Dukakis Center Study Provides Transportation Funding Summary

Third time a charm for transportation plan?

Senate measure seeks compromise between House and Patrick

CommonWealth | GABRIELLE GURLEY | April 11, 2013

AFTER DAYS OF POSTURING from both sides, Gov. Deval Patrick and legislative leaders may finally huddle mid-field to agree on a smaller transportation finance plan that whittles down operating gaps at MassDOT and the MBTA and provides some funding for capital investments, but holds the line on sizable tax increases.

In a speech this morning to the Greater Boston Chamber of Commerce, Murray called the Senate plan a “transportation financing framework.”

“It is not a capital finance bill that identifies specific projects, and it is not an agreement on any other funding priorities. It is not a blank check for the Department of Transportation or MBTA. 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.” Murray said according to prepared remarks.

Patrick got style points from transportation advocates for unveiling “The Way Forward,” an audacious 10-year, $1 billion transportation vision, along with a companion $900 million education package. But dollars attached to his vision thing floored Murray and House Speaker Robert DeLeo and prompted them team up to offer up a spartan $500 million counter-proposal that sacrificed both long-term and education for filling potholes and getting trains and buses to run on time.

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.

The Senate plan also 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 to transportation a 2.5 cent gas surcharge for an underground storage tank cleanup fund that currently goes into the general fund. That move would generate roughly $80 million annually. The Senate plan would also mandate that MassDOT 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 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 Patrick’s 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.

Both the Legislature’s and the governor’s plans 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; Legislature’s package averages about $600 million over the same period.

Each plan addresses 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 put $35 million toward 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 revisions give the MBTA and MassDOT more leeway to stem these hikes by trimming costs in-house, but could also produce nearly $275 million in new increases, the center found.

The Senate has nudged the Legislature closer to the compromise that Patrick sought. “I do think there is a thing as too small,” the governor has said. With this latest change, Senate leaders appear to agree.  Senators are slated to begin debate on the transportation finance in special Saturday session.

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