Wednesday, February 18, 2009

Gov. Patrick misses the mark with toll, gas tax proposals

While I have been generally in favor of some of Governor Patrick’s proposals to raise revenues—increases in the meals tax and a repeal of sales tax exemptions on “junk food” as examples—the proposals he has rolled out over the last few months to deal with the crisis in transportation funding have missed the mark.

In December, the Massachusetts Turnpike Authority looked to double tolls. Last week, Patrick floated a plan that could increase gas taxes by as much as 29 cents per gallon. Another proposal calls for taxing drivers based on the miles that are recorded using transponder chips. All are bad ideas. While we do need to find a way to pay for our roads and bridges—and the debts incurred by our transportation agencies—an increase in gas taxes this steep would just kill folks who live outside of our urban centers.

The solution is to combine a modest increase in the gas tax with a modest increase in tolls, and to deal with mass transit funding in a different way.

(I realize that some of you think all taxes are bad ideas, but we have a responsibility to pay for our debts. Have our transportation agencies been spending out of control? Probably. Feel free to blame the governors who oversaw the increase in debt (including Romney, Swift, Cellucci and Weld), your state representatives and senators, the agencies themselves…whomever. But regardless of whose fault it is, we still need to pay for it.)

Unfortunately, it looks like the governor is casting about looking for a plan. Here are some of the details of his latest proposal from the AP, via the Boston Globe:
BOSTON—Gov. Deval Patrick is considering asking the Legislature to raise the Massachusetts gasoline tax by 27 cents per gallon as part of a comprehensive package aimed at solving lingering state transportation problems, The Associated Press learned Monday.

Such an increase would stave off a doubling of Massachusetts Turnpike tolls planned for this spring, and finance a wholesale change in the way state runs its transportation system, but leave it with the highest gasoline tax in the nation at 50.5 cents. And the plan calls for increasing that tax annually, based on the Consumer Price Index, starting Jan. 1, 2011....

The plan calls for the state's Highway Division to receive $325 million, or 12.5 cents, of the added 27 cents-per-gallon gas tax. The MBTA would receive $286 million, or 11 cents, while the regional transit authorities would receive $39 million, or 1.5 cents.
The article goes on to quote an administration official explaining that the tax hike isn’t really that much, since the average driver would only pay an additional $120 or so per year. Of course if you live away from the city and have a pair of commuters in the family, as we do, you’re looking at more like $400 per year.

That is probably the biggest problem with this or other transportation taxes in a state like Massachusetts that is so evenly divided between urban, suburban, exurban, and rural populations: there is really no fair and equitable way to levy them. People in an around the city howled when the Turnpike authority proposed doubling the tolls inside 128 and on the harbor tunnels. Why should they have to carry the burden of the Big Dig debt when folks north and south of the city use the Central Artery and don’t have to pay a thing?

So now the governor comes out with a proposal that will hike the gas tax so that the tolls in and around the city can come down and mass transit can receive additional funds. Does that mean it’s my turn to complain? I almost never use the Pike or the tunnels (unless I’m heading to the airport) and I don’t have either commuter rail or a regional transit authority serving my town. Why should my gas bill go up 15% so all of those Lexus drivers from Metrowest can have their tolls taken down and some Birkenstock-wearing elitist from Cambridge can ride the train without a fare increase?

(I’m way overstating the argument for effect; I’m not that into class warfare.)

The answer is to avoid either all-or-nothing approach and cobble together a plan that will modestly raise gas taxes—which haven’t increased in 18 years—while charging drivers for the wear and tear they put on the turnpike and in the tunnels without killing them with draconian toll increases.

Looking at the figures cited above, a one cent increase in the gas tax is worth about $26 million in revenue (i.e. 1.5 cents of the proposed increase would provide $39 million for regional transit). So a 27 cent increase would bring in approximately $702 million in revenue annually. Let’s reduce the gas tax to a reasonable level:
  • 11 cents of that ($286 million total) is earmarked for the MBTA and while they need the money, ringing up the gas bill of millions of people who have no need to use the T isn’t the way to pay for it. So now we are down to 16 cents a gallon increase.

  • If we increase tolls modestly on the turnpike and in the tunnels we could bring in another $52 million to offset the money marked for the Highway Department (see below), lowering the total increase to 14 cents.

  • Because regional transit authorities are largely dependent on the use of the highways (as opposed to the MBTA which has a significant rail component) I’m going to leave that money in. I’m also going to leave in the two cents a gallon that is not broken down in the AP story.
So I’ve cut the gas tax increase nearly in half, from 27 cents a gallon to 14. This will require an increase in tolls, but that is not necessarily a bad thing. First, the people using the road are generally the ones paying for it (although I realize that by rolling the Big Dig into the Turnpike Authority—thank you Bill Weld!—we ended up saddling turnpike users with the extra debt). Secondly, robust tolls keep the traffic somewhat manageable and encourage some drivers to use mass transit—trends that could be dramatically reversed if the roadway were free or so inexpensive that it was cheaper than the alternatives. The key is to find the tipping point and keep the tolls in that range.

Here is my toll proposal:
  1. An across the board toll increase of 30%, rounded to the nearest quarter.

  2. Tunnel tolls would increase from $3.50 to $4.50.

  3. Remove all tolls on the Mass Pike west of Exit 14/15 in Weston, with the exception of the inbound tolls at the New York border and the inbound tolls at I-84 in Sturbridge. Set the rate of these at 30% higher than current inbound trip to Weston. (New tolls would be $3.50 at the New York Border and $2.25 at Sturbridge).

  4. Remove outbound tolls on the Mass Pike at Allston and at 128. To offset the change, the eastbound tolls in Allston would be increased to $3.25 (double the current rate + 30% toll increase).

  5. Charge a flat inbound toll at Exit 14/15 of $3.25., equal again to double the current rate +30% from 128 to the Pike.
And here is how my toll proposal compares to the Governor’s:
Roadway/Toll            Current              Governor’s Proposal   The Harris Plan
Ted Williams Tunnel $3.50 (inbound) $7.00 (inbound) $4.50 (inbound)
Sumner Tunnel $3.50 (inbound) $7.00 (inbound) $4.50 (inbound)
Mass Pike/Allston $2.50 (round trip) $4.00 (round trip) $3.25 (inbound only)
Mass Pike/Weston $2.50 (round trip) $4.00 (round trip) $3.25 (inbound only)
Mass Pike/Stockbridge $5.40 (round trip) $0.00* $3.50 (inbound only)
Mass Pike/Sturbridge $3.40 (round trip) $0.00* $2.25 (inbound only)

*One version of the governor's plan includes undefined tolls for these interchanges.
A compromise plan that includes both a modest toll increase and a modest gas tax increase is the only way to equitably share the burden. Even so, this plan does not address the deficit at the MBTA and does not take into account other revenue streams and efficiencies that should be explored before increasing taxes and tolls. Perhaps a dedicated push to reduce costs could lessen this burden.

In any event, if the governor continues to offer up trial balloons at the far ends of the funding spectrum (high taxes or high tolls) instead of leading with an equitable compromise plan, the legislature should take responsibility and cobble together a plan that spreads the burden equally.

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