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Gas tax funds bypass Bowen
Small rural municipalities in British Columbia that are similar to Bowen Island in size benefit from gas tax funds, says Kristen Watson, manager of finance for the Bowen Island Municipality (BIM). Yet BIM is unable to access these funding sources because it has been categorized as a tier 3 community under the Gas Tax Agreement, Watson stated at the council meeting on September 9.
“I was gathering background information on the current Gas Tax Agreement that is signed and administered by the Union of British Columbia Municipalities (UBCM),” Watson said. “I was also looking at other municipalities’ financial statements and was amazed how much money they receive from tax grants.”
Watson explained that federal Gas Tax Funds are allocated to B.C. communities according to the Gas Tax Agreement, under which communities are assigned to one of tier 1, 2 or 3, in accordance with their membership in a specific regional district. As a member of the GVRD, Bowen has been assigned to the tier 3 category.
The text of the UBCM Federal Gas Tax Agreement says that these tiers have been established in order to categorize communities “based on differing community characteristics including population density, degree of urbanization, adjacency to urbanized areas and the need for intra-regional infrastructure.”
“In most cases, tier assignment based on membership within a specific regional district makes sense, as communities within a regional district often share common characteristics,” Watson stated in her report.
But Bowen Island’s situation is different from that of adjacent communities, says Watson.
“Bowen is an isolated, rural island municipality with a population of 3,600, on the fringe of the third largest population centre in Canada. The island shares none of the community characteristics with the large urban GVRD municipalities, and the capacity of the local government to undertake infrastructure renewal and replacement is much smaller,” Watson said. “Bowen has a population density of 67 people per square kilometre, while density in the remainder of the GVRD averages 867 people per square kilometre.”
Watson explained that Bowen is a rural, residential community with a small local economy and comparatively little commercial activity.
And, as an island, it cannot benefit from a shared regional infrastructure, such as sewerage and water districts.
“As a result, there are few opportunities to implement shared service models in order to deliver quality, cost effective services to Bowen’s citizens. Fire and emergency services cannot be coordinated between municipalities to provide back-up support. Community recreation facilities cannot be jointly operated,” Watson stated, adding that Bowen Island’s ongoing costs to upgrade and maintain the community’s infrastructure are very high.
Federal Gas Tax funds are divided into the Community Works Fund (CWF) and the Strategic Priorities Fund (SPF). Watson explained that all local governments outside of the GVRD automatically receive CWF funding that goes towards capital projects that improve public transit, local roads, active transportation, community energy, water, wastewater or solid waste infrastructure that reduce greenhouse gas emissions, or provide cleaner air or cleaner water. CWF funds are allocated based on population and are used at the discretion of local governments to meet the communities’ priorities.
The Strategic Priorities Fund (SPF) is divided into the General Strategic Priorities Fund (GSPF) and the Innovations Fund (IF). Only five per cent of the SPF are allocated to the IF that supports innovative projects and is open to all local governments in B.C., including BIM.
The funding for the GSPF has been directed to fund TransLink capital projects through a resolution of the directors of GVRD municipalities.
“As a tier 3 GVRD community, Bowen is ineligible for Community Works Funds and the General Strategic Priorities Funds are used to fund Translink capital projects,” Watson summarized, adding that BIM would benefit from receiving direct Gas Tax funding for local infrastructure priorities.
To get an idea of the funding available through the Gas Tax Agreement, Watson has conducted an analysis of similar B.C. communities and what they’ve received from 2005 to 2014.
For instance, Cumberland, a community of 3,398, received a total of $1,201,574 ($1,088,576 of CWF direct transfer funding and $113,000 of GSPF funding).
Mackenzie, a community of 3,507, received $1,585,704 of CWF direct transfer funding.
Since Bowen is not eligible for CWF funding and GSPF funding is allocated to TransLink, BIM received only $100,000 of IF funding over the same time period.
Watson said that BIM has identified several urgent infrastructure upgrades.
“Much of the island’s road network consists of a system of paved legacy logging roads and trails, originally constructed from substandard base layers comprised of organic materials and rubbish. Bowen taxpayers face a significant financial burden to upgrade and maintain this road network,” she stated in her report.
Additional costs relate to bringing the community drinking water systems in line with current recommended standards. “Bowen has seven separate water systems providing drinking water to approximately two thirds of island residents. The largest of the systems, Cove Bay Water, supplies approximately 615 homes and businesses. The water is supplied by Grafton Lake. The future costs to Cove Bay’s 615 water users to construct a water treatment plant are estimated to range from $4 to $6 million,” Watson said.
Another example of necessary expenditures is the replacement of Bowen Island’s over 40-year-old fire hall. “A new facility will likely cost approximately $2 to $3 million, placing a significant financial burden on island residents to service this long term debt,” Watson explained.
“The costs to upgrade and maintain the island’s infrastructure are growing much faster than the residents’ ability to pay. Bowen Island is in need of access to the same stable long-term funding provided to other small, rural B.C. communities under the existing agreement,” Watson stated. She suggested that the Gas Tax Agreement should be modified to ensure that Bowen can access the Community Works and General Strategic Priorities Funds directly.
“For the purposes of determining Gas Tax Fund eligibility, Bowen would benefit immensely from being excluded from tier 3 and categorized instead as a tier 1 community. One possible option would be to include the population of Bowen with that of the Sunshine Coast Regional District. The communities of Sechelt and Gibsons share many local community characteristics with Bowen Island,” Watson said.
She suggested that BIM councillors seek to “engage the UBCM and the federal government in a dialogue to explore the feasibility of the reclassification of Bowen Island from a tier 3 to a tier 1 community.”