Gas Tax and Transportation Finance

GAS TAX AND TRANSPORTATION FINANCE

Transportation Finance Debate Continues

Gas tax debate takes new turn

Former Transportation Secretary James Aloisi calls advocates wishy-washy, but Stephanie Pollack says gas tax hike may not be enough

Commonwealth Magazine | August 15, 2011

ALOISI SUGGESTS LINKS BETWEEN GAS TAX INCREASE AND T FARE HIKE

By James Aloisi

Ronald Reagan used to say that political campaigns are won by those who make their case in primary colors, not soft or muted pastels. What he was really saying was that strong and compelling leadership requires a clear and candid statement of principles – what you are for and what you are against. Franklin Delano Roosevelt similarly quoted Dante’s warning that the worst places in hell are reserved for those who are mired in indecision.

The views of Reagan and Roosevelt came to mind when I saw the response of transportation advocates to US Sen. Scott Brown’s letter advocating no increase in the state’s gasoline tax. The advocates opposed Brown’s position but couldn’t bring themselves to endorse a gas tax increase. Many of the advocates are friends of mine and good people, so it pains me to write that this weak response is a good example of why we failed to get a gas tax increase in 2009, and why we will likely fail again. The transportation “advocates” cannot seem to gather the courage to take a strong and decisive position.

How can they be taken seriously when they state: “We do not endorse the gasoline tax or any particular revenue option at this time.” If they cannot endorse a gas tax increase at this time, when will the time come when they can?

The governor and lieutenant governor and I made a strong but failed effort to get a gas tax increase in 2009. The governor and lieutenant  governor have once again signaled their desire to lead on this issue. But they need strong and decisive and unequivocal support from advocates – not wishy washy evasion.

When I said that “reform without revenue is an empty slogan,” I was right – and we are facing the consequences today. My decision as transportation secretary to tell inconvenient truths may have been unpopular with some, but if we don’t have leadership that speaks frankly, we will continue down the path of inaction and disinvestment that have sadly led us to a chronic transportation funding crisis.

Political and government leaders will feel safe to speak frankly and make difficult decisions if they know that the advocates have their backs. This kind of response puts that in some doubt – and I hope it is corrected by a clear and unequivocal statement in support of a long overdue gas tax increase.

The advocates might even consider this: There should be no fare increase without a concomitant gas tax increase – lets have a level playing field, lets have some social and economic justice, and lets have strong and principled and effective leadership from those who choose to call themselves transportation advocates.

(James Aloisi was Secretary of Transportation from January through October 2009. He posted this comment in response to an Aug. 8 package of letters on the gas tax from US Sen. Scott Brown and Stephanie Pollack of Northeastern University and other environmental activists.)

IT’S UNCLEAR WHETHER RAISING GAS TAXES ALONE IS ENOUGH

By Stephanie Pollack

Many if not all of the Massachusetts citizens and taxpayers who signed the letters that I organized supported the proposed gas tax increase in 2009 and Gov. Deval Patrick, Lt. Gov. Tim Murray and former Transportation Secretary James Aloisi all deserve credit for doing the right thing by proposing a substantial increase in a specific revenue source to fund much-needed investment in Massachusetts’ transportation system.

Speaking only for myself (and not for the other signatories), however, I believe that former Secretary Aloisi misunderstands why many of us are not yet supporting a gas tax hike or any specific revenue option.  The question is not whether or not to raise gasoline taxes but how to create a stable revenue structure to support needed levels of transportation investment in the Commonwealth.  It’s not yet clear whether raising gas taxes – or, rather, whether only raising gas taxes – can accomplish that objective.

There are many good reasons to turn to the gasoline tax when more transportation revenues are needed.  Gasoline taxes are the primary “user fee” paid by motorists, the state already has a system in place for collecting and distributing gasoline taxes, and the state’s gas tax  has not been raised for two decades so the increase can be justified as simply restoring the real (inflation-adjusted) buying power of the gasoline tax.  And despite public perceptions to the contrary, gas taxes are extraordinarily low, not just compared to other countries but compared to historical levels here in the US. In the first quarter of 2010, Americans spent only 46 cents on federal, state, and local gas taxes for every $100 of income earned, the lowest rate since the government began tracking this metric in 1929.

But there are other reasons to be concerned that a gas tax hike is not a panacea for those in search of revenues to support transportation investment. One problem is political feasibility: only 3 of the 15 states that considered gasoline tax increases in 2009 actually adopted them. Another problem is revenue erosion:  many experts believe that gasoline sales and, therefore, gasoline excise tax revenues will continue to drop as drivers switch to more fuel-efficient and non-gasoline powered vehicles.

