Baker proposes $1 fee per ride-hailing trip
Would use portion of money to boost MBTA funding
GOV. CHARLIE BAKER wants to increase funding for the MBTA by $134.8 million in the coming fiscal year, and cover part of the cost by raising fees on ride-hailing trips from 20 cents to $1 per ride.
Baker said ride-sharing services like Uber and Lyft account for 100 million rides annually. “It’s very important, it’s certainly popular, but it is not a service that comes with no disruption,” Baker said, noting the wear and tear on roads and bridges and the congestion caused by ride-hailing.
Baker’s plan to raise transportation funding – but without any broad-based tax increases – comes amid a larger debate within the Legislature about funding for public transportation, in light of problems with performance and safety at the MBTA.
Baker unveiled the plan as part of his $44.6 billion budget proposal for fiscal 2021, which he released Wednesday. That represents spending growth of 2.3 percent over the current fiscal year. The bill also fully funds the first year of the new education funding formula, with $355 million in new spending.
Leaders in the House have said they plan to take up a major package focused on new transportation revenue this year, although details have not yet been released. Advocacy groups have floated a variety of proposals – many of which the governor has been hesitant to agree to – ranging from increasing the gas tax to imposing congestion pricing.
House Speaker Robert DeLeo called it “interesting” that Baker included the ride-hailing fee in his budget proposal, an idea he said House leaders are considering. He also made the point that Baker, who in the past has said the T does not need additional funding, is now saying it does.
“I am pleased all parties now agree on the urgent requirement for increased transportation revenue,” DeLeo said in a statement. “I look forward to working together on a transportation revenue package that addresses the system’s urgent needs.”
Baker’s proposal would increase the fee that riders pay when taking a service like Uber or Lyft from 20 cents per ride to $1. That would raise an estimated $120 million in fiscal 2021. Of that total, 70 percent, or $84 million, would go to the state. The rest would go to the municipalities where each ride originates.
Baker envisions putting $73 million of the state’s share into the MBTA.
The proposal faces opposition from ride-hailing services. “Lyft shares the goal of improving public transit in Massachusetts, but a five-times increase on rideshare fees will not solve the transportation challenges in the state, and will hurt those who can least afford it,” said Lyft spokeswoman Campbell Matthews.
A spokesman for Uber noted that ride-hailing accounts for just 4 percent of the state’s congestion. “We share the state’s goals of reducing congestion and investing in mass transit, but we have concerns with any proposal that would result in a substantial tax increase for riders,” said Uber spokesperson Alix Anfang.
In addition to money from the new fee, the MBTA would also get more money next year from its guaranteed portion of the state sales tax. The administration is predicting strong sales tax collections next year, and Baker wants to change the way the sales tax is collected, essentially requiring large businesses to remit monthly sales tax collections three weeks earlier than they do now. This would essentially frontload some sales tax revenue, resulting in $317 million more being collected in 2021, of which $40 million would go to the MBTA.
Baker overhauled management and implemented an aggressive capital campaign at the MBTA after the system failed repeatedly during the winter of 2015. A report released in December by the MBTA’s Fiscal and Management Control Board, after several train car derailments, criticized the agency for prioritizing capital repairs over safety. Baker said the new money would let the MBTA accelerate capital projects while making necessary safety improvements.
Several advocates say they hope lawmakers go beyond the governor’s proposal. Chris Dempsey, director of Transportation for Massachusetts, a transportation advocacy coalition, said he thinks the governor’s plan is a good one. “It’s appropriate to have a fee associated with TNC trips and to use the revenue generated from that fee to invest in transit, so you’re reducing congestion and improving options for people at the same time,” Dempsey said. But Dempsey said other tools are needed as well, like raising the gas tax.
Marie-Frances Rivera, president of the liberal-leaning Massachusetts Budget and Policy Center, called Baker’s focus on the MBTA “a bit limited.” She added: “We don’t see the kind of game-changing investments we know we need all across the state.”
Under Baker’s budget, the Registry of Motor Vehicles would get an $8.6 million increase. The agency hired 10 new staff members focused on safety, compliance, and the processing of out-of-state notifications, after a deadly crash revealed that the state was not processing out-of-state notifications of motor vehicle offenses. The money would fund these positions and pay for additional hiring.
The Merit Rating Board, which maintains operator driver records and had been effectively defunct before the scandal, would get another $800,000 to reform its business practices.
The governor is also proposing a new, permanent seven-member MBTA board to replace the MBTA’s Fiscal and Management Control Board, which is set to dissolve at the end of June.
In other areas, Baker’s budget does not envision any new broad-based taxes or fees. But he is reviving his proposal to tax opioid manufacturers, which lawmakers previously rejected, and his proposal to increase a tax on the transfer of deeds in order to address climate change, which lawmakers have not acted on yet.
Baker counts on getting $35 million from sports betting, even though the Legislature has not yet legalized sports betting. The budget includes $282.7 million in revenue from casinos and $160 million from marijuana taxes and fees.
The Department of Revenue estimates the state will lose $95 million due to a new law that taxes e-cigarettes and prohibits the sale of flavored tobacco products other than in smoking bars.
Baker’s budget adds $303.5 million into the Chapter 70 formula that pays for public education, for a total of $5.48 billion, to conform with a new law that updates the funding formula. Another $51.5 million in additional spending would be distributed among other education line items, including special education, charter school tuition reimbursement, and targeted assistance to help districts close achievement gaps.
Baker is proposing turning 15 vocational high schools into Career Technical Institutes, in which the facilities are used after the school day ends to train other high school students and adults in trades like plumbing, HVAC, manufacturing, and robotics. The budget would provide $8.4 million, which would be combined with additional capital money, with a goal of training 20,000 new workers over four years.Baker is proposing a new tax credit for businesses that hire individuals with disabilities.
The budget would also provide a $27.1 million increase in the budget of the Department of Children and Families and increases to funding for child care and college financial aid for children under DCF care.