After the Transit plebisicite: what’s next?

extract of the Mayors plan submitted to vote: financial figures have never been updated with the proposed .5% PST tax

The voters gave a big resounding NO to the Mayor’s Transit plan. This plan was a draft which financial figures had never been finalized, what is against the South Coast British Columbia Transportation authority act, and could not have been approved in that form by the Council of Mayors for this very reason. In fact, even with the 0.5% pst increase, it was still not yet fully financed and was not sustainable in the long run [1]. The lack of business case for some proposed services, starting by the Surrey LRT, could have cost so much tax $ in operating subsidies that not only a sunset clause for the tax was ruled out, but a new funding source could have been required before the end of the plan: The voter voted against that unsustainable path, knowing that anyway, there is always a Plan B, as alluded by the Surrey’s mayor.

Beyond the plan and the question on ballot, is the referendum framing. The referendum was asking to approve a Translink budget: In democracy, a budget vote is a confidence vote in the authority in charge of the said budget. Forget the “No” side leaded by Jordan Bateman and the CTF, it is the region’s mayors which have called for Translink audits, Translink reforms…and fired the Translink CEO in the mist of the campaign, clearly putting translink governance at the heart of the Referendum. On the Translink vote of confidence, the Council of mayors largely echoed the Jordan Bateman‘s message: “Translink is broken”, so ditto!

The stunning “No” side victory makes a Translink reform unavoidable. While, its Governance can certainly be improved, that will not rhyme with a better service. What can be done?

The Zurich precedent

In the 70’s, in Zurich, like in Vancouver, the voters have say “NO” to a grand and expensive Transit plan, and still Zurich has became the posterchild of efficient Transit.

Eventually as Vancouver, a “No” vote was not a No vote to Transit. In fact Zurich said “YES” to measures able to improve Transit efficiency, speed and reliability (“Transit first plan”). A Measures such as bus only lanes and signal priority can go a long way to improve service without breaking the bank, and help to build a solid business case for heavier rail investment.

As an example, a newly painted bus lane on Seattle’s Battery street, has allowed to increase bus speed by 20%, and reliability by much more, what makes Transit less expensive to operate (bus driver are paid by the hour, not the mileage) which generated 20% additional ridership, hence increasing revenue: all these decrease the tax burden.

Thanks to the still on-going federal gas tax program, bigger buses, be in the form of bi-articulated buses, like in Zurich, or longer articulated buses like introduced on Los Angeles’ Wilshire Blvd and in countless cities around the world, can also help to address overcrowding while keeping operating cost under control.

All these don’t require as much money as political will from the mayors, whose are responsible for the streets used by buses. Will, which has been sorely missing in the region and especially in the city of Vancouver where bus service is clearly neglected by the current council but where also Translink spend 50% of all its bus budget. That doesn’t need to be.

Translink has also been too nice… for too long. It is time for Translink to be more assertive about its needs to operate efficient transit:

• Transit optimization need to be much more aggressive by going beyond shuffling bus around:
• A generalized bus stop consolidation policy needs to be initiated
• costly detour, like the Champlain Height diversion on the route 49, need to be discontinued… without asking permission to the city of Vancouver
• City of Vancouver charge organization like car free day, to recover its policing cost…It is time for Translink to do the same and recover the cost of bus disruption involved by street closure from the responsible of those disruptions

We have already exposed many ideas of Transit network optimization on this blog, and we will continue: Those can be a tough sell, but as we have already noticed, period of fiscal constraint are a window of opportunity to introduce network rationalization, and so build a solid fundation toward the expansion of Transit.

In conclusion, the No to the referendum is an opportunity to rationalize our Transit network and to emulate the Zurich model.

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See Metro Vancouver: A look at the Mayors’ plan Capital investment, January 26, 2015

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Who is paying the Metro Vancouver CIT?

CIT stands for the Congestion Improvement tax submitted to a plebiscite
According to the last Mayors plan iteration, it is now like below:

Tourism share was originally quoted at 10% by the Mayors council, but this number has been proved erroneous. Credibility of other numbers have not been verified.

the CIT is expected to raise $250M/year

Is the CIT tax 0.34c a day or 258$/year per household?

In the Transit plebiscite campaign, people quote 2 different numbers:

• 0.34c a day (that is 124$ a year) if one counts only the direct CIT paid by metro Vancouver households
• $258 if one counts the CIT tax burden per household (direct and indirect)

The last number suggests people will support indirectly the businesses tax burden. Many on the “yes” side seem to argue that is wrong. For example, Brad Cavanagh at canspice.org, wants to believe that the gas price witnessed at the region border (Langley and Abbotsford) is proof of it:

Average gas price difference, between Langley and Abbotsford, is computed at 10.7c by Brad Cavanagh. The tax difference is 11c…

• The total tax rate is 32.17c in Langley (including a 17c Translink tax).
• The total tax rate is 21.17c in Abbotsford (no Translink tax but a higher provincial tax).

The 11c [1] tax difference is fully passed to the consumer ( The Brad Cavanagh’s error is to consider the Translink tax as the only difference between Langley and Abbotsford)

Do businesses pay taxes?

As economists know, businesses don’t pay taxes, people do. Businesses are an abstraction, people, be either the consumer, the shareholder, or the worker, are the ones paying the businesses’ taxes.
If that was not true, we would have transferred all of our tax burden on the businesses abstraction! In the meantime, studies tend to demonstrate more often than not, the workers support the businesses’ taxes burden (in the form of lower wages).

It is possible that the investments allowed by the CIT will allow productivity gains or a greater economic activity, making the real cost per household lower than assessed by the most pessimistic views. In the meantime a $258 CIT cost per household is no more wrong than 0.34c per household.

PS: We plan to write a post “debunking” the various claims done in the plebiscite campaign. As a primer, so far we can see, the CTF has provided mainly valid facts. I don’t discuss their significance and they could need to be replaced in a proper context (what Brad Cavanagh did in a previous post), but usually trying to dispute them is a losing proposition.

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[1] BC motor fuel and Carbon tax