In fiscal years 2009 and 2010, Massachusetts collected between $575 and $580 million from the 21 cents/gallon of the gasoline excise tax that goes to transportation (omitting the additional 2.5 cents/gallon that supports cleanup of underground storage tanks). That figure is down from the roughly $600 million or so that the Commonwealth collected in FY2004 and 2005.

The Transportation Finance Commission estimated that every penny increase in the gas tax would produce $32 million in additional revenue, but that figure is based on 2003 gasoline consumption. That figure drops to $26 million in new revenue for each penny if 2008 consumption levels are used – and consumption has dropped further since then due to gasoline price increases and the recession. Before deciding that a gas tax is the way to go, we need to be confident that it will produce enough revenue to meet the Commonwealth’s needs.

The pros and cons of using gasoline taxes as a transportation revenue source were recently outlined in an “options paper” prepared by the Dukakis Center for Urban and Regional Policy at Northeastern University and the Conservation Law Foundation, one of a number of revenue options analyzed in connection with a Blue Ribbon Summit on Financing Public Transportation in Massachusetts held last year at Northeastern.  The gas tax options papers and all of the others can be found here.

One key conclusion from that gathering of experts from around the country was that Massachusetts should not be looking to any single revenue source to close the gap between what the system needs and what we can currently afford. The states with the most sound transportation finance systems rely on a large number of diverse local and state revenue sources.

A gas tax hike may well end up being part of the portfolio of revenue sources that Massachusetts adopts, but we should be wary of claims that just raising gas taxes will solve our transportation finance woes.

Finally, I completely agree with former Secretary Aloisi that there needs to be a link between the emerging policy conversation about the gas tax and the soon-to-be front burner proposal to increase MBTA fares.  If T fares are raised in 2012,. it will represent the fifth increase in transit fares since the Massachusetts’ gas tax was last increased on January 1, 1991.

If user fees for transit users are “on the table,” user fees for motorists should be as well (and that could include Registry fees and tolls, as well as gas taxes). The only way Massachusetts residents and businesses will ever have the transportation system that we all need and deserve is if everyone – motorists, transit riders, employers, and taxpayers – pays a fair share of the costs of building, maintaining and improving that system.

(Stephanie Pollack is the associate director of the Kitty & Michael Dukakis Center for Urban & Regional Policy at Northeastern University.)


Brown wrong on gas tax

By Stephanie Pollack
The Boston Herald | Letters to the Editor | August 9, 2011 

Sen. Scott Brown is wrong that “Massachusetts motorists already pay a higher gas tax than the national average.” Massachusetts has a 21 cents a gallon tax which was last increased more than 20 years ago (“Brown, Kerry agree: Don’t hike gas tax,” Aug. 5). When other state taxes applicable to Massachusetts and the federal gasoline tax of 18.4 cents a gallon are included, Massachusetts motorists pay 41.9 cents a gallon. A report produced by Ernst and Young for the Urban Land Institute found that the national average is 48.1 cents a gallon. Combined local, state and federal gas taxes are much higher in Rhode Island (51.4 cpg), New York (65.6 cpg) and Connecticut (63.6 cpg).

If Massachusetts is to have the transportation system that we all want and need, all users and taxpayers are going to have to make at least a modest financial contribution toward preserving, maintaining and improving that system.

— Stephanie Pollack, Associate Director
Dukakis Center for Urban and Regional Policy at Northeastern University

Link to letter at www.bostonherald.com


OPEN LETTER TO SENATOR BROWN ON THE GAS TAX
 

August 5, 2011

The Honorable Scott P. Brown
United States Senator
2400 JFK Federal Building
Boston MA 02203

Dear Senator Brown:

As concerned Massachusetts citizens and taxpayers, we write in response to your letter to Governor Patrick yesterday, which expressed “serious concern” about the possibility that the Commonwealth would raise the “gas tax as part of a combination of proposals to address transportation funding.”

Massachusetts faces a transportation funding crisis – the Commonwealth is falling behind by hundreds of millions of dollars every year in investments we should be making to maintain, preserve and upgrade our roads, bridges and transit systems. We applaud Governor Patrick and Lieutenant Governor Murray for their courage in raising the issue and urge you – and other elected officials – to remain open-minded about the best way to ensure that Massachusetts has the resources needed to invest in our transportation infrastructure, an essential engine of the state’s economy.

