Tax debates rage across New England, but not in Mass.

Reform before revenues remains the Bay State mantra

THERE ARE TWO TAX DEBATES happening in New England that are worth watching, both for their substance and political theater.  In Connecticut, big business has declared war on Gov. Dannel Malloy’s proposal to raise certain corporate taxes to help pay for a historic and ambitious 30-year, $100 billion program of transportation and infrastructure improvements.  Supported by a Democratic legislature, Connecticut’s governor is determined to ensure that the state’s essential mobility infrastructure is prepared to meet future demands. He is proposing, among other things, to increase corporate taxes in a number of categories, all in an effort to raise $700 million toward his transportation infrastructure plan.  The mega-corporate community, led by General Electric (a company that has raised tax avoidance to an art form), is crying foul over the state’s imminent decision to ask those who can afford to pay a little more to do so.

I am sympathetic to Connecticut’s desire to raise substantial net new revenue to improve their transportation systems and infrastructure. Gov. Malloy is right when he says, “The key to prosperity, security, and the highest possible quality of life for Connecticut . . . is a best-in-class transportation infrastructure that is efficient, multimodal, resilient, and long-lasting.”  That is music to my ears, although I wish the song were being sung here in Massachusetts.  And while I applaud Gov. Malloy’s vision and plan, I part company with raising transportation revenue from non-transportation sources.  More often than not, such efforts anger and frustrate voters.  I believe that most people would support raising transportation revenue from transportation sources, and there is plenty of revenue to be generated if we go about it smartly and strategically (I’d start with a Vehicle Miles Traveled user fee, but you know that by now).

In Maine, Tea Party Republican Gov. Paul LePage is on the hustings trying to generate support for his proposal to eliminate Maine’s income tax and hike its sales tax.  LePage has met sturdy resistance from some members of his own party, and most Democrats, for his “lets make the rich a little richer” tax reform program.   As a response to this opposition, LePage has threatened to veto all bills sponsored by Democrats until they agree to place an income tax repeal on the ballot.  He’s also taken on the Republican Senate President, Michael Thibodeau, directing a barrage of robocalls into his district accusing his former ally of being in political bed with liberals who support “welfare funding for illegal aliens.”  (And you thought the only sports in Maine were moose hunting and fly-fishing.)

Speculation is that LePage believes this debate will lay the groundwork for an all-Republican legislature in next year’s election, thus giving him free reign to enact into law all sorts of Tea Party priorities in his final two years in Blaine House.  His miscalculation may be that he will have burned bridges to his own party leaders this year, and he will be looking more like a lame duck in 2017, less likely to generate unflinching support from legislators with a longer time horizon.

LePage and his brand of Republicanism provide a useful reminder of how far to the right national (and most state) Republicans have traveled since the halcyon days of Ronald Reagan. In a well-documented page-turner, Jeff Davis of the Eno Center for Transportation has written the story of how the gas tax was increased during the Reagan Administration, despite Reagan’s rock-solid small-government credentials. Reagan understood the importance of spending on transportation and infrastructure to create jobs and improve the economy.  Sadly, as Davis points out, the 5-cent gas tax increase in 1982 was the last time the federal gas tax was raised to actually increase funding in the Highway Trust Fund.  Subsequent federal gas tax increases in 1990 and 1993 were designed to prevent a deficit, not increase net new revenue.  Fast forward to today, where we find ourselves living in a nation that increasingly turns to funding gimmicks to maintain our largely outdated transportation system.

The closest we’ve come to a tax battle here in Massachusetts is the relatively genteel back-and-forth among top state leaders about the film tax credit and earned income tax credit. This is relatively small stuff in comparison to what’s being debated in Maine and Connecticut, and if there’s one sure way to bore people to tears, start talking to them about tax credits.

Of course we do have a ticking time bomb here in the Bay State, and that is our continued refusal to raise net new revenue for our transportation system.  Say what you will about Malloy and LePage, they can’t be accused of kicking the can.  They have strong ideas about the respective futures of their states, and they are moving forward boldly, despite heavy criticism.  As Malloy tries to enact a massive transportation funding bill into law, and as LePage tries to enact a massive overhaul of Maine’s income and sales taxes, we in Massachusetts debate the merits of hosting the Olympics.  The Olympics debate takes up all the air and gets us riled up, sparking wars of words among local journalists in a fashion unseen since George Frazier took on Channel 2’s The Reporters (and got fired for doing so). In the meantime, Rome burns.

Unfathomably, we are letting an important moment pass by as we fail to acknowledge the need to raise net new revenue to invest in modernizing and renewing our transportation system — and particularly our public transportation system.  Our collective lethargy on this topic is maddening, and one wonders what it will take to spark a meaningful, bipartisan effort to raise the revenue we all know we need. If the winter MBTA meltdown wasn’t enough of a trigger, I fear for the catastrophe that will be required to get something done.

The Massachusetts Senate recently put the brakes on the runaway train that posed as MBTA reform but included a proposal to lift the cap on T fares and repeal a half-billion dollars of anticipated transportation funding.  I’m hopeful that this will give decision makers time to reassess the best way to move forward with a public transportation renewal plan.  We cannot reform our way to a more reliable system. That does not mean we should abandon necessary reforms to improve MBTA management.  But it does mean that the focus needs to shift from blame and reform to a positive vision of what a modern, reliable public transportation system should look like.  We should not settle for a return of a “normal” MBTA, because a “normal” MBTA too often lets us down, and in all events is not capable of meeting our current and future mobility needs.  Our future depends upon a revitalized multi-modal transportation system that leverages technology and innovation and places emphasis on modal funding equity.  Such a system would be able to meet the changing mobility preferences of our time, support increased private sector investment, compete with emerging micro-transit options, and respond to the changing demographics of the city and its suburbs.

Meet the Author

Big ideas are being debated in Connecticut and Maine. Agree with them or not, at least give our New England neighbors credit for challenging their citizens to have a purposeful vision for their future, futures not tied to gimmicks and one-off events, but rather tied to core beliefs and values. Our local obsession with the distraction of the Olympics leaves little room for the kind of robust debate we need to change the old, failed, auto-centric “reform before revenue” paradigm that retains its vise-like grip on many. I continue to be baffled and amazed at how quickly the urgency that followed the winter meltdown has passed into lethargy or, worse, amnesia. We can hope for a better winter, we can patch things up, we can prepare better operational and maintenance plans, but we cannot change the harsh realities of an old system that is being asked to perform above and beyond its capabilities.

James Aloisi is a former state transportation secretary and a principal at the Pemberton Square Group.