House Eyes Transit Users To Raise Revenue
While Gov. Deval Patrick has proposed bankrolling his $1-billion transportation plan with an income tax hike that is central to his $34.8-billion budget plan, the House might take a different approach and seek to raise funds from users of the transportation system.
“The financing method for transportation works best when there’s a connection or a nexus to the users or those who benefit from the transportation system,” said William Straus, House chairman of the Joint Committee on Transportation.
The Mattapoisett Democrat said House and Senate leadership might decide to carve the transportation funding out of Patrick’s budget and consider a new transportation financing bill, perhaps in tandem with the state budget.
Straus said funding transportation with user fees would be a better guarantee that the funding stream would remain in place than an income tax – which, combined with the closure of tax incentives, provides the bulk of the new revenue Patrick sees as critical to education and transportation investments.
“You can’t do it one annual budget at a time,” Straus said. “My preference is that we finance it in a way that essentially locks the money up for transportation.”
While Patrick’s budget calls for regular gas tax increases by tying the tax to inflation, the governor in the latest Beacon Hill debate over transportation funding resisted using an increase in the tax as the engine for funding transportation improvements.
"It would take a tripling of the gas tax to fund this plan. It would put us way out of sync with our competitors in the region and nationally, actually, so that is not at the top of my list," Patrick said when unveiling “The Way Forward,” a report on the $1 billion annual funding needs for transportation. The memory of his own failed attempt to raise the gas tax in 2009 is still fresh in the governor’s mind, as well.
“We've tried the gas tax before and I had my head handed to me,” Patrick said last November. In 2009, the Legislature opted instead to increase the sales tax from 5 percent to 6.25 percent in order to shore up recession-thinned state revenues. Patrick’s budget calls for a sales tax rollback to 4.5 percent.
The gas tax was last increased in 1991, and still stands at 21 cents per gallon, significantly less than gas taxes in all of the New England states and New York, except in New Hampshire, where it’s 18 cents. Massachusetts also has a 2.5-cents-per-gallon underground storage tank fee.
To raise the $1 billion deemed necessary to improve and expand transportation in the state, the gas tax would have to rise to 51 cents per gallon, according to “The Way Forward,” which would make it the highest gas tax in the region, just barely edging out New York’s 50.6-cent-per-gallon rate.
By drawing on income taxes, new corporate taxes and a closure of tax breaks, Patrick’s budget would raise about $1.9 billion in revenue, which the administration plans to devote in part to education as well as transportation.
Legislators have approached Patrick’s plan with caution and described mostly negative reactions from constituents, though House Speaker Robert DeLeo and Senate President Therese Murray have said they remain open to the idea.
Straus is more bullish than Patrick on the benefits of the gas tax as a means to raise transportation revenue. The motor fuel tax is paid by those who use the state’s roads and highways, and consumers who opt for more environmentally friendly vehicles pay less, Straus said. He said the gas tax would have to remain “a central part of our transportation system.”
A gas tax, and other taxes and fees paid by users of transportation – such as MBTA fares and Registry of Motor Vehicle fees – are insulated from the desires of future legislators and governors to use those revenues for non-transportation areas of government, in a way that the income tax is not, Straus said.
“The Way Forward” lays out transportation funding needs for the next 10 years. Straus said income tax revenue would be more easily shifted away from transportation needs, which could spell uncertainty for transportation funding over the decade.
A spokesman for DeLeo said there has not yet been a decision about whether to split the transportation financing from the overall budget.
Transportation Secretary Richard Davey has said he’s aiming to submit, by Friday, a $3-billion transportation bond bill that would secure a 10-year funding stream for local road projects.
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