Costs and trends of transit funding

The Ministry of Transportation and Infrastructure and BC Transit projected that achieving transit growth would require an injection of financial resources for capital projects such as rapid transit infrastructure, new buses and building or expanding transit exchanges, bus garages and maintenance facilities. In addition to the cost of expanding transit to achieve the growth targets, there are substantial capital costs just to maintain existing services. For example, fleet replacement costs were 75 percent of BC Transit’s capital budget during the period from 2007/08 to 2011/12.

Along with capital investment, expanding transit services also entails an increase in operating funds, at least until the time when ridership growth is significant enough that passenger fares cover the costs of transit services.

In 2007, the Ministry of Transportation and Infrastructure’s estimate was that to achieve their goals of increased transit usage by 2020, capital and operating costs would amount to approximately $2.6 billion. 

This translates to an average annual increase of 4.1  percent.

The provincial government put forward a vision for, and commitment to, public transit in the province in the Provincial Transit Plan, and called upon its government partners at federal and municipal levels to join in the vision. BC Transit has worked towards achieving the goals of the Provincial Transit Plan through its partnerships with local governments, and relies strongly on their support to meet the targets.

Actual total expenditures from 2007/08 to 2012/13 have increased by an annual average of 9 percent. This increase is higher than what the ministry initially projected would be required, but lower than what BC Transit anticipated in its service plans during the first three years after the launch of the Provincial Transit Plan. BC Transit considers that the economic downturn has been a constraint on the availability of funding for transit expansion.

Figure 12 - Expenditure trends for transit provision from 2007/08 (click image to enlarge)



Total expenditures are comprised of capital and operating expenditures, and the trends have been different for each type. Actual capital expenditures from 2007/08 to 2012/13 are lower than projected, assuming an even distribution to 2020. Operating expenditures are higher than what the Ministry of Transportation and Infrastructure originally projected would be required to meet their goals for 2020. However, BC Transit’s projection from its service plans anticipated higher operating expenditures than what was actually spent for four of the five years since the plan was launched.

A large proportion of operating expenditures is the delivery of transit service hours— that is, the number of hours the buses are on the road. The number of transit service hours delivered during the period since the Provincial Transit Plan was launched was lower than anticipated.

This is likely related to an increase in the cost of providing transit services.

Therefore, achieving 2020 targets will require even more funding for operating costs than anticipated in the 2008 Provincial Transit Plan.

To consider: Are existing funding commitments and sources sustainable given the long-term objectives and timeframes targeted?

The understanding and estimation of transit development costs is more advanced than the quantification of transit benefits. As the Freiburg example in Text box B has shown, there are real economic benefits, ranging from higher cost recovery in transit operations to reduced health care costs from safer means of mobility, that accrue to society. However, the distribution of transit costs and benefits is not symmetrical. Many of transit’s benefits will accrue to government departments outside transportation (e.g. health and social services departments), while the costs for developing public transportation are concentrated within the transport department’s budget. In addition, the economic benefits from investing in public transportation often lag behind the costs by a decade or more.