Skip to content
Join our Newsletter
Join our Newsletter

WAVE to absorb new gas tax

Transit to cut winter service next season to make up shortfall Public transit in British Columbia will not be exempt from the B.C. government’s new 3.5 cent a litre gasoline tax, nor will they have any say in how that tax is spent, B.C.

Transit to cut winter service next season to make up shortfall

Public transit in British Columbia will not be exempt from the B.C. government’s new 3.5 cent a litre gasoline tax, nor will they have any say in how that tax is spent, B.C. Transit was told last week.

The new tax was effective as of March 1. Combined with rising gasoline prices as war threatens the Middle East, the price of fuel has reached record highs around the province, breaking the 90 cent barrier in many communities.

Transit companies around the province have so far been spared the effects of the increase, having negotiated fuel futures contracts at approximately $22 per barrel of oil that will run out on March 31. The price is currently around $37 a barrel.

Vancouver-based TransLink, the short name of the Greater Vancouver Transportation Authority, is the only public transportation company with a longer contract, which was set at between $23 and $24 per barrel until the end of this year.

TransLink has asked the government to put some or all of the 3.5 cents per litre raised in the GVRD back into public transportation, but was denied. However, it did receive another 0.5 cents per litre starting on March 1.

For the Whistler and Valley Express (WAVE), the expiration of their fuel futures contract at the end of the month will mean that the transit service will have to pay market prices for gasoline until prices have stabilized and B.C. Transit can negotiate a new contract on their behalf.

According to WAVE manager Scott Pass, the transit service uses approximately 912,000 litres of fuel each year, which means that the tax increase will cost the service approximately $32,000. That doesn’t include the growing cost of fuel and other rising expenses, such as insurance, parts and vehicle maintenance.

With the province freezing its contribution to transit at 2001-2002 levels for the next few years – and because the transit services are locked into a funding formula with the province that makes it impossible for municipality’s to increase their contribution – balancing the books next year means cutting service and finding efficiencies.

"Unless the status of the tax exemption changes, or the province decides to increase funding, we have to cut $32,000 from somewhere, and it’s likely going to have to come from service," says Pass.

After a decade of growth, 2002-2003 is the first fiscal year in which WAVE has been called upon to cut service. Because the transit service offers two levels of service, one for winter and one for summer, it has more flexibility than other transit services around the province.

This season the winter service didn’t kick in until Nov. 23, 12 days later than originally planned. In addition, the slower summer schedule will kick in a week earlier, on April 22.

"Rather than cut service, we made the winter shorter," says Pass. "We’ve also cut down on non-essential maintenance, a lot of aesthetics. We’re not going to stop repairing the breaks or engines, but that graffiti on the seat might stick around a little longer."

Pass is hopeful that gasoline prices will return to normal before the next winter season, otherwise he may have to cut service even further to balance the budget.

In the meantime, he says, the biggest impact has been on the drivers. WAVE has a pool of 65 drivers during the winter season, but just 30 during the summer months.

"Some of the winter workers are getting two or three weeks less work a season. For some that means that they just start their summer work a little sooner, but for others it might mean a month and a half of downtime instead of two or three weeks," Pass says.

Pass expects the government’s plan to freeze funding to last through the 2004-2005 fiscal year. In the meantime, WAVE is looking at all options available, and Pass hopes that more options will be available soon if the Resort Municipality of Whistler is granted the ability to tax resort guests in the provincial Community Charter legislation, and the transit funding formula between the province and municipalities allows for more flexibility.

According to Chris Foord, the marketing and public relations manager for B.C. Transit, the current funding formula makes it impossible for municipalities to increase their contribution to transit services.

Under the formula, the province agrees to kick in a certain amount for every dollar spent on transit by a municipality. Since provincial transit funding is frozen, municipal transit funding is effectively frozen as well.

The formula also makes it impossible for transit services to increase fares to cover growing costs.

"Right now we’re at the band-aid stage," says Foord. "We’re working to try and stop the bleeding right now while minimizing the cuts to service.

"Whatever we come up with, that’s the short-term solution. It’s what’s going to get us through the next year. But what about the year after that? What about the next decade? We have to look farther down the road, and that mean re-evaluating the way we fund transit in this province.

"Populations are growing in Vancouver and Richmond and Whistler and Kelowna, and public transit is going to be more and more important. We are looking at how we can still continue to grow the service. We’ve increased service every year for 14 years, and this is the first year we’ve had to pull back."

Foord believes that the funding formula should allow municipalities to bolster spending on transit, especially in towns like Whistler where the infrastructure for the tourist trade is largely supplied by property taxes.

"The formula is about 15 years old, and it has helped to grow transit in the province substantially in that time. Unfortunately there isn’t a transit system on earth that makes money, but this plan helped to ensure a fair subsidy for both the province and municipality. But if municipalities want to spend more money on transit, they shouldn’t be limited by the formula. That doesn’t make sense," Foord says.

Foord is also concerned that none of the 3.5 cent per litre tax increase on gasoline is earmarked for public transportation, but rather on infrastructure that would benefit drivers in the long run.

In addition, he says the new tax will generate an estimated $14 million in GST revenues for the federal government each year, which he feels should come back to the province and be used to support transit.

Although the tax is a concern, rising gasoline prices are a bigger challenge for B.C. Transit. According to Foord, there has been an almost 30 cent per litre increase in the last year and a half.

That increase is raising costs for transit services, but is also prompting more people to use transit. Although no figures are available, Foord says there has been a significant increase in cash box collections in Vancouver and Victoria in recent weeks, which usually points to an increase in casual users.

Foord says it was ironic that the transit is being forced to find efficiencies, cut costs and reduce service at a time that more people are using it is an alternative.