Premier Christy Clark says the possible defeat of a proposed 0.5 per cent sales tax by the No side in this spring’s referendum on transit expansion might force Metro Vancouver mayors to raise TransLink’s property tax instead.
TransLink already collects $305 million per year – $238 per average home assessed at $719,000 – from its dedicated property tax, which is charged on homes and businesses in addition to municipal and school property taxes.
The premier told reporters Friday the mayors could still raise that if voters reject the sales tax because her 2013 election promise to subject any new TransLink revenue source to a referendum didn’t apply to greater use of existing taxes.
“If they decide they do want to build transit without a Yes vote in this referendum, mayors will have to fall back, I guess, on the existing funding mechanism that they have,” Clark said at an event in Surrey.
“They have always had the ability to raise money for transit through increasing property taxes and I suppose that would be one of the options available to them if the referendum fails.”
Clark said she will personally vote Yes as the owner of a home in Vancouver and added talk of defeat may be “hypothetical” because mayors are very confident of success.
Clark and successive transportation ministers have repeatedly said mayors could increase property taxes if they wished to avoid a referendum.
The No side has argued money could be saved from municipal and regional district budgets to fund transit expansion.
No campaign spokesman Jordan Bateman said the province and mayors should focus on fixing TransLink if the referendum is defeated and be “open minded” to options other than just raising TransLink’s property tax.
“To go after a No vote and immediately raise a different tax to pay for their wish list would be exceedingly politically risky for them,” Bateman said. “They’d be ignoring the wishes of a lot of people who want them to fix TransLink first.”
Mayors have consistently opposed any greater reliance on property tax by TransLink, saying a new source is necessary and their cities need taxation room to pay for other major infrastructure.
“I don’t know how many more times the province has to be told,” Richmond Mayor Malcolm Brodie said. “But I have no reason to believe the mayors’ council will ever approve funding from property tax. If that’s where the premier wants it to go, it will have to be provincial legislation and they will have to pay the price.”
Port Coquitlam Mayor Greg Moore said Metro mayors have not discussed raising TransLink’s property tax as a fallback solution to raise the $250 million a year extra that the proposed sales tax would deliver.
He said the sales tax is the fairest tax to fund the mayors’ plan for transportation expansion, which he said has broad support.
Asked if the mayors have considered declaring a property tax hike to be the Plan B ahead of the referendum to force voters to decide which tax they want, Moore said no.
“That tactic is not something we’re interested in,” he said. “We’re just focused on trying to be successful in what’s in front of us right now and then we won’t have to visit any other options. We can move forward with implementing the plan.”
Moore said higher TransLink property taxes would hammer low-income seniors who have seen property values rise sharply over time.
The property tax is TransLink’s third largest revenue source after transit fares, which generate $518 million a year, and the 17-cent-a-litre fuel tax, which raises $338 million.
TransLink’s private board of directors have the power to collect three per cent extra in property tax each year without the mayors’ consent.
Typically, that’s meant increases of around one per cent for existing residents, while the remaining two per cent has come from new construction.
Anything more than the three per cent cap requires a vote of the mayors’ council.
One reason mayors have been reluctant to raise TransLink’s property tax further is because of the wide range of assessments around the region.
The average assessed house in Maple Ridge, at $507,000, pays just $168 in property tax to TransLink, while that tax bill doubles to $322 for a $1.04-million average assessed house in Richmond and triples to $522 for the average $1.57-million house in Vancouver. (See charts below based on assessment data compiled for Black Press by Landcor Data Corp.)
If the entire $250 million plan was funded instead from more property tax, it would cost the average Metro home an additional $195 a year, but, again, that figure would vary widely depending on the assessment. (The rate for TransLink’s tax is currently $0.3315 per $1,000 assessed value.)
SFU City Program director Gordon Price said he doubts enough mayors would be willing to vote for a property tax increase for it to pass, although some mayors from cities with lower real estate valuations might support it, creating deep divisions.
“You’d rip the region apart,” he said.
Price said voting in a steep property tax hike right after a referendum loss would be tantamount to “political suicide” for mayors, who he predicts would be more likely to turn the entire problem of governing and funding TransLink over to the province.