The Independent Panel Review made 18 recommendations, including greater cooperation, planning and accountability between B.C. Transit and local governments.
It suggests the B.C. Transit Board provide local governments with letters of expectations and performance analyses to account for planning and spending decisions.
Nanaimo Regional District chairman Joe Stanhope welcomed the recommendations, saying municipalities have been frustrated by decisions made by B.C. Transit without any input from them.
Stanhope said municipalities and B.C. Transit haven't been operating on the same fiscal year, meaning the agency sometimes made decisions that hiked municipalities' costs after they had finalized their budgets.
"One of the big issues that we faced was the decision of B.C. Transit to increase their management fees after we had passed our budget," he said. "We had to take those increases out of reserve."
Transportation Minister Blair Lekstrom said he's committed to improving cooperation.
"I think local governments have made it clear they haven't felt they have been at the table early enough in many of the decisions with B.C. Transit," he said. "I'm pretty optimistic that can be resolved."
Lekstrom said he will present an action plan to the Union of B.C. Municipalities in September.
The recommendations, which must still be considered by government, also include giving local governments more ability to appoint their own representatives to the transit board for better consultation between both partners.
The panel looked at transit in 40 communities but did not include TransLink, which oversees public transit in the Metro Vancouver area.
B.C. Transit manages public transportation for all the jurisdictions in the province outside the Greater Vancouver area.