Reining in gas tax pre-spending

Under current gas tax rules, Regional District of Bulkley Nechako directors are limited on what projects they can spend the money.

You may complain about your fuel prices at the pump, but at least some of that cost comes back to benefit you through the federal gas tax program which puts a portion of taxes collected back into local governments.

The important source of funding came up for debate during the Oct. 24, 2013 Regional District of Bulkley Nechako (RDBN) board meeting. The formula for spending gas tax funds within RDBN electoral areas will be changing.

Until now, a director could commit multiple years’ worth of gas tax funding to a project, even if that spending extended beyond his or her elected mandate. This meant that a newly elected director could walk into an office where a large portion of the electoral area’s spending capital had already been exhausted by the previous director.

This is exactly the situation Rob Newell, RDBN director area G (Houston Rural), faced when he took office.

“As a new director, I was unaware that my predecessor [Lance Hamlin] had spent beyond his term in office,” Newell said. “This has left me without gas tax funding to carry out the priorities of my term.”

Newell will only have access to new funding in the final year of his term, hamstringing his ability to direct cash towards local qualifying projects for most of his tenure as director.

Although all funding for gas tax projects must receive board approval before they can go ahead, RDBN directors are presumed to reflect the interests of their own constituents, and so their recommendation carries persuasive weight in the final board decision.

Under current gas tax rules, RDBN directors are limited on what projects they can spend the money.

“Currently the rules are that [projects] have to either reduce greenhouse gas emissions, provide cleaner air, or provide cleaner water,” RDBN Financial Administrator Hans Berndorff said.

Under the previous formula, a director could ask the RDBN to commit up to five years of funding to one project, even if the director’s elected term would conclude before the five years were up.

“Under the existing [RDBN rules], an electoral area can, on any one project, spend the entire amount of funds they will be getting under the current [federal gas tax] agreement.”

Newell’s motion was to amend board rules so that no director could spend beyond his or her elected term. There was broad support for Newell’s concerns around the board table.

“It [gas tax funding] is the primary resource that allows directors to create the kind of changes in their region they want to see,” said Smithers Mayor Taylor Bachrach. “Every director should have equal access to those resources. We don’t want a person to get elected, and come into a job where the person before them has essentially spent the budget.”

Under a resolution passed at the Oct. 24 RDBN board meeting, directors will only be able to commit electoral area tax fund allocations equal to the length of the director’s current term in office.

The existing federal gas tax agreement, which expires at the end of December, was a five year agreement. The details of the new gas tax agreement coming into effect in the new year are not yet available, although a loosing of the restrictions placed on what projects qualify for tax fund dollars is expected.

Federal gas tax funding is a major source of funds for RDBN directors to facilitate projects within their electoral districts. The RDBN receives a portion of the federal fuel taxes you pay at the pump, and distributes those funds to the electoral areas based on a population-size formula.

The RDBN has received $836,699 annually in gas tax funding over the 2005-2013 period. Area B, Burns Lake rural has received $108,451 every year since 2005. Area E, Francois/Ootsa Lake rural has received $77,016, and Newell’s area G Houston rural has received $52,344, all based on population.

Within electoral area B (Burns Lake rural), 2012/13 gas tax allocations went towards energy upgrades at the Trout Creek Hall ($25,000), and Island Gospel Fellowship church ($100,000). The Burns Lake Snowmobile Club received $13,731 towards projects to reduce greenhouse gas emissions.

Within electoral area E (Francois/Ootsa Lake rural), energy upgrade grants were given to Grassy Plains Hall ($8548, $34,287), Trout Creek Hall ($75,000), Island Gospel Fellowship church ($25,000), and the Southside Economic Development Association ($8160).

 

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