Monday, June 25, 2012

Regional Transit Local Funding Options Report

The report is out.   The report is not well done and has some major concerns for me.  It relies on a non-random survey of only 144 people as an indicator of support or not of funding sources,  It also has little or not research done on general municipal taxation issues.   It has quantification of how much money needs to be raised and what each source could contribute.  Finally it was written by Todd Litman of the Victoria Transport Institute who has a very specific bias on the issue.

The report finds that there are no new funding options that are particularly cost effective and easy to implement.  The report does recommend looking at:

  • Parking levy - an extra property tax on non-residential parking spaces.  This would place more of a burden on the business community for the cost of transit.  The report seems to be suggesting a flat tax of $50 per space which would require the province to change the laws to allow.
  • Vehicle levy - charge a fee on each vehicle in the region.   If it is per vehicle it is a regressive tax and hits the poor the hardest, if it is based on the value of the vehicle it hits businesses that have trucks hardest.  The report assumes a per vehicle fee
  • Employee levy - collect a fee for each employee an entity has.  I am not sure you could apply this to the provincial or federal governments and if you do not this will place a huge burden on small business especially tourism.

The report also recommends where possible:

  • Development cost charges - do we really want to add more costs to getting developments built in this region?  It also places the burden on new developments for benefits to previous developments and is not very equitable.  It will also increase the cost of housing in the region
  • Station rents - this assumes the stations are zoned to allow commercial rental space.   Even this were the case, only a few stations could host this and the total rental space would be small.
  • Air rights - I can not think of any locations where this would be realistic anytime in the future.  It also assumes that the City of Victoria and the province of BC will transfer ownership of the street/road to BC Transit.

They also mention looking at a Land Value Capture Tax.   This is a very difficult tax to figure out.  It only applies of the value of the land rises because of the transit system.  Measuring this is incredibly hard to do and I suspect would lead to a lot of work for lawyers challenging the land value increase.

Most interesting the online survey is how few people took part.  Only 144 people responded which means the results have no statistical relevance as a measure of public opinion.   The report should not have relied on any data coming from the online survey because it is not accurate.   

The way the survey is presented both on page 22 and on page 59-60 does not make it clear what the tables mean.  Are they total respondents for each option, which seems to be the case for some, or is it percentage?

I do not have enough information about the focus groups to know if the work is valid or not as a measure of public opinion.   There is a table on page 23 that has a scale from -1.5 to 2.0 but no idea of what the numbers indicate.  Without some sort of idea of what is being measured the table is meaningless.

Most of the options looked at by the report looks at the impacts of various taxes, or defacto taxes, on funding.   Meanwhile the bibliography is full of reports on options for financing transit systems in the United States.   There is only one reference to report on municipal finances and that is not an academic report.   There are a number of very good economists looking at municipal taxation issues in Canada but none of them were considered.

The report should have quantified in some concise way what each source of revenue could raise and how much would need to be raised.    To pay the $300 to $350 million capital cost locally over 20 years we need about $22,000,000 to $25,000,000 a year, beyond that there would be also be an increase of $10,000,000 a year in operating costs because of the LRT.    The LRT need is an increase in local funding of $32 to $35 million a year.
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