The two main sources of funding for BC Transit are government (provincial and municipal), and passenger fares. The federal government also contributes funding for capital infrastructure.
Figure 8 - Sources of funding for BC Transit (click image to enlarge)
Funding for transit comes from these main sources in most of BC Transit’s service area:
- provincial government
- municipal government
- passenger fare revenues (plus a small contribution from advertising and investment income)
In the Victoria Regional Transit System, fuel tax is an additional source of funding.
The federal government also contributes to some transit capital projects.
Text box H - How transit service levels and budgets are set (click image to enlarge)
Passenger fares offset the amount municipal governments fund. This means that if passenger revenues increase, municipal governments have to cover less of their transit costs through other sources, such as property taxes.
Provincial and municipal funding are tied to each other through a legislated cost-sharing formula.The formula requires that each party pay a specific proportion of transit costs each year; therefore, if one funding partner wishes to expand transit services, the other partner has to pay their portion of the associated costs.
Provincial funding levels are set based on a formula in the Transit Act regulations. The formula requires the following cost-sharing:
Figure 9 - Transit cost sharing formula (click image to enlarge)
For an explanation of different types of transit, see Text Box A.
Victoria’s conventional transit system receives a lower provincial share because there is a fuel tax that supplements funding for the system.
Over the past five years since the announcement of the Provincial Transit Plan, transit expansion has been impacted by the ability of either the Province or local governments to fund its share of a proposed transit expansion. Overall, the provincial government’s proportion of transit funding has generally increased since 2008.
Figure 10 - Changes in BC Transit funding sources (click image to enlarge)
British Columbia’s provincial government is above the Canadian average in its contributions to transit operating revenues.
Text box I - Transit funding sources: Comparison of British Columbia to the Canadian average (click to read)
Transit funding is fairly complex and varies greatly across the country, making it challenging to develop clear comparisons between transit agencies in different provinces. Nonetheless, some comparisons have been made that can provide insight into differences between provincial approaches.
British Columbia’s government is one of five Canadian provinces and territories that provides operating funding for conventional transit. From the chart, we see that the provincial contribution in B.C. is higher than the Canadian average, while the proportion provided by municipal contribution is roughly similar, and the proportion covered by passenger fares is lower in B.C. than the average.
Text box I-a - Source of transit operating revenues (click image to enlarge)
If we look at the funding sources on a per capita basis, however, the figures suggest that British Columbia’s municipalities are among the lowest contributors in Canada. This emphasizes the high level of provincial funding for operating costs in British Columbia.
This high level of provincial funding enables BC Transit to provide transit services in a wider range of communities than in much of the rest of Canada, including communities that would normally be considered too small to afford public transit. This wider scope of communities with transit can contribute towards meeting the social goal of improving mobility. But at the same time, passenger fares do not cover transit costs due to lower ridership.
To consider: What is the most appropriate funding model for BC Transit to meet long-term transit goals and objectives?