Greater Victoria homeowners face a $28.50 increase in property tax, largely for new buses bought for the Olympics that B.C. Transit was compelled to buy, says Saanich Mayor Frank Leonard.

But B.C. Transit officials argue that greater traffic congestion and a slump in ridership revenue are behind a need to increase the average homeowner's transit levy to about $122.50 annually.

Leonard, who sits on the Victoria Regional Transit Commission, said that's smoke and mirrors. He said the real reason for the hike is debt servicing costs being foisted on local property owners by the province to pay for new buses it bought for the Winter Olympics.

"I feel a lot of what's been put forward is spin about congestion causing the shortfall," Leonard said.

B.C. Transit staff say the Victoria transit system is facing a $5.88 million deficit. Total costs for services in 2011-12 are expected to increase by $7.8 million, to $102 million.

A report to the transit commission shows passenger and advertising revenue are down, projected to fall more than $2 million short of the $37.1-million budgeted.

"While expenses have been kept below the anticipated costs, the most significant issue is with the passenger revenue," Transit president Manuel Achidinha said in the report. "Ridership to date has been marginally below last year's results. General economic conditions and increasing road congestion in the region are considered to be the primary cause of this shortfall."

Transit staff said congestion increases costs as it takes more time, more buses, more drivers and fuel to deliver the same amount of service. And transit is less attractive if bus riders are struck in traffic like everyone else.

Ridership and revenues could be increased by establishing transit priority or high-occupancy lanes, Achidinha's report said.

Transit has cut costs by freezing spending on non-core items and implementing a hiring freeze.

Staff are recommending the commission consider a variety of plans for 2011-12 including one that would cut 10,000 hours of service and increase the property tax transit levy by $28.50 per household.

That has Leonard seeing red. "The reason for the increase in debt service is that they've brought in a whole bunch of new buses. Where did the new buses come from? The new buses came mostly from Whistler from the Olympics," Leonard said.

"After the Olympics they've sent these buses out to the regional transit systems and the debt service for these buses are being charged to those regional systems," he said.

While the local transit commission approves a service plan and an operating budget it's up to B.C. Transit to determine how to best deliver the service, including when to buy new buses.

B.C. Transit added 100, 2009 Nova low-floor buses to the Victoria fleet and retired 40 last year, said transit spokeswoman Joanna Linsangan. Each bus cost about $500,000. Victoria has 258 buses in its fleet.

Linsangan said the buses weren't bought for the Olympics "however, early delivery of the buses enabled us to use them to provide our enhanced service in the Sea to Sky region during the Games."

Christopher Causton, transit commission chairman, said it's debatable whether Victoria needed 100 new buses. "It was accelerated, sure. Because of the Olympics there was an increase in the requirement for an upgrade to the fleet," Causton said.

"There was in that five year plan an increase in the debt service but there wasn't a forecast that revenues would fall off."

Leonard said the transit commission has a $1.5 million surplus that could absorb the bulk of the $2 million ridership revenue decline. But local property owners shouldn't be paying provincial debt servicing costs, he said.

Achidinha's report said factors driving the $7.8 million in increased costs are: $3.5 million in debt servicing; $1 million more in fuel; $1.9 million in maintenance requirements due to an increased fleet, parts pricing and increasingly complex technology; and $1.3 million for a full year of service increases such as late night buses.

bcleverley@timescolonist.com