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Minister of Transportation Todd Stone,  is photographed in his office at the B.C. Legislature Tuesday June 12, 2013.The Globe and Mail

B.C.'s Transportation Minister appears to be warming up to the idea of a second carbon tax, one that would be levied in the Lower Mainland and fund the region's transit expansion.

Todd Stone on Tuesday offered his formal response to a 10-year plan released earlier this month by the Mayors' Council. The minister said the plan faces some significant funding gaps. He said the province will not fund the transit expansion through its provincial carbon-tax revenue – but said area mayors might want to consider a new regional carbon tax.

"A new regional carbon tax will be complex and costly to administer, making it important that the full spectrum of costs and economic impacts (for example, on motor fuels, home heating and industrial processes) are well understood by the residents who would need to vote on it through a referendum," Mr. Stone wrote in a letter to the mayors.

"Should the Mayors' Council confirm with me that a new regional carbon tax is its preferred funding option, the Province will work with the Mayors to undertake an assessment of administrative requirements for implementation."

Mr. Stone commended the mayors for highlighting the region's transportation needs and priorities, but said their math did not add up. He said the plan for federal funding was flawed, because the mayors' plan calls for $1.5-billion – more than is earmarked for the entire province through the Building Canada Fund.

Mr. Stone encouraged the Mayors' Council to consider raising property taxes, saying such increases would not be subject to referendum. He said he looks forward to receiving further details on other potential funding options, such as mobility pricing – a plan to charge motorists based on the distance they drive.

The mayors have agreed to a sweeping $7.5-billion plan to improve transit over the next 10 years. The plan includes a subway for Vancouver, light rail for Surrey, rapid buses in other growing parts of the region and a new Pattullo Bridge.

The province had required the mayors to reach a consensus on a 10-year plan so that a regional referendum on funding sources could be held.

Mr. Stone said if a referendum is to be held this fall, he will need formal notification from the Mayors' Council by July 15. If the plan is to hold a referendum next year instead, Mr. Stone said recommendations on a referendum question could wait until the fall.

Richard Walton, mayor of the District of North Vancouver and chair of the Mayors' Council, said Mr. Stone's letter and subsequent news conference came as something of a surprise and will be discussed by the mayors at a meeting Thursday. Mr. Walton said it only makes sense for provincial carbon-tax revenue to go toward funding transit, and he doesn't plan to give up on that fight.

"The goal of the carbon tax, reducing carbon, is just completely synchronous with public transit funding and getting people out of cars," he said. "Regardless of what the minister has said, we still believe it's the best source."

Mr. Walton acknowledged that it could be a challenge to get residents to vote in favour of the new regional carbon tax. He said the minister's suggestion that the mayors consider raising property taxes shows the province is trying to get the municipalities to do the unpopular work.

Mr. Walton said it might be difficult for the mayors to meet the minister's deadline for notification of the referendum. He reiterated that the mayors don't agree with holding the referendum in the first place.

"We think it's bad policy," he said. "…The fact that it's been thrown to a referendum is obviously frustrating."

With a report from Frances Bula