $80 million in new revenues half from a 2 cents increase in gas tax, and $20 million each from property taxes and a fare hike. 2. Neither of TransLink s Choices are Acceptable At this point, BEST cannot endorse either of the two Choices currently proposed by TransLink in their current form. Choice 1 is not supportable because of severe cuts to transit service and regional transportation investment, and the obvious disruption that would result. While Choice 2 would allow for improvements to regional transportation, BEST does not support this option, in its current form. Choice 2 is not supportable for two primary reasons: 2.1 TRANSIT USERS WILL PAY MORE FOR LESS SERVICE a) A second fare increase follows an earlier June 2000 fare hike, and places an unfair financial burden on transit users: asking them to pay more, sooner and for less service the cumulative impact of the two fare increases is that TransLink s most loyal transit users will pay an additional $ more per year. families with multiple transit users will pay even more. the June 2000 fare increase was followed by a lengthy strike depriving a large proportion of the population of basic access to public transit. the June 2000 fare increase was followed by significant cuts to bus service because of the vehicle levy s failure. it is not fair to expect transit users to bear a disproportionate burden of covering transit operating costs. TransLink s transit cost recovery is poor, but this is not due to fares that are too low. Transit cost recovery is low because of long-time municipal and regional land use decisions that support and reinforce sprawling, dispersed development and automobile dependence. These are among the costs, as TransLink states, of failing to signal to vehicle drivers the full costs of their use of the transportation system. 2 b) Contrary to TransLink claims, transit fares are higher in the GVRD than in many other regions, particularly for discounted fares. TransLink s comparisons are selective and overstate the value transit riders receive in GVRD compared to other regions. The table below indicates that, in many respects, TransLink s current fares remain high relative to other cities. (See Chart on following page) 1 TransLink, Strategic Transportation Plan (June 2001) pg Ibid. 3

4 Monthly Pass ADULT 10 tickets (discount fare) GVRD-Translink 2-zone Toronto Montreal Calgary Edmonton Ottawa $87.00 $93.50 $48.50 $52.50 $54.00 $59.50 $22.75 $18.00 $15.00 $14.50 $15.00 $16.50 c) Transit fares have grown substantially faster than inflation including the proposed 2002 increase, adult transit fares grew 48% since 1991 (from $1.35 to $2) seniors fares have grown 114% (from $0.70 to $1.50). senior s pensions have grown 28%. the consumer price index has risen only 19%. (See Chart 1 on following page) % 120% change 100% 80% 60% 48.1% 40% 20% 0% senior transit adult transit fare fare note: * 2001 numbers not change 28.1% mo. retirement pension * 19.2% cpi 1992=100 * d) Better service promised to transit users for the first fare increase have not been delivered. Since the October 2001 cuts, service levels are not appreciably higher on an annualized basis than in 1999 and service has dropped in certain areas and at certain times. Under the STP, transit investments were to increase by 10% a year; under Choice 2, transit investments will increase by just 3% a year, with those investments not starting till e) The 2003 fare increase is being advanced to 2002, while transit service improvements will not occur until 2003 and then only moderately thereafter. This means a 33% fare increase without any appreciable improvements to attract new riders. f) The fare increase will negatively impact ridership growth. It is almost unheard of in the Canadian transit industry to have such large fare increases in quick succession The consequences of such a large increase 33 % in one and a half years are unpredictable; but ridership will surely go down, especially in the absence of significant improvements. Recent studies have shown that, on average, a 10 % increase in bus fares results in a 4% decrease in ridership (American Public Transportation Association). 2.2 INVESTMENT PRIORITIES UNDER CHOICE 2 ARE INCONSISTENT WITH THE DIRECTIONS OF THE STRATEGIC TRANSPORTATION PLAN AND THE LIVABLE REGION STRATEGIC PLAN. Both the STP and LRSP approved by municipal and regional governments placed a priority on transit expansion and service imp rovements. Under Choice 2, transit users are paying 100% ($ more per year) of what was proposed in the STP, but will get only 25% of the service promised (after 4% in cuts just implemented). Conversely, road users pay just 40% ($32 more per year) of what was proposed in the Strategic Transportation Plan, but road maintenance and building will be funded at 100% of STP levels. By contrast, transit investments have been reduced from STP levels, from 10% to 3% per year. 4

