GOV. MAURA HEALEY’S task force on transportation funding spent months looking at new ways to pay for the long-term financing of improvements and upgrades to the state’s crumbling transportation infrastructure.
But in the end, they’re focusing on the revenues from an existing tax that was under their noses the entire time: The Fair Share Amendment to the state constitution, also known as the millionaires tax, since it levies a 4 percent surtax on income above $1 million.
“This does not require new taxes,” Healey said Tuesday, with task force members standing behind her inside Worcester’s Union Station. “No new taxes. What it required is 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.”
Healey administration officials are attempting to deploy the revenue in a way that was first tested on a smaller scale in last year’s state budget.
The budget proposal Healey intends to file with state lawmakers will seek to send $765 million in surtax money – $500 million more than last year – to a special transportation-focused fund that already exists. The money sent to the transportation-focused fund will also be available for the state to borrow against, allowing billions of dollars in capital spending.
The budget proposal also focuses on stabilizing the MBTA, which is still recovering from a hit to ridership, and ensuing drop in fare revenue, that came with the Covid pandemic.
Healey painted a dire picture of the state of transportation infrastructure before she came into office in 2023. “Projects that had been talked about for years and years and years never seemed to move forward, from west-east rail to the I-90 rebuild in Allston to the Cape Cod bridges,” she said. “The MBTA had many days where it was barely moving at all.”
Some transportation advocates indicated that there is more to be done and called dedicating more Fair Share revenue to transportation is a “good first step.” “Swift action is needed to pull the MBTA out of a deficit that otherwise will lead to devastating consequences for riders and communities,” said Reggie Ramos, executive director of Transportation for Massachusetts.
She added that the Healey administration and state lawmakers must also dive into the task force report’s mentions of new user fees and other new revenue. “Fair Share funding is necessary for stabilizing our system, but to bring to life the system residents across the state deserve, we must also do more,” she said.
Overall, the Healey administration’s proposal calls for investing $8 billion over 10 years to improve transportation across the state, beyond just the MBTA, which has been facing a “fiscal cliff” – a shortfall of $700 to $900 million that could lead to massive layoffs and service cuts if it doesn’t receive an infusion of funds.
“We’ll put our entire transportation system on stable footing, something that we haven’t had for decades,” Healey said.
The MBTA’s $89 million legacy debt will also be wiped out.
Healey also pledged more frequent MBTA trains and buses and station upgrades. “Bottom line: You’re going to wait less and you’re going to move faster. When we fix the foundations we can do so much more,” she added.
The plan calls for $615 million for the multibillion dollar Allston I-90 project, which includes a new commuter rail station. The project is also expected to receive $335 million from the federal government, as well as $300 million from the city of Boston and neighboring Harvard University. The balance of the $2.07 billion projected is expected to be covered from federal loan program and “existing capital resources,” according to state transportation officials.
Monica Tibbits-Nutt, Healey’s transportation chair and the task force’s co-chair, called the panel’s work a “very difficult conversation” that focused on both the system’s short-term and long-term challenges.
Doug Howgate, the president of the business-backed Massachusetts Taxpayers Foundation and a task force member, was one of the architects of the proposal to focus on tapping the millionaires tax rather than new taxes or fees, a somewhat ironic move since business groups opposed the tax when it was a ballot question in 2022.
Matthew Gorzkowicz, Healey’s budget chief who also co-chaired the transportation task force, said early on the panel wasn’t initially sure how much money the state would end up with from the millionaires tax.
“We started to realize that we may have more to work with than we had thought,” he told reporters on Tuesday. “I will also say that part of our evolution with the task force was that many of the task force members felt like it was difficult to both size how much revenue we needed, as well as what revenues we should go for, when we hadn’t spent the revenues that were just recently approved by the voters in [2022]. I think folks started to feel as though we needed to make sure we were doing the right thing by voters, doing the right thing by our residents, by making sure that money was spent responsibly, leveraged to do what they envisioned it was going to do when they voted on it, and that’s really when it became our focus.”
When asked about a pair of transportation borrowing bills signed by Gov. Charlie Baker, both of which exceeded $8 billion, Gorzkowicz said those bills were simply authorizations to issue debt while what the Healey administration proposes is “fundamentally different.”
“Unless you have revenue to support that debt, you can’t really issue it. That’s the game changer here,” he added, referring to the Healey plan to leverage millionaires tax revenue in the special transportation-focused fund.
Gorzkowicz said the millionaires tax appears to be a stable revenue source. “We’re going to grow into this over a period of time and we’re going to make sure we don’t over-extend ourselves and make sure we don’t build in operating costs that can’t be supported long-term,” he said.
The proposal drew a sharp rebuke from the conservative-leaning Massachusetts Fiscal Alliance, an outside group that opposed the millionaires tax at the ballot box. “This proposal is a textbook example of fiscal irresponsibility. Rather than tackling the deep-rooted inefficiencies and mismanagement plaguing the MBTA,” spokesman Paul Craney said in a statement, “Governor Healey is opting to throw more taxpayer dollars at the problem, all while leveraging Massachusetts’ financial future with unsustainable borrowing.”
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