Your statement that “Massachusetts motorists already pay a higher gas tax than the national average” is simply incorrect.

Massachusetts currently levies a 21 cents/gallon (cpg) tax on gasoline, which was last increased on January 1, 1991. When other state taxes applicable to Massachusetts and the federal gasoline tax of 18.4 cents/gallon are included, Massachusetts motorists pay 41.9 cents/gallon in combined local, state and federal taxes. A report produced by Ernst and Young for the Urban Land Institute1 and issued in May surveyed all local and state gasoline taxes nationwide and found that the national average is 48.1 cents/gallon, about 15% above the Massachusetts rates. Gas taxes are much higher in neighboring states such as Rhode Island (51.4 cpg), New York (65.6 cpg) and Connecticut (63.6 cpg). Our gas taxes are closer to those in states like Louisiana, West Virginia and Missouri than those in states such as California and Illinois, which are our economic competitors for both talent and jobs and which have chosen to levy higher gas taxes in order invest in their transportation infrastructure and economy.

We do not endorse the gasoline tax or any particular revenue option at this time but we do believe that the time is long since past for a serious policy conversation on how Massachusetts can find the revenue needed to invest in our aging transportation infrastructure.

We are also disappointed that your letter failed to demonstrate equal concern for transit users as for motorists. The owner of a car driven 12,000 miles per year which gets 25 miles/gallon and therefore uses 480 gallons of gas per year would pay $72 annually if the gas tax were increased 15 cents/gallon. But MBTA riders are facing what may end up being steep fare hikes – an increase of 25 cents per bus or subway ride or $10 for the monthly bus and subway pass would cost each transit user more than $100 annually. If Massachusetts is to have the transportation system that we all want and need, all users and taxpayers are going to have to make at least a modest financial contribution toward preserving, maintaining and improving that system.

Indeed, one of the best ways to moderate the financial impact of new transportation revenue sources on Massachusetts taxpayers would be to ensure that the federal government remains an important partner in supporting investment in roads, bridges and transit. If you share our concern with investing in the transportation system in order to help grow Massachusetts’ economy, you can help by supporting reauthorization of the federal surface transportation program at current levels. As you undoubtedly know, the House of Representatives has proposed a plan that would slash federal transportation money to states by as much as 30 percent, possibly reducing Massachusetts’ share of highway funds by as much as $170 million.

In conclusion, we hope that you share our belief in the importance of state and federal investment in the transportation infrastructure that is so vital to the Commonwealth and will keep an open mind about all potential revenue sources that can help to address decades of underinvestment in Massachusetts’ transportation system.

Stephanie Pollack, Dukakis Center for Urban and Regional Policy, Northeastern University* AND Richard A. Dimino, A Better City*

Eugene B. Benson, Alternatives for Community and Environment*
Stephanie Wasser, Boston District Council/Urban Land Institute*
Melissa Hoffer, Conservation Law Foundation*
John M. Pourbaix, Jr., Construction Industries of Massachusetts*
Jeanne Dubois, Dorchester Bay Economic Development Corporation*
Tracy Brown, Fair Housing Center of Greater Boston*
Lawrence J. Fabian, Dorchester resident
Jane Howard, Principal, Howard/Stein-Hudson Associates*
Dominick Maiellaro, Architect
David V. Dinneen, Massachusetts Airport Management Association*
Joe Kriesberg, Massachusetts Association of Community Development Corporations*
Paul Regan, MBTA Advisory Board*
Andre Leroux, Massachusetts Smart Growth Alliance*
Marc Draisen, Metropolitan Area Planning Council*
Monica G. Tibbits, 128 Business Council*
Daniel LeBlanc, Somerville Community Corporation*
Mike Feloney, Southwest Boston Community Development Corporation*
Alan Macdonald, Chairman, Transportation Advisory Committee to MassDOT*
Douglas McGarrah, Member, Transportation Advisory Committee to MassDOT*
Chrystal Kornegay, Urban Edge*
Wendy Landman, WalkBoston*
* Affiliation is provided for identification purposes only

Download this letter as a PDF

1Infrastructure 2001: A Strategic Priority, available at here.


Join the discussion about this issue on the Conservation Law Foundation’s Blog.

