In the past year, the legislature had finally taken some responsibility for transportation funding -- after twenty years of denial. They raised the gasoline excise tax by 3 cents, not enough to make up for the value lost through inflation, but something. And more importantly, they arranged an "indexing mechanism" that would ensure that we would not suffer through another twenty year period of fiscal farce. The "indexing mechanism" would keep the value of the excise tax steady over the years, ensuring that the regular effect of inflation would not become a source of de facto tax cuts.
Question 1 repealed the "indexing mechanism", thereby spurning the fiscally responsible step taken by the state legislature. Therefore, the gasoline tax will, in effect, receive an automatic tax cut every year going forward, again. Voters here have rejected irresponsible tax cuts in the past, so it's a bit of a head-scratcher, but hopefully not a trend-setter. In any case, if you are ever in conversation with a voter who claims to be "fiscally responsible" ask them if they voted for Question 1: if so, you can safely call them a hypocrite.
So what happens now? Well, the legislature is going to have to scramble a bit to find funding for some things. There are still plenty of failing bridges, potholes aren't going away, the T has 45-year-old subway cars that can't go without replacement, and buses have to be replaced on a regular schedule. It appears that the latter two are not in danger, and neither is the important Green Line Extension project through Somerville. But funding for everything else is questionable. That includes part of the cost of the Allston Interchange project that will replace the failing riverfront viaduct of the Mass Pike and reshape the area, fixing many of the problems that the existing highway afflicts on the neighborhood. There's the River Street and Western Ave bridges, which are crumbling. And several hundred other overpass and bridge repair or replacement projects that I could scarcely begin to enumerate. Roads ain't free, despite the feverishly held beliefs of the mostly suburban, mostly automobile-dependent voters who forced Question 1 on us.
Meanwhile, MBTA bus and train fares are virtually guaranteed to go up by about 5% every two years. Somehow, once again, public transit riders have been left holding the short straw, while drivers continue to reap steadily increasing subsidies in the form of inflation-driven gas tax cuts. Funny how that always seems to happen.
Paul McMorrow has suggested that we should adopt the idea of regionally-based taxes to pay for transportation projects. Ballot questions enacting regional sales or payroll taxes are popular in many western states. But it's not constitutional in Massachusetts, so this would require some fancy footwork or a change. And there's a bigger problem: we will end up with a system where transit projects are funded via additional regional taxes, while highway builders get to keep helping themselves from the general fund. Not a good dynamic. If Boston is forced to tax itself just to keep the MBTA running, then why should Boston subsidize highways in central and western Massachusetts? Either all transportation projects should be considered regionally, or none at all -- because we're all in this together.
For a few ideas to consider, check out the report last month from the Urban Institute about how the various states are handling the gas tax. Some have indexed the price in various ways to the going wholesale price of gasoline, which is one way to simulate a percentage-based tax like sales taxes. Oregon and Virginia are piloting a major reform that replaces gas taxes with vehicle-miles-traveled taxes. This is thought to better represent the cost to society of operating a vehicle on the public ways. The Federal government has also floated the idea of allowing tolling to be used on interstate highways (where it was not grandfathered). Tolling would be a fair way to obtain funding for highways, the counterpart of paying a fare to ride a train or bus. Used properly, it would also have the benefit of actually reducing congestion: with automated electronic tolling it's hassle-free, and part of the proceeds can be used to fund really good public transportation for people who don't or can't drive.
Here's a reform package I've been thinking about:
- Apply sales tax to gasoline. Right now, gas is exempt from the sales tax, which is a hugely regressive subsidy to drivers at the expense of lower-income families. If we were to instead apply the sales tax to gasoline, then the overall rate could be lowered, so that other goods and products that everyone buys would not be subsidizing gasoline (at least, not as much). This could be designed in such a way that any increase in cost for gasoline would be made up for by decreased cost in everything else.
- Change the purpose of the gasoline excise tax: instead of funding transportation, an excise tax on gasoline should fund clean-up of the pollution caused by gasoline usage, and also public health efforts to mitigate the damage to human health caused by gasoline usage. The rate of the gas tax would be set at the level needed to achieve these public health goals, which include the Healthy Transportation Directive and the Mode Shift Goal.
- Other excise taxes should go into the general fund.
- Transportation should be funded out of the general fund based on the merits and cost-effectiveness of each project in question. Such projects should have to compete with other worthy projects in other departments, such as schools, housing assistance, health care, and yes, even tax cuts.
- Ridiculously bad boondoggles such as South Coast Rail, which is expected to cost the state over $500,000 per projected rider, should be discarded until somebody finds a way to get the costs under control.
- All congested highways should be outfitted with variable, automated, electronic tolling. The tolls would vary from free (when there is little demand) up to whatever amount is required to clear out congestion at that time of day. The precise formula would have to be carefully designed in order to avoid surprising people. The revenue from the tolls can be used in several ways, and there is a reasonable argument that some of it should be used to ease the regressive effect of the tolls. Part can go to boosting public transportation capacity and frequency along the corridor, making it a real, serious option for many more people. This has the nice side effect of bringing the benefit of the transportation infrastructure to the many people who cannot drive, for whatever reason. Another part can go towards income tax relief for the low-income users of the highway who still need to drive. The rest should go into the general fund.
- End all parking subsidies. That includes the minimum parking quotas found poisoning most zoning codes. The authority to impose such quotas, which are an intrusion on private property rights, comes from enabling legislation in the General laws, so it should be possible to retract that authority at the state level. Minimum parking quotas waste land, destroy healthy environments, raise housing prices, and, in general, these kinds of subsidies help cause traffic congestion. It's hard to imagine a more self-destructive set of regulations.
Does this package have a chance of ever passing? I doubt it. There's too much powerful, vested interest in the status quo. As we saw with Question 1, people don't like it when you end their subsidies, even if they are really harmful, self-destructive subsidies that cost the rest of us dearly.
I'd be interested to hear other people's ideas about transportation funding reform.