Wednesday, March 30, 2016

A brief history of the federal Gas Tax Fund and why it goes to TransLink

As I’ve posted about many times, local governments in our country are responsible for most of the public infrastructure that is used in your daily life even though the combined revenue collected by local governments is an order of magnitude smaller than what is collected by the provincial and federal governments.

Starting in the 1990s, there was a recognition that there was a fiscal imbalance. Pressure was mounting for the federal government to provide some sort of stable funding to support municipal infrastructure. By the early 2000s, the federal government launched the Caucus Task Force on Urban Issues to explore ways in which the federal government could support local governments. The Task Force recommended that the federal government provide financial support to local governments.

After some delay, the federal government settled on a gas tax transfer. In 2005, money started flowing to local governments for capital projects; $5 billion over five years.

In Metro Vancouver, the region’s municipalities agreed to pass the gas tax transfer directly onto TransLink. This made sense as at the time TransLink was controlled by local government. The provincial government removed direct control of TransLink from local government in 2008.

In the 2013 budget, the federal government announced that the Gas Tax Fund would increase to $2 billion dollar per year, and would grow at a rate of 2% per year. The goal was to provide long-term, predicable funding to local governments.

The previous gas tax transfer was going to TransLink carte-blanche. Money earmarked for local government now going directly to a provincial agency didn’t sit well with many local government politicians.

While some called for TransLink to stop getting any of the Gas Tax Fund, this would have had a deviating impact on the ability of TransLink to keep Metro Vancouver’s transportation network in a state-of-good repair.

Understanding that stripping the Gas Tax Fund away from TransLink would not improve the quality of life for people in the region, a decision was made to have Metro Vancouver approve the projects that TransLink could use the Gas Tax Fund for. The thought was that local governments could get a bargaining chip, and some limited control of infrastructure projects, at TransLink.

A new agreement was signed with the federal government in 2014 which gave control of the gas tax fund back to local governments in our region.

Metro Vancouver has posted a new draft framework for how Gas Tax Fund money will be allocated to TransLink projects.

Metro Vancouver will ask TransLink to submit a list of projects for funding. These projects need to support a multi-modal transportation network, support the Regional Growth Strategy, improve air quality, reduce GHG emissions, and support a strong local economy. The Metro Vancouver board will choose projects to approve from the list provided by TransLink.

The proposed framework will likely be approved by the Metro Vancouver board in the coming months. While the new framework will give local governments more control of how TransLink uses the Gas Tax Fund, I don’t expect to see any drastic changes to the kinds of capital projects coming out of that agency.

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