Minutes of the Public Hearing held March 4, 2008

TOWN OF VIEW ROYAL

STAFF REPORT

DATE: March 6, 2008 TO: Council FROM: Director of Finance FILE: 0540-20/Fin SUBJECT: Funding Options for Carbon Tax Revenue

ISSUE

To provide Council with options for using the anticipated Carbon Tax revenue.

BACKGROUND

The Provincial government has introduced a Carbon Tax on fuel sales which will become effective July 1, 2008. The Provincial government will return 100% of the revenue collected to taxpayers through tax cuts and credits to individuals and businesses and grants to municipalities to offset the cost of the tax on local government operations.

The Province estimates that the amount of Carbon Tax revenue for the Town of View Royal for the remainder of 2008 will be approximately $8,000. It is anticipated that the Town will receive approximately $16,000 in 2009 for the full year. These amounts are estimates based on the Provincial population formula which has been used for previous grants.

The intent of the grant is to offset the cost of the carbon tax on municipal operations. At this time, it is difficult to accurately estimate the cost of the carbon tax on municipal operations as information regarding fuel consumption and purchases made through various departments is not centrally located. The exact method of payment of this grant to municipalities is not known at this time.

The Carbon Tax is intended to provide an incentive to reduce the consumption of fossil fuels by increasing the price of fuels. A significant portion of municipal operating costs are for fuel for vehicles and equipment (fire, public works, bylaw and administration). Staff estimates that the Town's direct costs for fuel will be in the range of $5,000-$6,000 per year. In addition to this direct cost, the Town will experience increased costs for contracted services, goods and services, and capital projects as suppliers pass on the cost of the carbon tax. It is anticipated that the cost will exceed the estimated grant of $16,000.

DISCUSSION

Given the purpose of the carbon tax is to provide an incentive to reduce carbon emissions, the revenue should ideally be dedicated to projects or initiatives that promote carbon reduction. Such projects could include:

• Capitalizing an "Energy Efficiency Revolving Fund" for municipal facility improvements.
• Funding a municipal Green Fleet plan (e.g. converting a vehicle to hybrid or electric).
• Funding renewable energy feasibility studies or pilot projects.
• Retrofitting municipal facilities with energy efficient lighting or appliances.
• Purchasing public works equipment with low emission engines.
• Adding bicycle racks to municipal facilities.
• Funding public awareness campaigns for energy efficiency and carbon reduction.
• Funding tree planting initiatives.

OPTIONS

1. Direct that the Carbon Tax revenue be placed in a reserve account specifically for carbon reduction initiatives/projects or used to balance the budget for 2008 and 2009.
2. Direct staff to consider carbon reduction initiatives for potential funding from the Carbon Tax revenue and include them in the 2009 budget deliberations.
3. Direct staff to report on the actual costs of the Carbon Tax to the Town once information becomes available.

STRATEGIC PLAN ALIGNMENT

The recommendations are aligned with the Strategic Plan theme of Environmental Stewardship and specifically objectives for reducing greenhouse gas emissions.

FINANCIAL IMPLICATIONS

The estimated Carbon Tax revenue is $8,000 for 2008 and $16,000 for 2009.

RECOMMENDATION

THAT Council direct that the Carbon Tax revenue for 2008 and 2009 be placed in a reserve account to be used specifically for carbon reduction initiatives/projects and that staff include specific carbon reduction initiatives in the 2009 budget deliberations for potential funding from this reserve account.