Under the Hood of the Massachusetts Transportation System: Why is our transportation system underfunded?

Rafael Mares | @RafaelMares2

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This post is part of a series on transportation issues affecting Massachusetts. Look for more from Rafael Mares and Christine Chilingerian in the coming weeks. To stay up to date, visit this www.clf.org/blog/tag/MA4Trans/ or follow the hashtag #MA4TRANS on Twitter.

Massachusetts relies on several sources of funding for its transportation system. In addition to user fees—such as transit fares, registry fees, and tolls—and federal dollars for capital projects, a good portion of the system is funded through state gas and sales taxes. Both the gas tax and the sales tax, however, have been providing less revenue than originally expected or planned.

For one, the gas tax has not been increased since 1991. Due to inflation, the value of the gas tax is trickling away over time. In Massachusetts, we’ve lost 41% of the 1991 gas tax’s purchasing power as costs rise and cars become increasingly fuel-efficient. It is now worth only 12.4 cents in 1991 dollars. That’s a paltry amount, especially in light of the fact that it was originally worth 21 cents. Consider that, over the same time period, other staple consumer goods have increased in price, for example, the average cost of a pound of flour has more than doubled. It is clear that the gas tax hasn’t kept pace. Consider also that state gas taxes are higher in every other New England state, with the sole exception of New Hampshire, which is currently considering a gas tax increase whose rate would put Massachusetts in last place in our region. Nationwide, Massachusetts currently ranks 29 in the gas tax; Wyoming’s pending gas tax increase could make the Commonwealth drop to number 30 by July 1st.  That should not be a point of pride.

In 2000, the last time the legislature considered a major funding bill for transportation, the sales tax had just experienced a decade of 6.5% growth per year. A portion of the sales tax was dedicated to transportation at the time with an assumption that it would increase at least 3% per year. In reality, the sales tax, however, only increased an average of 1% per year, leaving the system significantly underfunded. While the legislature responded with some smaller fixes over the last few years, none were large enough to correct the problem.

If we want to solve some of the problems I identified in an earlier post, we need to raise new revenue for transportation. It doesn’t have to come from the gas tax or the sales tax, but it has to come from somewhere.

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