A new MassINC report is calling for regional taxes to fund the state’s transportation infrastructure, which would mean any additional MBTA aid would have to come from residents of the communities serviced by the transit agency.
Currently, the MBTA receives a disproportionate share of state sales tax revenue to fund its operations. The MassINC report recommends that regions of the state should be able to enact, at local option, a regional payroll tax or a vehicle-miles-traveled tax to fund local transportation initiatives. The report says this new approach would reverse the Greater Boston-centric flow of dollars and stimulate deeper economic development in and beyond the capital region.
“We have two choices,” says MassINC research director Benjamin Forman, the report’s lead author. “Business as usual and we’ll plug the holes just barely and limp along for another decade or two or we could take [a] regional approach which could potentially raise significant sums of money…fix the problems, and build for the future.”
Any conversation about public transit funding in Massachusetts usually begins with the MBTA. The MBTA eats up the highest share of state funding among the country’s largest transit systems, according to the MassINC report. The study found that nearly 60 percent of the authority’s annual budget comes from state sources. (Even with most of state transit funding going to the MBTA, the authority continues to carry the largest debt burden of any transit system in the country.)
There are major regional inequities in transportation funding, according to the report. The MBTA saw a 16 percent increase in funding since 2009. Under the 2009 transportation reforms, the Legislature voted to allocate $160 million annually to the MBTA on top of the one cent of the 6.25 percent sales that goes to the authority.
The cash-poor regional transit systems, however, receive only one-third of their budgets, on average, from state sources. State funding for regional transit authorities has decreased by 5 percent in the past two years. The MBTA also draws more in sales tax from regions outside its service areas than those regions receive in sales tax revenue for their own transportation systems.
Fewer dollars from the state means regional transit authorities cannot fully invest in their systems. Cities and towns outside metro Boston also end up paying more of their systems’ operating costs through their own municipal revenues. The regional transit authority communities have seen a 51 percent increase in local assessments since 2002; MBTA communities have only seen a 5 percent increase in their assessments.
All told, these problems hamper the ability of regional officials to attract the kind of economic development opportunities they need. “We keep talking about why other parts of the state aren’t growing at the same pace as Greater Boston,” says Forman. “So how can we ask communities with the least tax capacity in the state to pay for an asset that is used by people with the most tax capacity in the state?”
The report points out that the funding pressures on regional systems means that a city like Lowell can’t provide a robust link between its University of Massachusetts campus and the city’s commuter rail station. Instead, the Lowell Regional Transit Authority runs buses more than 30 minutes apart on weekdays and offers no evening service. There are fewer trips on Saturdays and on Sundays there is no service at all.
For remedies, the study’s authors suggest two financing strategies. One is a regional payroll tax on workers in the MBTA’s service region. A 0.7 percent levy, which is similar to what Portland, OR, assesses, could bring in between $600 million and $900 million annually, the report says. Smaller regional levies could help the MBTA close its annual operating deficit and produce millions in revenue on top of state funds for cities like Lowell, Springfield, and Worcester.
The second proposal, a vehicle miles traveled tax, is one option that transportation planners across the country have long-touted as the next major step in paying for roads, bridges, and transit. A VMT tax is borne by the people who use a transportation system. The levy would increase during rush hours, forcing some users to make more deliberate decisions about their travel needs, thereby reducing congestion.
However, a VMT tax is an idea that remains on the drawing board in the Bay State. Collecting a VMT tax, either annually or when filling up at the pump, has the potential to rile voters. But Forman argues that if voters are empowered to choose the projects they want to fund, they may feel differently. Across the country, where voters have weighed in on spending for specific projects, 70 percent of them have been approved, he said.
But the sticking point is that the framework for these kinds of ballot initiatives does not currently exist in Massachusetts. Forman says the Legislature would have to empower regions like metro Boston to make their own decisions to pay for transit improvements. “It may take time, but communities are going to have to pressure the Legislature to create a process that improves the efficiency of our transportation spending if we have any hopes of getting the big projects done within the MBTA,” he says. “I don’t see another alternative.”
Both Gov. Deval Patrick and Lt. Gov Tim Murray continue to stress that the Bay State needs new transportation finance strategies. However, the administration has yet to offer up any fresh proposals after Gov. Patrick’s signature financing proposal, a 19-cent gas tax, failed in 2009.
Homepage photo by Josh Kaufman photography published under a Creative Commons license.