C. Establish stable and sufficient financing for all modes
Metro Boston and Massachusetts need to develop significant additional resources to support the operation, maintenance, and expansion of the region’s transportation system. Increased and diversified revenue streams are necessary to address the $15 to $19 billion shortfall that the Commonwealth faces over the coming 20 years, just to maintain the existing transportation system. Support is also needed for the expansions, enhancements, and transportation alternatives necessary to support the region’s economy, environment, and quality of life. There is no single solution that will close the state’s funding gap and provide the resources to create new infrastructure. The region and the state need to develop diversified revenue sources that include increased fuel taxes, strategic application of user fees and tolls, transit fares, and local revenue generation.
Institutional reform is also critical, since each dollar saved through reform increases the amount available for maintenance, operation, and expansion. Of paramount importance is stabilization of MBTA finances to reduce that agency’s crushing debt burden and control the amount of money spent on health care and pensions. Reforms throughout the state’s transportation agencies can also help to control costs. For example, MassHighway must end the practice of paying for personnel and operating expenses through bonded funds, where they are paid off at a higher cost over a period of 20 years or more. Comprehensive asset management and efficient project delivery are critical for making the most of limited transportation funds, and are described in other sections of this Strategy.
Other innovative financial mechanisms can support a more robust transportation system. Local or regional revenue generation through taxes or fees would provide municipalities with additional flexibility and control over their own infrastructure needs, would promote greater coordination between local land use decisions and transportation, and would bolster the overall transportation system.
17) Increase statewide transportation revenue generation
Massachusetts needs an immediate source of new revenue that can be used to reduce the maintenance backlog and expand infrastructure to support sustainable land use patterns. New revenue streams should be diversified, dedicated to transportation so they are stable, reasonably related to transportation uses, and adaptive to increases in materials and labor costs.
The gas tax in Massachusetts (currently 21 cents per gallon, not including a 2.5 cent Underground Storage Tank tax) has not been raised since 1991, during which time it has lost much of its purchasing power.
17.a The Legislature and Governor should increase the gas tax
17.b Unused portion of funds from the Underground Storage Tank program, if any, should be rededicated to transportation.
18) Stabilize and strengthen finances of the MBTA and regional Transit authorities
Due in part to debt assumed from Big Dig mitigation projects, 30% of the MBTA operating budget is dedicated to debt relief. The MBTA is so overwhelmed with debt and the cost of the employee pension program that it cannot serve the basic needs of its ridership or properly maintain its infrastructure, let allow finance needed expansion projects.
The Blue Ribbon Commission that designed Forward Funding did not foresee the drop in sales tax revenue when they dedicated a portion of that revenue to manage the MBTA’s operating expenses. The decrease in the sales tax has made it impossible for the MBTA to reduce its debt burden, and operating and maintenance has suffered. Action must be taken to address the overwhelming burden of debt service and the ballooning cost of employee benefits to ensure the continued financial viability of the MBTA and its daily operations.
The states RTA’s also find themselves in a position of flat revenue streams and increased costs. Every year they are making the hard choices to cut back on service. RTA’s provide the primary transit option for many communities in the region and are an integral element of the suburban system that collects riders using the commuter rail. Their continued stability, including secure funding streams, are vital to the maintenance and expansion regional transit network.
18.a The Legislature should take action for the Commonwealth to assume a portion of the MBTA’s debt
18.b MBTA should reduce the rate of growth of fringe benefits costs by reforming health care and retirement policies
18.c MAPC should assist the MBTA and the RTAs in exploring the possibility of joining the Group Insurance Commission (GIC)
18.d The Legislature should “current fund” RTAs
19) Implement tolling strategies to reduce congestion and raise revenue
Massachusetts and Metro Boston should make greater use of tolls and other pricing mechanisms to reduce congestion and generate revenue to support transportation system maintenance and alternative modes. While the gas tax is important and should be increased, there are many reasons to move to a more diversified revenue system with a larger share of tolls and user fees:
- As residents move to more fuel-efficient vehicles, fuel tax revenues will decline over time;
- If applied equitably, road pricing mechanisms such as tolls charge users more precisely for what they use; an
- Strategic pricing mechanisms can encourage more efficient use of infrastructure capacity and can generate revenue to fund alternatives.
However, the existing application of tolls in Metro Boston is neither equitable nor strategic. Currently, only motorists traveling into or out of the Inner Core on I-90 and Route 1 pay tolls, while motorists entering or leaving via other routes pay no tolls. In 1998, the Turnpike Authority established a schedule for regular toll increases to meet operating expenses and bond commitments. Proposed increases in excess of the scheduled increase, combined with elimination of tolls elsewhere on the Turnpike, would shift an inequitable burden onto certain motorists, while failing to raise sufficient revenue or encourage more efficient use of infrastructure capacity.
In pursuit of needed revenue as well as greater equity, the Commonwealth should establish open-road tolling on all limited access highways, automatically charging drivers based on the number of miles they travel on the highway system. Given the current state of technology and anticipated improvements, this goal should be achievable within five years.
For both existing and new tolls, the state should evaluate the application of congestion pricing structures. Congestion pricing strategies set the cost of the tolls based on time of day and congestion levels, with higher prices for congested peak periods, and lower prices for off-peak periods. Congestion pricing can be revenue neutral, or the revenue generated could support complementary transit systems that help to reduce congestion and the negative environmental impacts of single occupancy vehicle travel.
19.a Massport and Turnpike Authority should regularly review tolls and make reasonable increases as scheduled and necessary to meet operating expenses and bond commitments
19.b The Massachusetts Turnpike Authority and Massport should implement congestion pricing on their highway, tunnel, and bridge assets
19.c EOTPW should develop a plan to implement mileage-based fees and open road tolling within the next five years.
20) Eliminate agency-level inefficiencies and redundancy
Transportation agencies should fund operating personnel and expenses through operating rather than capital budgets.
In FY 2004, Massachusetts spent 44 percent of its highway funds on debt service, by far the highest in the nation. According to the Transportation Finance Commission, the Commonwealth spent $162 million in bonded capital funds for Mass Highway operations in 2006, including salaries for 1,000 people. Using so much debt means that more and more of the revenue stream in the future will be devoted to paying off the debt, rather than paying for new maintenance or construction needs.
Ending this practice and keeping personnel in the operating budget would save the Commonwealth $825 million over the first 20 years, and additional hundreds of millions in the long term.
20.a The EOTPW should phase out the practice of using capital funds for operating expenses as soon as possible
21) Increase local and regional revenue generation for transportation
Local governments and residents should be provided the tools to generate funds to improve transportation and transit opportunities. See also Implementation Strategy #2, “Strengthen Municipal Finance.”
21.a MAPC should work with stakeholders to develop legislation that would allow local and regional tax referenda
21.b Municipalities should make use of District Improvement Financing to help fund infrastructure improvements
21.c Municipalities should make use of impact fees
22) Maintain fares as a significant source of revenue for the MBTA and regional transit authorities
Transit provision is a vital function of the region’s economic and social health. Some populations are dependent on transit as their primary means to access to jobs, healthcare, and services. The MBTA and regional transit authorities should not be expected to fund themselves independently. Subsidy from the Commonwealth is reasonable and necessary, but it is also important that transit passengers pay a meaningful share of the service operating cost.
22.a The MBTA and the RTAs should institute regular and predictable increases in fares to keep pace with inflation
22.b The MBTA and the RTAs should consider instituting off-peak pricing for transit to encourage increased ridership and more efficient use of transit infrastructure.
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