5 This distribution of expenditures does not reflect regional priorities nor the high financial burden placed on transit users. TransLink has flexibility in how it distributes investment amongst various modes. It has clearly chosen to fully fund its road program, even though road user contributions have been lowered. BEST is not opposed to road investment per se. However, we are opposed to the significant shift in priorities evident in Choice 2. Our road network is mature but our transit network is underdeveloped. We have spent many decades and countless dollars developing an automobile-oriented region. There continue to be significant expenditures at the municipal, regional and provincial levels. Our road network certainly may require maintenance funding and strategic capital investment TransLink has demonstrated those commitments through road project partnerships with other levels of governments. In our view, TransLink is clearly moving away from the transit priorities clearly outlined in the Strategic Transportation Plan. The STP s emphasis on public transit and other sustainable modes, such as cycling, had wide public support. Those efforts should not be abandoned. The next section outlines how and why TransLink must get its stated priorities for sustainable transportation back on track. 3. Back on Track: Towards Sustainable Transportation Planning 3.1 Transit Spending Public transit in the GVRD requires major capital and operating investment catch up for decades of relative neglect. TransLink has been given primary responsibility and wherewithal to fund and support transit investments. Unfortunately, TransLink now seems poised to reduce or forgo those commitments. Under the scenarios outlined in Choice 2, many of the region s urgently-needed transit investments cannot be fully financed. The funding envelope is simply not large enough. Thus, as TransLink admits, the substantial transit investments promised in the STP have been scaled back to modest improvements in Choice 2. TransLink thus proposes only a 3% annual increase in transit services, compared to the 10% per year proposed under the STP. This is simply unacceptable, especially given the fare hikes in June 2000, the second fare increase now proposed, and the recent cuts to bus service of 4%. Moreover, Choice 2 will advance the fare hike to April 2002, yet defer any new transit investments to This, too, is unacceptable and unfair. Better and more frequent bus services are required across the region to build up ridership and support for public transit. TransLink s proposed improvements are simply not sufficient for the region s need, especially given population growth and mobility demands. In summary, transit users are now expected to pay more than 100% of proposed STP contributions: two fare hikes, with the second one now being advanced by 9 months yet transit investments are just 25% of what was promised under the STP. By contrast, under Choice 2 TransLink proposes to fund the road system at 100% of STP levels, when road users will contribute only 40% of new funding. BEST strongly believes that transit funding should reflect the larger contributions being asked of transit users. In particular, bus and trolley services need urgent investments and expansion. With a revised spending plan and new revenues, TransLink should restore transit investments to STP levels improvements of 10% per year. In the short term, TransLink should fund the immediate restoration of 160,000 service hours to transit service hours equivalent to the the recent transit cuts. To do so, TransLink could simply reallocate parts of its roads budget, or introduce additional increases in the proposed property tax. Over the longer term, TransLink must consider a broader range of revenue sources as outlined in Section 4 to return to STP levels of transit funding. 3.2 Road Spending Relative to the STP, Choice 2 represents 20% lower projected revenues: $80 million versus $100 million. This level of reduced funding explains TransLink s move towards more modest levels of transit funding. 5

6 The same, then, should be true of road funding. It is BEST s fundamental position that roads also be funded at reduced levels in order that transit not be disproportionately impacted by lower than projected revenues. This means that, pending the restoration of a fully-funded STP, road maintenance and capital should be funded at sub-stp levels in proportion to lower contributions from road users. As mentioned previously, BEST is not opposed to road spending per se. However, we would suggest that, as they have with transit funding, TransLink approve only modest increases in road funding, in line with reduced overall revenues relative to those projected in the STP. BEST proposes that road spending increase by no more than 40% over today s levels, consistent with the reduced contributions from road users. This would represent a more balanced approach. These lower expenditures would provide approximately $7.5 million per year that could be used as an offset to lower transit fares or as a means of allowing additional transit expansion beyond that indicated in Choice 2. Again, this would provide a more balanced and equitable approach towards new revenues and new expenditures. Equally importantly, it would be more consistent with regional goals, would support the Livable Region Strategic Plan and TransLink s own stated goals regarding transit priority. Recently TransLink has proposed that gas taxes could be dedicated to road projects. BEST is fundamentally opposed to any dedication of gas taxes solely to road expenditures. There are several reasons for this. First of all, it goes against TransLink s legislated purpose: to build and fund an integrated regional transportation system for roads, transit and other modes. Giving road investments their own funding envelope will lead to inflexible budgeting decisions: TransLink will feel obligated to spend road dollars on road projects regardless of whether they are needed, or whether they provide actual benefits for the region. On this point, the U.S. experience is instructive: federal and state dollars dedicated to roads has led to very expensive, intrusive and sprawling road projects spending for its own sake. Finally, dedicated road budgets fail to address a simple fact: road users benefit from transit, and vice versa. 