Restarting the transportation funding debate
With millionaire tax shot down, what else is under consideration?
WITH THE MILLIONAIRE TAX ballot question shot down by the Supreme Judicial Court, the debate over state transportation funding is slowly starting to shift gears on Beacon Hill.
Rep. William Straus of Mattapoisett, the House chairman of the Legislature’s Committee on Transportation, said it’s time to start having a debate about alternative revenue measures. He indicated nothing major is likely to happen until after the November election, but said the issue needs to be addressed in 2019.
“They are all unattractive choices. Everyone knows that. But on the other hand everyone insists we need a reliable transportation system,” he said. “It’s time to start working on it. We’re talking billions of dollars of underfunding in our transit system.”
Sen. Eric Lesser of Springfield, a vice chair of the Transportation Committee, pushed one specific revenue option at an event on Wednesday. He urged passage of a bill that would allow neighboring communities to band together to hold regional ballot initiatives to fund local transportation projects. He acknowledged the idea gained little traction on Beacon Hill while the poll-popular millionaire tax remained on the ballot.
The Baker administration has shown little interest in talking about new revenues for transportation. Transportation Secretary Stephanie Pollack declined comment for this story, but Joseph Aiello, the chairman of the MBTA’s Fiscal and Management Control Board, said in April that he would like to see the board begin exploring new revenue options toward the end of this year so it can put a proposal before the Legislature.
Here are some of the options under consideration:
Millionaire tax II: The millionaire tax would have imposed an additional surcharge on incomes over $1 million. The ballot question creating a millionaire tax was struck down by the Supreme Judicial Court in June because the question tied too many unrelated elements together. For example, the question created the tax but also directed that the money raised by the tax go for transportation and education. Several politicians have hinted that they would like to see the Legislature pursue a change to the state constitution allowing a millionaire tax, but that would be another two-year process with an uncertain outcome. It’s true the millionaire tax polled well, but many voters also liked the way it directed the money for specific uses rather than just turning the funds over to Beacon Hill.
Gas tax: The state gasoline tax was last raised in 2013 – rising 3 cents to 24 cents a gallon. The tax was also indexed to inflation, but indexing was shot down in 2014 by a ballot question supported by Gov. Charlie Baker. The gas tax offers many advantages. It’s already in place, easy to collect, and philosophically attractive because it is a user tax of sorts. It also provides a steady source of income that can be used to issue bonds. The big disadvantage to the gas tax is that it’s likely to decline as the shift to vehicles with better mileage of run on electricity accelerates.
Fee on vehicle miles traveled: The so-called VMT fee is more equitable than a gas tax because anyone who drives a mile pays the fee. There are logistical issues to work out with the technology, but political opposition may be the biggest hurdle. In 2016, Baker vetoed a provision in a transportation bond bill that would have directed the Department of Transportation to apply for federal funds to develop a VMT pilot program.
TNC fee: As part of an effort to regulate transportation network companies (otherwise known as the ride-hailing apps Uber and Lyft), a 20-cent fee was assessed on each ride in 2016. The fee was largely an after-thought in the legislation, but it produced nearly $13 million in 2017. The money was split evenly between a state transportation fund; MassDevelopment, which is charged with using the money to help the taxi industry; Boston, where 34 million of the 64 million rides originated; and the rest of the cities and towns where rides originated. None of the money has been targeted for any specific project, in part because no one saw the fee as a revenue raiser. But Straus said he thinks that’s beginning to change as the ride-hailing apps cause more congestion and need dropoff and pickup locations on local streets to avoid snarling traffic. Straus said the 20-cent fee seems low to him; Lesser said the fee also has limited impact on low-income people because high-income people tend to use ride-hailing apps. Straus pointed to Chicago, which began assessing a 52-cent charge on TNC rides in 2015 and increased that amount by 15 cents in 2017, with all of the additional money steered to the Chicago Transit Authority. The fee is slated to go up another 5 cents next year. The appeal of the TNC fee is that it’s in place and the governor went along with the original concept. The downside of the TNC fee is that it’s new, so it’s unclear whether the revenues are reliable enough to be used to float bonds.Regional ballot initiatives: The proposed legislation would allow neighboring communities to assess virtually any type of tax on their constituents to pay for transportation initiatives. Massachusetts is one of only nine states that doesn’t allow local areas to raise revenues on their own for transportation. Supporters say the approach makes sense, particularly in areas outside of Boston, where needs are obvious but funding sources are scarce. Another advantage is that such ballot initiatives usually identify specific projects or services to be funded, so a scorecard of success or failure can be kept. Senator Lesser likes the idea, but the legislation hasn’t made it very far on Beacon Hill. Pollack, the state transportation secretary, is mum on the idea, with her spokeswoman saying the Baker administration would carefully review any legislation that reaches the governor’s desk.
Fare increases: Another MBTA fare increase is likely in mid-2019. The T’s Fiscal and Management Control Board has signaled it will raise fares then and the Baker administration also favors that approach. Pollack is fond of saying she prefers small, regular fare increases. Under state law, the T can only raise fares 7 percent at any one time.