MA Transportation Funding Framework: More (or really less) to the supposedly budget-minded proposal than meets the eye

Rafael Mares | @RafaelMares2

On Tuesday, the Massachusetts House and Senate Committees on Ways and Means jointly announced a transportation finance framework. Upon close review, there is more (or really less) to the supposedly budget-minded proposal than meets the eye.

In short, the legislature’s answer to MassDOT’s ten-year transportation plan would neither be big enough (it does not even attempt to close the one billion dollar revenue gap), nor long enough (only five years) to meet the Commonwealth’s fundamental transportation needs. The framework would not cover the maintenance of our transportation system, nor keep it in a state of good repair, let alone allow for any investment in modernization. This would leave the entire transportation system vulnerable, staunching economic opportunity by locking in another five years of chronic underfunding for transportation. And rather than providing a real, long-term solution to the real problems associated with chronic underfunding, it guarantees we’ll be having this conversation all over again as soon as next year.

Here is what you should know about the framework:

1)    How the revenue will be raised:

  • The $519 million per year price tag that the legislature is putting on its proposal includes revenue to be raised from the following sources: a $.03 gas tax increase ($95M), indexing the gas tax to inflation starting in 2015 ($15M), a tax on cigarettes, cigars and tobacco products ($165 M), a tax on computer services ($161M), elimination of utility tax classifications ($45M), and a change in the source of sales for multistate corporations ($35M).
  • However, not all of the new revenue is dedicated to transportation. Rather, a total of $260 million per year on average is not allocated to transportation or any other purpose as of now. Apparently no agreement has been reached on how to spend this portion of the new revenue.
  • What the legislature did not advertise is that the framework also directs MassDOT and the MBTA to raise an additional average of $214 per year from unspecified revenue sources the agencies have under their own control. Such revenue sources include primarily fares, tolls, and Registry of Motor Vehicles fees. While modest, planned and regularly scheduled fare, toll, and RMV fee increases are advisable, the amount MassDOT and MBTA would be expected to raise from these sources under the legislature’s proposed framework is nearly double the amount MassDOT proposed to raise from this category in its plan. As a result, it is fair to expect that fares, tolls, and RMV fees would go up as soon as July 1, 2014, and again in the fiscal years 2016 and 2018. So much for the committees’ spin that their stripped-down framework is mindful of people’s pocketbooks.
  • The framework also includes other transportation revenue sources from gambling revenues, contributions from the Convention Center, and contributions from MassPort ($40M).

2)    How the revenue will be spent:

  • While the framework does not list all the particulars on how the money could be spent, it promises to stop borrowing to pay for operating expenses over a three-year period and to provide full funding for snow and ice removal (phased in over a two-year period).
  • The MBTA’s operating deficit would be close to covered for five years, but not quite.
  • The state’s fifteen regional transit authorities (RTAs) would be forward funded in 2014, but would receive a significantly reduced investment from what MassDOT originally proposed. Instead of an additional $100 million/year, the fifteen RTAs would have to make do with an additional $18 million/year.

3)    What is not covered:

  • The framework does not identify any money to borrow for new capital projects. Hence the Commonwealth would not have the ability to address its overwhelming maintenance backlog. Therefore, there would not be enough funding to rehabilitate our structurally deficient bridges (there are over 400 of them in Massachusetts), replace the Red Line, Orange Line, and Green Line cars that are beyond their useful lives, repair the I-91 viaduct, and swap out old RTA buses.
  • The RTAs would continue to be underfunded. As a result, a combination of restoration of service previously cut, increased frequency of service, and longer evening and weekend service will not be possible.
  • No new investment in our state’s transportation system would occur. Think no South Station expansion, no South Coast Rail, no new bike and pedestrian paths, or other improvements. It is noteworthy that the Green Line Extension to Somerville and Medford is legally required, but the New Starts application for federal money, which requires the MBTA’s financial house to be in order, would be put at risk and could cost the state hundreds of millions of dollars in federal assistance. Additional delays could also be expected.
  • Although a separate bond bill authorizes an additional $100 million for next year to be spent on local road maintenance, the insufficient amount of money in the framework for debt service and other more pressing needs would mean that this increase could not be released.

While the proposed framework purports to be sustainable, adequate, and simple, on closer look, it unfortunately achieves none of these laudable goals. No matter which way you slice the numbers, there isn’t enough there to achieve the most basic improvements needed to ensure the safety and reliability of our public transit systems, roads and bridges.

Raising taxes at this time is clearly necessary to fund our transportation system, but if we ask people to pay more, we need to make sure that they have something to show for it. This framework fails that simple test.

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