3.3 Bicycle Spending TransLink s CEO recently committed to restoring bicycle spending to STP levels. The STP outlines of cycling funding of $2.5 million in 2001, rising to $3.0 million in 2002, and to $5.0 million in Yet already, TransLink is falling behind on those commitments. TransLink s bicycle budget is currently well below STP levels. Few significant capital dollars have been spent on bicycle facilities or cost-sharing with municipalities. Much more can be done on this front. Indeed, cycling in the GVRD is woefully underfunded relative to other North American cities such as Portland, Montreal and Toronto. Cycling infrastructure and operating funding is very inexpensive relative to TransLink s overall budget, yet they can provide strong benefits. There is clearly a latent demand for cycling in the region, particularly in high density areas. Between 1994 and 1999, walking and cycling trips increased by almost 29 per cent, a higher increase than any other mode. 3 The financial and environmental benefits of cycling in the region are significant. Existing trips are accommodated at relatively low cost. With modest levels of investments, trips can be shifted from the automobile to bicycles. About one-third of work-trips in the region are less than 5 kilometres long, a journey length of minutes that most cyclists find convenient and enjoyable. Short automobile trips in dense urban areas typically have the highest emissions per vehicle. Conversely, if bike journeys in the City of Vancouver were replaced by cars, traffic congestion would increase up to 6 per cent on some of the region s most congested roads. Peak period traffic would increase by 4,000 vehicles. 3.4 Delivering Cost Efficient Service In TransLink s current constrained fiscal environment, BEST agrees that existing and proposed resources can be deployed more cost efficiently. Doing so will avoid the need to increase fares again to cover costs in the future. Currently, TransLink s transit revenue assumptions are based on a 50% cost recovery on transit services. This is based on the assumption that future service enhancement will have on average 50% 3 TransLink Board Report, Recent Trends in Travel Behaviour (September 24, 2001), p. 6 6

7 recovery. BEST believes that much higher revenue and transit ridership, and therefore cost recovery, are possible with a more efficient deployment of service. BEST believes that to improve the efficiency and image of its services, all new service hours should be deployed primarily on the basis of strict ridership and cost recovery criteria, as is done in most systems in Canada. This means that service would be allocated based on where people will use them most rather than spreading it around. BEST notes that there has been a bias in TransLink s service deployment in recent years towards high cost, low ridership routes in suburban areas, while many established areas with high existing and potential ridership are starved for service. BEST notes that operating cost recovery on most routes in the City of Vancouver, for example, are in the % range. Finally, we should point out that improved transit services have an inherent cost-efficiency advantage over building extra road space. Transit yields direct revenues to TransLink. New road spending does not. New investments in transit can be sustainable, both environmentally and fiscally. 3.5 Communications TransLink s communications to promote the benefits of public transit have been inconsistent and misleading. For example, TransLink has tended to underplay or ignore the June 2000 fare hikes $25 million per year in new revenues derived from transit users in outlining its financial plans and campaigns for new revenue sources. Nor has it fully acknowledged the potential downsides of fare hikes: lower ridership. Translink also misleads the public in its fare comparisons with other cities. Such comparisons are incomplete or inaccurate, especially since service levels vary greatly from city to city. TransLink should be in the forefront of promoting the importance and benefits of transit to the entire region and its citizens. The wide benefits of transit should also be communicated to non-users, such as car and truck drivers, and the business community. Public transit is a crucially important, necessary and valuable service for all GVRD citizens. 4. Moving Forward on Revenues: Beyond Choice 2 BEST s support for TransLink s funding and spending proposals is contingent on obtaining commitment to substantive amendments to Choice 2. In this section, BEST makes a number of suggestions to amend TransLink s Choice 2 option. Further, we propose a number of reasonable funding alternatives, each available to TransLink. For illustration, a number of BEST s proposed options are summarized in an annotated chart, attached in APPENDIX ONE. Our comments and proposals are based on the following principles: Priority for transit investment Balance and equity in financial contributions Balance and equity in expenditures Support for regional plans Optimizing transit ridership Integrated funding All residents benefit from transportation investment, regardless of mode used 4.1 Transit Fares BEST cannot support any further fare increases to transit users under the current funding formula and expenditure proposals. We oppose a second fare increase for two reasons. 1. The promised transit investments as outlined in the STP have been dramatically scaled back. Transit users should not be expected to pay higher fares, to pay them sooner, but get less transit improvements than the STP promised. Yet that is precisely what Choice 2 proposes. 2. Choice 2 also places the major burden of its new revenue streams on transit users. Under Choice 2, average annual dollar contributions from transit users are six to ten times higher than contributions 7

