New Transportation Taxes Coming.

With Massachusetts looking at mid year budget cuts due to missing it’s revenue benchmarks, and with transportation scheduled for review in the coming month(s), it appears likely that there will be a strong push by the Governor and the legislative leadership for tax increases in the next fiscal cycle.

The Speaker has left the door open for a tax package by not taking the anti-tax pledge that he usually takes in advance of a session. The Governor continues to call for an “adult conversation” on the way we finance government, and the MBTA and our road and bridge system is badly under-financed. The tea leaves are not that difficult to read, with the only question being which tax vehicle will be brought forth and supported by leadership. I believe that you have to make the gas tax the “betting favorite”, since our transportation system will be one of the major reasons given for the need. Will there be an attempt made to charge people on a per mile basis? The Commonwealth, in a filing with the federal government related to the Green Line Extension, cited several possibilities for new revenues. The federal government has indicated that it will not fund its share of that Green Line extension unless the Commonwealth showed how it would fund its own share. (Total project cost of $1.3 billion, with $557 million picked up by the federal government, and $778 million by the State) Leaving aside the issue of why we are expanding transit with no way to pay for our existing maintenance the Green Line project has forced the Commonwealth to at least list some of the funding possibilities for the future. The State House News Service managed to secure a copy of a letter from the Federal Transit Administration to the State in which these funding sources, previously mentioned as possibilities by the State, were talked about. What were they? From the Metrowest Daily News.

Several “large new, uncommitted funding sources” have been identified by the state for the project, according to the response letter to Davey. They include a proposal for the state to take back the MBTA’s $1.6 billion in debt obligations; a new $.01 per-mile statewide tax on vehicle miles dedicated to the Commonwealth Transportation fund; and the allocation of casino gaming revenues to the MBTA, the letter says.
If those don’t garner support, the state would consider increasing MBTA fares or parking fees, raising the motor vehicle registration renewal fee or the motor vehicle sales tax. The state is also considering “indexing the $160 million annual contract assistance from the Commonwealth to growth in sales tax revenue.” Another plan calls for a “commercial parking tax” or indexing the fuel tax to inflation.

So the Commonwealth is on record as already examining the above listed options. The Governor says that we should just wait for his plan, but where is the fun in that? Edward Glaeser, writing in the Globe, advocated tolling on a per mile basis, with a peak hour pricing differential for Massachusetts roads as a partial funding solution.

I think it is safe to say that there will be a new tax plan based on some combination of the above options brought forward that will be a lifeline to the MBTA, and have as of yet undetermined benefit for non-mass transit transportation. The local Transit Authorities will likely see some benefit in order to try to build some political support statewide, but I believe it will still be a heavy lift politically. But if House and Senate leadership are on the same page politically then you would have to make passage of a new tax package a betting favorite. It should make for a very interesting session.

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