AS SHE ANNOUNCED a plan to invest $8 billion over 10 years to improve transportation across the state, Gov. Maura Healey took a moment to highlight one thing left off the table.
“This does not require new taxes,” Healey said on Tuesday from behind a podium in Worcester’s Union Station. “No new taxes! What it required was smart fiscal management, and what it’s meant is a bigger investment over a longer period of time that we can make in transportation infrastructure.”
Members of the governor’s transportation funding task force spent the last year assessing the intense cash flow needs for transit systems across the state and prodding delicately at the idea that existing revenue streams might not be enough to completely save those systems.
Ultimately, they concluded that relying largely on the bigger-than-anticipated receipts from the Fair Share Amendment, or millionaires tax, could retire the MBTA’s legacy debt, fully fund operations for the next two years, and set the T on a functional capital path for the next decade.
“It’s a big deal, and if it works, it’ll be transformational, at least in the very short term,” said Brian Kane, executive director of the MBTA Advisory Board and a member of the task force, on The Horse Race podcast after the task force’s report dropped on Tuesday.
Healey promised that the report’s recommendations and her transit funding plan are no longer “kicking the can down the road” by continuing a habit of underfunding the state’s critical transit investment needs.
But task force members, generally pleased with the report and Healey’s plan as a first step, acknowledge there is still a lot of track ahead and new revenue options will need to be dealt with in the future. The task force report also recommends future reconsideration of fees.
Though the Healey administration has been straightforwardly pledging no new taxes throughout the year as the task force met, Kane said the panel was not explicitly told to take the options off the table.
“No, it wasn’t a directive,” he said. “There was never a memo saying, ‘thou shall not.’ We looked at all kinds of broad-based revenue raising options.”
But he said the message that new taxes wasn’t the way to go came through in other ways.
The administration was “very direct in the sense that we need to maintain Massachusetts as a competitive place for folks to want to come and live,” Kane said. “And there is a concern, I think, amongst some economists and some folks in Administration and Finance and some folks in Economic Development that we do run the risk of sort of taxing ourselves out of competitiveness. Now, I don’t know if that’s true. I don’t know if that’s untrue, but that’s what experts were telling us.”
So while taxes seemed to be off the table, the task force still needed to find ways to steer more money into transportation systems as it became clear that the federal spigot would likely be turned off.
“I do think, though, that everyone in the room is a political animal, and is cognizant of where we are right now in the Commonwealth and in the United States,” Kane said. “I mean, the presidential election took place during this whole process as well. And that changed the game.”
As the task force began meeting, Kane said, they were being briefed on billions of dollars coming in from the federal government, especially through the bipartisan infrastructure bill. “I think we’re also aware that those days are probably over from Massachusetts after inauguration day,” he said of the Biden investments.
Leaning on the millionaires tax approved by voters in 2022, which tacks a 4 percent income tax surcharge on income over $1 million, to support the system allowed the task force to sidestep some of the thornier financial conundrums like the gas tax.
But that doesn’t mean it was far from their minds. In terms of how to get electric vehicles to contribute to infrastructure costs, Kane said, “I think we have to wrestle with that as a society. It’s something we’re going to have to deal with in the next decade at least, because the gas tax as a revenue source for transportation is dwindling and going away.”
But members of the panel said proposals for new taxes were likely to face political headwinds. Kane noted that the Healey administration and the Legislature have opted to cut taxes over the last session rather than eye new ones.
“I think at the end of the day, recognizing just how complex transportation is, we wanted a report that would be actionable,” said task force member Amie Shei, president and CEO of The Health Foundation of Central Mass. “We could have come out with a report with recommendations about many new potential funding revenue options, without any consideration of what the political appetite is for suddenly adding those new revenue sources. Yes, they will need to be considered in the future, but until we can stabilize the current system and demonstrate the value of public investment in transportation and build public trust, we can’t get to that next level.”
Two conversations evolved over the course of the task force’s yearlong process, Shei said. One was moving away from the difficult pitch of new taxes. The other involved all the transportation needs outside of the main MBTA system.
“At the beginning of the year, there was definitely a heavy emphasis on the MBTA, understanding MBTA financing and needs,” she said, noting the agency’s looming $700 to $900 million shortfall. But as the year progressed, she said, regional transit authorities, bridges, and other transportation issues got more attention.
From her perch in Central Massachusetts, Shei applauds the plan to dedicate $25 million toward regional transit authority workforce recruitment and retention and $10 million for micro-transit, smaller transportation services that can help fill in gaps between RTA systems.
The report recommends that the administration and the Legislature “work to rationalize” the current set of fees and taxes and consider factors like climate impacts, affordability, equity, and competitiveness. This process, the report suggests, should also contemplate new strategies and technologies that could make the system safer, offer more user choice, ease congestion and reduce carbon emissions.
“I think it has to be a very dynamic approach, these funding options, and also the political climate changes so much from year to year,” Shei said. “So what may be feasible at one point in time may not be feasible at another point in time. For example, the whole debate on congestion pricing – many of us are being informed by what is happening in New York City and just watching that process unfold. So I think our understanding of the revenue options will evolve over time.”
The post Political headwinds, talk of competitiveness kept new taxes out of transportation task force discussions appeared first on CommonWealth Beacon.