8 from other sources. Including last year s fare hike, transit users would pay between $250 to $500 more per year to TransLink s coffers. $600 $500 Who pays how much to TransLink under 'Choice 2' - Avg per year $400 $300 $200 $100 $ Property Tax Gas Tax Fare Increase * Fare Hike 2000 Fare Hike 2001 * Fare increases in column 3 represent average annual increase for 2-zone users, paying cash fares. One-zone users would pay $125/yr, double that with a second fare increase. TransLink is also proposing possible fare restructuring. Some elements of restructuring such as a revised zone system, or reduced costs for monthly passes or fare savers may benefit transit users, and also increase ridership. But any attempt to restructure fares must be revenue neutral. That is, fare restructuring must not be a back-door mechanism to simply garner more dollars for TransLink: that would amount to yet another fare hike for many users. However, there is an argument to be made for reallocating fare incentives or discounts for most frequent use and those trips that support regional goals (e.g. short trips, focus on town centres or areas of high ridership, etc.) BEST opposes TransLink s current proposal to increase fares. A second fare increase, in our view, is only acceptable if TransLink begins to immediately implement the transit investments outlined in the STP increases of 10% per year. How might this be accomplished? TransLink should consider reallocating road dollars to transit, increase the property tax portion, and consider other revenue streams, such as a higher parking sales tax. If those revenues allowed for a restoration of STP-level transit investments, a small incremental fare hike may be acceptable e.g. 10 cents in 2003 and 5 cents in (It s important to recall the recent 4% cuts in transit service. It will take several years before transit services could realistically catch up to STP-levels; thus any new fare hike should reflect those delays in service). In summary, BEST is fundamentally opposed to any transit fare increase if it is not preceeded by or concurrent with a substantial improvement to transit services. TransLink s fare policy should reflect its own stated priorities: to increase transit mode share and overall transit ridership, and to make transit investments a regional priority. 4.2 Property Tax BEST recognizes that an increased property tax, as with most sources, is unpopular. Yet TransLink s own analysis shows that GVRD homeowners have lower overall property tax than comparable cities in Canada, and a far lower proportion of that tax directed toward transit. Given TransLink efforts to keep transit fares in line with other cities, significant increases in the property tax would have considerable merit. RESIDENTAL PROPERTY TAX GVRD Toronto Ottawa Calgary Transit Component $59 $350 $346 $280 Average Residential $2,500 $3,150 $2,850 $1,650 Property Tax Bill Transit % of Total Bill 2% 10% 12% 17% 8

9 Small increases in average property taxes would raise substantial revenue for regional transportation infrastructure. BEST proposes that TransLink increase the property tax from $22 per household to $33 per household. This would bring raise an additional $10 million annually. These additional revenues would avoid another fare increase, yet still permit the means to pursue additional transit expansion beyond that indicated in Choice 2. This proposal is reflected in chart included in APPENDIX ONE. We note that in terms of public acceptance, those opposed to property tax increases will be opposed regardless of the size of the increase (i.e. opposed out of principle ). Raising the amount obtained from the property tax by another $10 or so is unlikely to affect general public acceptance. Yet such an increase will substantially reduce the burden on transit users and may indeed reduce total costs for many families. 4.3 Parking Taxes The Province currently turns over to TransLink 7% ad valorem (sales) tax on paid parking in Greater Vancouver worth about $10 million annually. In a cost-sharing agreement signed last year with TransLink, the Province is obliged to amend its sales tax legislation to permit a parking tax increase from the current 7% rate up to as much as 21%. This amounts to an additional $20 million per year in revenue for TransLink. The agreement further states that, in the absence of introducing such legislation, the Province shall make best efforts to provide TransLink with an alternative source of equal value. Failing that, an arbitrator would be appointed. The deadline for instituting this parking tax was October 1 st. Following inquiries, TransLink informed BEST that the Province has not turned over this revenue, nor have any efforts been made to appoint an arbitrator. What is the status of this agreement? It appears that TransLink has passed up an additional and urgently needed revenue source at a time that it calls an urgent funding crisis. This is mystifying, to say the least. BEST urges TransLink and the Province to immediately introduce increases in the ad valorem tax, as allowed for in their cost-sharing agreement. This proposal is represented in APPENDIX ONE. TransLink also has the ability to institute a special parking charge on parking stalls, such as those in shopping malls. While there are some difficult logistical hurdles to overcome in introducing such a charge, TransLink could set an expedited schedule to do so. Parking charges are an excellent