Is Baker’s commission another delay tactic?

Need for more transportation revenues hasn’t changed

LIKE RED LINE TRAINS, the state’s efforts to address transportation funding are constantly bedeviled by fits and starts in a seemingly endless quest to reach the destination.

In the latest iteration, the Baker administration has proposed the creation of a commission to analyze transportation needs and develop a plan to pay for them, though the scope and makeup of the commission appear to be a work in progress.

Time will tell whether this is a serious initiative or simply a delaying action to avoid the question of new revenues, which virtually every independent study of the past 15 years has concluded are essential to maintain and modernize the state’s highways and public transit systems.

The long and sad transportation funding saga really began in earnest 25 years ago with the state’s decision to build the Central Artery. It’s not that the decision itself was wrong but that the price tag was grossly underestimated and state leaders never raised enough tax or toll dollars to pay for it.

The result was predictable. Funding was cut for other important highway and bridge projects across the state and the MBTA’s state-of-good-repair backlog grew ever larger.

With former governor Paul Cellucci opposed to new taxes in the late 1990s, Charlie Baker, his secretary of administration and finance, resorted to a Wall Street concoction — grant anticipation notes borrowed against future federal highway aid — to help pay for the skyrocketing costs of the Central Artery, extending for 20 years the project’s impact on other critical transportation initiatives.

Despite taking office during a fiscal crisis, former governor Mitt Romney had no more interest in new taxes than Cellucci. In 2004, the Legislature passed a transportation reform bill that created a 13-member Transportation Finance Commission, on which I served, to determine long-term transportation financing needs and make recommendations to fund any shortfall. Working over a three-year period, the commission released a detailed analysis of its findings in March 2007 and an equally detailed set of recommendations six months later.

The commission identified an almost $20 billion, 20-year shortfall in funding for basic transportation needs. The recommendations to close that gap included $2.5 billion of reforms and $18 billion in new revenues, including raising the gas tax by 11.5 cents, indexing the gas tax to inflation, and moving to “a system of direct road user fees as the principal source of transportation funding using modern technology.”

No one contested the report’s conclusions, which are just as valid today as they were 10 years ago. Many of the reform recommendations were subsequently adopted, but political leaders have struggled mightily with the call for new revenues.

The tone was set immediately when former governor Deval Patrick, concerned about the recommendation for revenues, conveniently scheduled a competing press conference at the precise moment that the Transportation Finance Commission was releasing its findings. Despite his ploy, the report received wide attention and support gradually built for new transportation revenues.

The key moment came during 2012 when Rich Davey, the secretary of transportation at the time, toured the state to build support for transportation revenues, presumably with Patrick’s blessing. Business, environmental, and transportation groups all joined in support, and then-Senate President Therese Murray and House Speaker Robert DeLeo each announced that transportation would be a priority for the 2013 legislative session.

However, to everyone’s surprise, at the beginning of the 2013 session Patrick undercut the broad consensus when he rejected transportation revenues and instead proposed a major reform of the tax code, including a large increase in the personal income tax and the ending of three dozen exemptions. Patrick’s proposal was dead on arrival, but it put the Legislature on the defensive and undermined support for a meaningful increase in the gas tax.

In the end, the Legislature cobbled together a revenue package that depended on the ill-fated tech tax, which was quickly repealed under a storm of criticism. The package included a paltry 3-cent increase in the 24-cent gas tax, which had lost 50 percent of its value since it was last raised in 1991.

The one important change would have tied the gas tax to inflation. Indexing would have cost the average motorist only $5 more each year, but the power of compounding would over time have generated hundreds of millions of dollars and appreciably closed the gap identified by the Transportation Finance Commission.

However, Republican legislators placed a repeal measure on the 2014 ballot that was supported by then-gubernatorial candidate Charlie Baker. The repeal was narrowly approved by the voters, which left the state effectively back at square one in terms of new revenues for transportation.

Picking up on one of the key Transportation Finance Commission recommendations, the Legislature, in a 2016 transportation bond bill, included a provision directing the Baker administration to seek federal funding for a voluntary pilot program to charge drivers based on vehicle miles traveled, or VMT. Baker vetoed the provision, contending that he needed more information on how the pilot program would work when, of course, that was the very purpose of the pilot in the first place.

The latest effort to generate transportation revenues comes from the so-called millionaires’ tax, a proposed constitutional amendment to increase the income tax on individuals earning more than $1 million by 4 percentage points. If approved by the voters in November 2018, the $1.5 to $2 billion raised by the tax would in theory go to transportation and education, though in reality there is no guarantee that would be the case.

However, a coalition of business groups is filing a legal challenge to knock the constitutional amendment off the ballot. Furthermore, retailers have filed a ballot question to cut the sales tax rate from 6.25 percent to 5 percent, which would reduce tax revenues by an estimated $1.2 billion. So if both tax measures pass, the net effect would be a small increase in tax revenues, not enough to make even a dent in long-term transportation needs. And if the millionaires’ tax is not on the ballot and the sales tax is approved, the state will be thrown into a full-blown fiscal crisis.

Which brings us back to the Baker administration’s proposed commission. Commissions can serve a useful purpose, as the Transportation Finance Commission demonstrated, but they can also be used to delay action or avoid making hard political decisions.

Certainly with all the changes engulfing transportation and society, a commission could do a lot of good work. But the conclusions on revenues would be fundamentally the same as laid out by the Transportation Finance Commission: Massachusetts needs significant new revenues in order to maintain and modernize our roads and bridges and public transit systems; and there are only two direct and meaningful revenue sources to turn to — the gas tax and open-road tolling, or VMT. The pace at which the former declines will determine how rapidly we need to expand the latter.

The reality is that with the uncertainties around the ballot questions and with 2018 being an election year, neither Baker nor the Legislature has any interest in addressing the issue of transportation revenues in 2018.

Meet the Author
The key will be 2019 when the ballot questions have been decided and either Baker will be re-elected or a Democrat will have assumed the governorship. Perhaps then we can finally face the transportation funding realities that one administration after another has steadfastly ignored.

Michael Widmer is the former president of the Massachusetts Taxpayers Foundation.