Saturday, December 8, 2012

"Alternative Road Financing Arrangements" by Fred Nix

History, that's anything prior to March of 2001. The BC Liberals have been hammering away at BC NDP as if there weren't any other political parties running BC before the NDP came along.  The Social Credit Party did exist, then they ran afoul of the public's interest and were royally dumped at the polls.  Wiped out they were, never to return under the Social Credit flag, but some how, enough of the "Socreds" survived, and ended up in the BC Liberal Party.

Maybe the only common denominator for the Socreds and the BC Liberals is to be able to call themselves     FREE ENTERPRISERS .


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Enough of politics.... Fred Nix: Alternative Road Financing Arrangents

Research conducted for the Canada Transportation Act Review
Their goal was to rein in expenditures. This meant that financial necessity was generally the driving force for looking at alternative highway finance policies (tolls, new dedicated taxes, some new urban arrangements and possibly the road fund in British Columbia).
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The alternative financing arrangements examined in this paper include 19 toll facilities in Canada (12 of which are border crossings to the United States), five new financial arrangements in urban areas (these typically involve transit financing as well as roads), and several road funds. Road funds act as a repository for dedicated user taxes and as a source of money for road maintenance or construction. The main such fund in Canada is in British Columbia where a crown corporation has been established that both owns the provincial roads and finances capital expenditures from, among other things, dedicated fuel tax revenues.

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Third, and just using fuel tax revenues as an indication of the level of all road-related taxes, it is apparent that the economics of roads varies considerably from one jurisdiction to another. At the extremes, fuel tax revenues in British Columbia equal only 63 per cent of annual road expenditures (BC has expensive roads) while in Ontario fuel taxes exceed road expenditures by 13 per cent (Ontario has high traffic volumes).

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2.10 British Columbia

In fiscal 1998/99, $1,769 million was spent on local and provincial roads in British Columbia.

British Columbia has an interesting history of highway finance policies. It is interesting in several ways: (1) it has been characterized by significant changes from time to time, (2) at certain periods it has been one of the most user-pay policies in the country, (3) it currently encompasses the closest thing that Canada has to a broad-based provincial road fund, and (4) it is one of the few provinces to establish urban agencies with responsibilities for roads (and other things) and with funding sources related to road use.

Although there is no point in going too far back in history, it is interesting to note that British Columbia had a toll road act back in 1899. During the first half of the 19th century, there was a series of legislation dedicating a portion of vehicle fees to local governments. In 1935 the province passed an act to allow a toll bridge to be constructed across the Fraser River. From 1950 to 1959, there was a road fund that received 3¢/gallon from the gasoline tax. In 1953, the province established the BC Toll and Highway Authority that, at its peak, operated seven major water crossings on a toll basis. In 1964 the province abandoned both the dedicated fuel tax and the road (bridge, tunnel) toll concepts.

Tolls were re-introduced as a funding mechanism in 1986 with the building of the Coquihalla (Chapter 3). The concept of user pay and/or dedicated revenue sources is quite common in terms of the provision of other services: BC Hydro, BC Ferry Corp, BC Rail and BC Transit.39
 
More recently, British Columbia made a significant change to the way it finances roads in the establishment of the BC Transportation Financing Authority (BCTFA). The BCTFA was established in 1993 and given broad powers to undertake a variety of transportation infrastructure projects (more than just roads). The initial focus was on additions to highway capacity. The BCTFA was originally funded through a 1¢/litre tax on gasoline and diesel and a $1.50/day tax on vehicle rentals. This brought in $55 million annually. The fuel tax rate has been increased to 3.25¢/litre (April 2000) and the latest annual report (fiscal year 1999/2000) shows a total of $177 million in revenues from both the fuel tax and the vehicle charge. A more detailed description of the BCTFA is left for Chapter 5.