user pay mechanism that signal to drivers the true costs of road and parking infrastructure, and return those revenues back into regional transportation. Such user fees are explicitly supported in TransLink s Strategic Transportation Plan. 4.3 Gas Tax BEST supports the proposal to increase the gas tax by 2 cents a litre. Gas taxes are the most effective userpay mechanism available to pay for transportation. Indeed, TransLink and the Province could go further in this direction. Transfers to existing Provincial gas taxes to TransLink could be advanced. A transfer of onehalf cent per litre of gasoline is scheduled for 2003, and a further one-half cent in These transfers could be advanced to 2003, generating approximately $20 million a year in extra revenue till This would alleviate TransLink short-term financing problem allowing the transit fare hike to be cancelled. This transfer option is supported by both the Vancouver Board of Trade and the British Columbia Automobile Association. The option is also represented in APPENDIX ONE. 5. Other Options Current and Future 5.1 Summary of Proposed New Options The previous section outlined a number of additional revenue options for TransLink. An annotated summary of our proposed options is shown in APPENDIX ONE. TransLink aims to raise at least $40 million from existing and regional sources of revenue; this would match the $40 million anticipated from the 2 cents gas tax granted by the Province. The Provincial government has clearly stated that any additional new sources of revenue - such as a vehicle levy - would 9

10 require a plebiscite. In our view, that condition seems unduly restrictive and interferes with TransLink s overall mandate. This underscores the need to revisit the GVTA Act, a point made by the Auditor General in his recent report on TransLink. Nonetheless, our revenue proposals have followed those criteria; they are not new, but represent increases in existing sources, and thus would not a prompt a plebiscite. In summary, our proposals suggest that TransLink derive additional revenues from two sources: a sales tax on paid parking; and an advancement of scheduled transfer of Provincial gas taxes. Both these sources are existing sources, but they would require Provincial approval and legislation. (The same is true of the 2-cent gas hike already on offer). In addition, BEST proposes increasing TransLink property tax by a further 50%, or $11 per average household. BEST s alternative revenue sources are designed to reduce automobile use, traffic congestion and air pollution, while keeping transit fares affordable and equitable for lower income transit users. Public transit services will remain an attractive, affordable option, leading to a cleaner environment, more transportation choices and a healthier, more livable region. 5.2 Longer Term Issues This position paper has focused on TransLink s current financial shortfall. BEST s proposals are by no means exhaustive or complete. Indeed, over the longer-term TransLink and the Province need to make real commitments to obtain secure revenue sources for regional transportation infrastructure. User-pay mechanisms where transportation pays for transportation should be given priority. Among those are road and bridge tolls, property taxes on parking lots or stalls, benefiting area taxes, and vehicle levies. Introducing such user-pay fees would allow reduction of other charges which have no direct link to transportation use, such as the BC Hydro levy. TransLink must also address a number of other looming, longer term concerns. Issues of governance and accountability are central. The Auditor-General addressed a number of these issues; the Province, Translink and other stakeholders must together address these concerns in the months and years ahead, including possible revisions to the GVTA Act. Other equally important concerns include TransLink s current and potential contributions to Skytrain expansion and other expensive rapid transit projects. As well, proposed road projects present TransLink with enormous financial challenges. The capital and debt-servicing costs of both road and rapid transit projects could easily dwarf the fiscal challenges TransLink faces today. TransLink must obtain agreements for secure and sustainable financing before embarking on any major transportation projects. Equally important, TransLink should employ least-cost transportation planning principles in all its capital spending, ensuring that regional planning decisions achieve the most public benefit for the lowest possible cost. Finally, TransLink faces a challenge of public support and credibility. TransLink needs to seriously address issues of public accountability and involvement. TransLink is further split by regional divisions and municipal self-interest, rather than guided by a truly regional vision; the Board s relationship with both the Province and the GVRD are vague and troublesome. As a result, transportation decisions suffer from excessive politicization. Such divisions are essentially what killed the vehicle levy, and thus led to TransLink s current crisis. These issues too will need to be addressed in a wide-ranging review of TransLink s governance structure, its public and political mandate. Yet some of those concerns can be addressed in the shorter term. TransLink can start immediately by improving its public communications; by allowing for greater and more accessible input from the public and stakeholders; and by actively promoting the benefits and costs of a sustainable transportation system that meets long-term economic and environmental goals for the region. 10