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 OPEN LETTER TO GOVERNOR PATRICK
AND LT. GOVERNOR MURRAY

August 5, 2011

The Honorable Deval Patrick
The Honorable Tim Murray
Office of the Governor
Massachusetts State House, Room 280
Boston MA 02133

Dear Governor Patrick and Lieutenant Governor Murray:

As concerned Massachusetts citizens and taxpayers, we write to applaud your recent statements about the importance of finding new revenue to support the Commonwealth’s transportation system and in response to US Senator Scott Brown’s letter to Governor Patrick yesterday, which expressed ‘serious concern’ about the possibility that the Commonwealth would raise the ‘gas tax as part of a combination of proposals to address transportation funding.’

Massachusetts faces a transportation funding crisis – the Commonwealth is falling behind by hundreds of millions of dollars every year in investments we should be making to maintain, preserve and upgrade our roads, bridges and transit systems. We applaud you for your courage in raising the issue of the need for additional transportation investment and urge you – and other elected officials – to remain open-minded about the best way to ensure that Massachusetts has the resources needed to invest in our transportation infrastructure, an essential engine of the state’s economy.

We also remind you that Senator Brown’s statement that ‘Massachusetts motorists already pay a higher gas tax than the national average’ is simply incorrect.

Massachusetts currently levies a 21 cents/gallon (cpg) tax on gasoline, which was last increased on January 1, 1991. When other state taxes applicable to Massachusetts and the federal gasoline tax of 18.4 cents/gallon are included, Massachusetts motorists pay 41.9 cents/gallon in combined local, state and federal taxes. A report produced by Ernst and Young for the Urban Land Institute and issued in May1 surveyed all local and state gasoline taxes nationwide and found that the national average is 48.1 cents/gallon, about 15% above the Massachusetts rates. Gas taxes are much higher in neighboring states such as Rhode Island (51.4 cpg), New York (65.6 cpg) and Connecticut (63.6 cpg). Our gas taxes are closer to those in states like Louisiana, West Virginia and Missouri than those in states such as California and Illinois, which are our economic competitors for both talent and jobs and which have chosen to levy higher gas taxes in order invest in their transportation infrastructure and economy.

We do not endorse the gasoline tax or any particular revenue option at this time but we do believe that the time is long since past for a serious policy conversation on how Massachusetts can find the revenue needed to invest in our aging transportation infrastructure. We draw your attention to recent reports issued by Northeastern University’s Dukakis Center for Urban and Regional Policy and the Conservation Law Foundation2 as well as one issued by A Better City3

We have written to Senator Brown to correct his misinformation about the current state gas tax and to urge him to support current federal funding levels for state transportation spending; a copy of that letter is attached. We thank you for your commitment to investing in the transportation infrastructure that is so vital to the Commonwealth and hope that you will continue to keep an open mind about all potential revenue sources that can help to address decades of underinvestment in Massachusetts’ transportation system.

Stephanie Pollack, Dukakis Center for Urban and Regional Policy, Northeastern University* AND Richard A. Dimino, A Better City*

Eugene B. Benson, Alternatives for Community and Environment*
Stephanie Wasser, Boston District Council/Urban Land Institute*
Melissa Hoffer, Conservation Law Foundation*
John M. Pourbaix, Jr., Construction Industries of Massachusetts*
Jeanne Dubois, Dorchester Bay Economic Development Corporation*
Tracy Brown, Fair Housing Center of Greater Boston*
Lawrence J. Fabian, Dorchester resident
Jane Howard, Principal, Howard/Stein-Hudson Associates*
Dominick Maiellaro, Architect
David V. Dinneen, Massachusetts Airport Management Association*
Joe Kriesberg, Massachusetts Association of Community Development Corporations*
Paul Regan, MBTA Advisory Board*
Andre Leroux, Massachusetts Smart Growth Alliance*
Marc Draisen, Metropolitan Area Planning Council*
Monica G. Tibbits, 128 Business Council*
Daniel LeBlanc, Somerville Community Corporation*
Mike Feloney, Southwest Boston Community Development Corporation*
Alan Macdonald, Chairman, Transportation Advisory Committee to MassDOT*
Douglas McGarrah, Member, Transportation Advisory Committee to MassDOT*
Chrystal Kornegay, Urban Edge*
Wendy Landman, WalkBoston*

* Affiliation is provided for identification purposes only.

Download this letter as a PDF

1Infrastructure 2001: A Strategic Priority, available here.
2A Framework for Creating a Financially Stable Public Transportation System for Massachusetts, available here.
3Transit Finance in Massachusetts: A Framework for Discussion, available at http://www.abettercity.org/docs/Transit%20Finance%20White%20Paper.pdf.


Join the discussion about this issue on the Conservation Law Foundation’s Blog.

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