At the local level, British Columbia has established two urban areas (Victoria and the municipalities in the Greater Vancouver Regional District) that also have a form of dedicated user taxes-transit taxes of 2.5¢/litre in Victoria and 8¢/litre in the Vancouver area. The agency in the Vancouver area (TransLink) is considering the use of tolls for major new roads (South Fraser Perimeter Road).40 These urban arrangements are described in Chapter 4. BC Ferries also receives 1.25¢/litre from the fuel taxes (gasoline and diesel) on province-wide sales. (The tax in the Vancouver area, the BC Transit tax, used to be 4¢/litre with the result that the tax rate in the area was 4¢/litre higher than elsewhere. Effective April 1, 1999, the province eliminated the BC Transit Tax in the Vancouver area and starting giving TransLink 8¢/litre, but the net effect is still that the tax rate in the area is 4¢/litre higher than in the rest of the province.41)

Other provincial road costs in British Columbia-maintenance, rehabilitation and operations-are funded in the traditional fashion. That is, the Ministry of Transportation and Highways lines up with other Ministries for its share of revenues out of the consolidated fund. However, a 1999 committee established by the BC government has recommended "That the provincial excise tax on gasoline be dedicated to highway infrastructure in the province . . ." It also recommended "that the Province urge the federal government to do likewise [ie, dedicate] with the federal excise tax."42

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Current And Historical Experience With:
  Dedicated road-use taxes Road Funds Toll Roads Sharing road-use taxes with local governments
Nfld 1920s - licence fees
1933 - import duty on fuel
1920-1932 - Road Commission
1932-1950 Highroads Fund
? no 1920 - Road Commission, grants to St John's
1920s-1930s - grants from Road Fund
PEI 1920s - some taxes pay highway loans ? no No, other than Confederation Bridge ? no
NS 1920s - some taxes pay for highway loans
1990 - special tax on motor fuels
1913-1926
1990 - Transportation Trust Fund
4 toll roads/bridges since WW II ? no
NB 1926-1935 - gas tax
1947-1952 - special gas tax
1989-1993 special tax on motor fuels
1926-1935 highway fund
1947-1952 winter road fund
1989-1993 - Arterial Highway Trust Fund
Currently 1 toll bridge
1990s - started a toll highway (Fredericton-Moncton) but removed tolls in 2000
1952 - some grants to local gov't under Gasoline Sales Tax Act
Que 1939-1964 - could use road taxes for interest on highway loans
1950-1960 - some gas taxes
1950-1960 fund for deposits of gas tax, used for winter roads and to pay debt.
1996 - new `accounting' road fund
1950s-1960s - toll road authority
2000 - new legislation on toll roads
1920s - Montréal - special vehicle tax
1995 - creates the AMT in Montréal area
Ont 1926-1952 gas tax deposited in Fund 1920-1952 - Highway Improvement Fund 1958 - new Act on designating roads & bridges as toll facilities
1993 - 407(ETR)
?
Man 1920-1925 - some vehicle fees ? no ? no ?
Sask 1977 - permit truck fees 1977 road account for permit truck fees ? no ? no
Alta 1924-1966 - some fees/taxes used to pay highway loans
1994 - announced that road taxes were dedicated
1999 - portion of fuel tax dedicated to urban roads
1924-1966 - Main Highway Fund ? no 1951-1958 4¢/gal used to fund grants
1999 - Calgary & Edmonton - 5¢/litre on fuel sold with city
BC 1950-1959 - 3¢/gal to road fund
2000 - 3.25¢/litre to BCTFA, other amounts given to BC Ferries & cities
1920-1921 - special account in Consolidated Fund
1950-1959 Highway Development Fund
1993 - BCTFA
1899 - Toll Roads Act
1953 - toll authority (7 facilities )
1986 - Coquihalla
1921 - local gov't receives 1/3 of vehicle fees
1999 - transit tax on fuel sold with Victoria & Vancouver
Yukon No information, but it is unlikely that there have been any dedicated taxes, funds, tolls
NWT ? no ? no One winter road with some user fee ? no

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