Dukakis Center Compares Proposed Transportation Budgets

Could the Senate plan provide common ground?

CommonWealth | GABRIELLE GURLEY | April 11, 2013

THE MASSACHUSETTS SENATE is preparing to vote on a transportation finance plan that is bigger than the $500 million House version Gov. Deval Patrick threatened to veto but still well below the $1 billion package the governor wanted. What’s unclear is whether the Senate bill will be the common ground where all sides can come together.

In a speech Thursday to the Greater Boston Chamber of Commerce, Senate President Therese Murray called the Senate plan a “transportation financing framework” that doesn’t mandate specific construction projects or set funding priorities. “It is not a blank check for the Department of Transportation or MBTA,” she said in a speech to the Greater Boston Chamber of Commerce. “Instead, it holds the two agencies accountable for delivering savings or revenue and working toward contributing the same share of their budget that they are doing now.”

Patrick is far more receptive to the Senate approach than he was to the House bill. “It’s definitely moving in the right direction. It’s very hopeful. I’ve heard a couple numbers that are a little closer to the billion dollars we proposed originally in transportation, and that is great, because it means we’ll be able to do some things. We’re trying to check to see whether the numbers, you know, whether the dollars are real,” Patrick told reporters in a State House hallway Thursday, according to a transcript of the interview provided to the State House News Service by the governor’s office.

The plan that the House approved Monday allocates a 3-cent gas tax hike, motor vehicle sales tax revenues, gaming licensing funds, and monies from the general fund to transportation.  Revenues from new cigarette and business taxes outlined in the House plan would go into the general fund to replace dollars going to the transportation side of the balance sheet.

Like the House plan, the Senate proposal sends an estimated $265 million in new revenues to transportation next year. But faced with the unusual spectacle of open dissension from rank-and-file members over the smaller House plan, Senate leaders cobbled together a set of changes to the bill.

The Senate Ways and Means Committee built on the House plan by redirecting a 2.5-cent gas tax surcharge for an underground storage tank cleanup fund to transportation programs. That move would generate roughly $80 million annually. The Senate plan would also mandate that the Massachusetts Department of Transportation lease right-of-way access to telecom and utility companies, a strategy that would bring in $40 million over three years, beginning in 2016.

Those revenue sources would boost transportation funding to $805 million by fiscal year 2018 once all revenue and non-tax adjustments are fully phased in. “In the Senate’s plan, we remain consistent with the House on new taxes and we will not squeeze the middle class,” said Senate Ways and Means Committee Chairman Stephen Brewer in a statement provided toCommonWealth.

The Senate plan moves the Legislature closer to an $800 million target proposed by the Massachusetts Taxpayers Foundation in March.  The foundation had staked out a middle ground between state lawmakers and the governor that would allow transportation agencies to get a handle on the chronic underinvestment while offering some leeway for modest expansion projects.

“On balance, I think this is a good bill,” Michael Widmer, the president of the taxpayers group, told CommonWealth.

Widmer was unconcerned about slippage in motor vehicle sales tax revenues over the long-term. “The sales tax has not grown in the last decade, the way it had in the previous decade, which is part of the issue with the [MBTA],” he said. “But it’s been very stable.”

He added that the “great flaw” in Gov. Patrick’s proposal was his reliance on the income tax to generate $1 billion. Widmer said that over time budget pressures would erode the amount of income tax revenues that could be devoted to transportation. However, the foundation opposes the rights-of-way fee proposal, arguing that the requirement would open up utility and telecom companies to tens of millions in new taxes.

The Legislature’s and the governor’s plans both allocate roughly similar amounts in new revenues to transportation in fiscal 2014, according to an analysis by Northeastern University’s Dukakis Center for Urban and Regional Policy.  Patrick’s proposal delivers significantly more money, an average of about $800 million, over four years; the  Senate  package averages about $600 million over the same period.

Both plans address operations and maintenance issues, such as ending the practice of paying MassDOT employees from the capital budget (the governor’s plan would do so sooner) and establishing forward funding for the regional transit authorities.

Lawmakers also put the onus on MassDOT and the MBTA to come up with ways to generate their own dollars to help close their budget gaps. Beginning in fiscal 2015, the MBTA would be required to come up with $35 million to cover their own costs. By 2018, the authority would have to come up with $136 million. MassDOT also would have to fund tens of millions of its own costs in a four-year period.

Beginning in 2015, the governor’s plan relies on 5 percent increases in tolls and MBTA fares every five years and Registry of Motor Vehicle fees would go up 10 percent, according to the Dukakis Center analysis. The Senate bill would require $275 million more in toll, fee, and fare increases, but the MBTA and MassDOT could avoid those increases by cutting their costs, the center found.

Administration and legislative officials have clashed sharply over whether the Legislature’s transportation plans, which focus on plugging operating deficits at MassDOT and the MBTA, leave enough funds to address the state’s significant backlog of unfunded capital projects. In a widely circulated memo last week, MassDOT Secretary Richard Davey panned “an alarming lack of support for fixing our roads, bridges, and trains” in the proposal that Murray and DeLeo unveiled jointly, calling the plan “another short-term band-aid.”

Legislative leaders have countered that their plan leaves enough room to fund basic maintenance, as well as more expensive capital projects like replacing aging Red Line and Orange Line cars, and extending the Green Line to Somerville and Medford. They say this because the Legislature’s plan would fully fund the MBTA’s existing five-year capital plan.

However, the T has shown no recent ability to afford its own capital plans. Budget documents show that in recent years, large and small capital projects have been kicked down the road as operating deficits cannibalized maintenance spending. In fiscal 2012, for instance, the MBTA’s capital plan called for spending $35 million overhauling the Green Line’s Number 7 cars; the agency only spent $2 million on that job. Fiscal 2013 was supposed to mark the beginning of the T’s $739 million replacement of its aging Red Line and Orange Line cars, but the agency spent just $3.4 million of the $34.9 million it had budgeted for the job, and kicked future costs down the road. In that same year, it didn’t spend a dime of the $17 million allocated to an upgrade of electrical systems along the Orange Line.

Senators are scheduled to begin debate on the transportation finance in special Saturday session.

Paul McMorrow contributed to this report

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