Gas Tax

In response to my post  about the gas tax, I received about 50 helpful communications — mostly e-mail, a few calls and several comments online at the Herald site.  Additionally, the forum at the Chenery was well-attended and participation there was also helpful.  Mike Widmer and Rep. Alice Peisch added a lot of helpful information.  In the same week, I also benefited from a small group briefing with the Turnpike Authority Director and the Secretary of Transportation.

 The e-mail communications were overwhelmingly supportive of the gas tax — simple, fairer than high tolls, environmentally sound, definitely needed, a broad-based mechanism to fund a broadly-used commonwealth asset. Several commenters, including most of those online at the Herald site, emphasized the need for savings, in addition or as an alternative.

 Here are the takeaways for me. 

1. Fixing the pike’s deficit should occur as part of a larger transportation package that also fixes the MBTA’s deficit and addresses the total transportation funding gap.
2. The transportation funding gap (annually roughly $1 billion) derives from years of deferral of costs — through borrowing, through ignoring maintenance, and through financial gimmicks (swaptions).  People have not made the necessary, but politically-difficult, revenue raising decisions.
3. Cost-savings are essential to pursue, but aggressive savings will only close roughly 10% of the transportation funding gap.  The biggest opportunity for cost-savings identified by the Transportation Finance Commission was in the benefit structure of the MBTA.   I intend to file legislation that will require greater disclosure of records (including pension records) of quasi-public authorities.
4. A gas tax increase is a necessary component of a package to address the transportation funding gap and should be dedicated strictly to transportation needs, including mass transit.
5. High toll increases on the existing roads are unfair — the gas tax is much fairer.
6. Institution of tolls on the big dig segments of 93 and/or on the state’s borders would also be fair.  It would be most attractive if it could be automated open road tolling only.  There are privacy concerns about a broad expansion of open road tolling, although such an expansion is the likely long run future and allows better management of congestion.  One concern is that some tolling configurations could push traffic onto smaller local roads.
7. Given where neighboring states have set their gas taxes, it would be hard to raise the gas tax much more than 35 cents (i.e. to much above 55 cents per gallon).  35 cents on the gas tax would go a long way (at $30 million per cent) — covering roughly the known deficit, but would need to be joined with other measures (93 tolls) to allow the elimination of tolls on the western pike and to cover system improvement needs.
8. The turnpike authority itself is unpopular.   There is a known history of patronage hiring and relatively generous compensation packages — toll-takers with overtime (which is being trimmed) have often made $80 to $90K on a base of $53 to 63K.  Severance provisions are generous.   The agency should probably be shrunk (by giving the segment west of 128 to Mass HIghway).  Full elimination of the authority may or may not make sense.  With the institution of fast lanes and current tougher management, employment is down roughly 15% to under 1000.  The authority has fired the hangover of consultants associated with the big dig, saving $20 million per year. 
9. For perspective, the turnpike authority is comprised of two legally separate parts.  The larger part is only about 25% bigger as an operation than the town of Belmont – the operating expenses for the Metropolitan Highway System (the harbor tunnels, the O’Neill tunnel and the turnpike extension from 128) are about $100 million.  Like the town, its budget is mostly personnel.  It now has under 1000 employees – mostly toll takers, maintenance workers and assigned state police officers.  Unlike the Town of Belmont, the MHS has a capital budget and a debt load each roughly equal to its operating budget — for a total spending need of $300 million per year.  Current revenues are only $200 million per year (mostly from tolls), so the gap is $100 million.  Legally separate, the segment of the pike west of 128 has a gap of about $50 million per year on revenues of $130 million per year.  The Western Pike is basically a road, while the MHS has a lot of sophisticated ventilation and other structures to manage.
10. The gas tax could be structured to create a floor on prices, supporting a permanent transition to more environmentally sound forms of transportation.  It also could be structured to up-charge premium fuels used in more expensive, gas-guzzling automobiles.
11. Revenue-neutral tax relief for low/middle income families is an important issue which I will continue to press, but separately from the gas tax issue.  The gas tax increases are small relative to the relief potentially appropriate for some low/middle income tax payers.  

Useful Links:

• Massachusetts Turnpike Authority Information Site 
• MBTA Information Site 
• Transportation Finance Commission Report 
• News coverage of Fitch rating of the Turnpike Authority 
• Senator Baddour’s Blog (Senate Chair of the Transportation Committee)