Five transportation funding solutions
Part three of three
November 27, 2012
[Read the first part of this series, on the case for funding transportation, here, and the second part, on why "reform before revenue" was the wrong answer, here.]
THE SOLUTIONS I PROPOSE, taken together, can have a profound, lasting, positive impact on public transportation funding and, consequently, public transportation quality and reliability. Effective solutions must be formed and framed within a larger context of mobility improvement, shared civic experience, and a firm commitment to generational responsibility.
The proposed solutions represent straightforward steps that can be taken to set the T on the path to fiscal stability. In some respects they are opportunistic, designed to strategically leverage specific initiatives. Together, these proposals are rooted in the view that we need to stop the recurring practice of taking small, ineffective steps that simply kick the can and never provide a sustainable, structural solution. Instead, we should establish a resilient economic platform for the MBTA that will enable it to continue to support economic growth and the region’s quality of life.
First, the state gas tax needs to be increased, and a significant portion of the increase needs to be dedicated to public transportation. I know a tax increase is not viewed as popular. What tax increase is? But an increase is urgently needed as a part of a comprehensive and meaningful solution.
In 2009, the Gov. Deval Patrick and I proposed a 19-cent gas tax increase, indexed to inflation. A substantial portion of that increase was to be dedicated to public transportation. Such a use of the gas tax is consistent with good public policy, as it may encourage modal shift, which in turn is good for air quality, energy security, and mobility. Had that 19-cent gas tax increase been enacted in 2009, we would have generated something in the range of $1.5 billion in net new transportation revenue by now, and there would be no crisis to deal with today. Let’s not make the same mistake again.
The Massachusetts gas tax hasn’t been increased since 1991. It has not even kept pace with inflation. I propose that we increase the gas tax by 20 cents (and automatically allow it to adjust for inflation) and give 10 cents to the MBTA and 10 cents to the highway system. At the same time, I propose that we return half of the 2009 sales tax money – about $80 million -- dedicated to the MBTA back to the state’s general fund, for use on other pressing non-transportation Commonwealth needs. The remaining $80 million of the MBTA portion of the 2009 sales tax should be dedicated to the regional transit authorities, to get them back on their own pathways to fiscal solvency.
Second, in 2007 the Transportation Finance Commission made a strong argument for introduction of a pure user-fee system to raise transportation revenues. This so-called “VMT” system (for Vehicle Miles Traveled) would charge motorists a small fee for each mile they drive each day on major state roads and highways. Pilot programs conducted in other states have proven conclusively that VMT can be structured in a manner consistent with legitimate privacy concerns, so that origin and destination data are not retained.
VMT would be fair and transparent, and it would generate funds well in excess of the current gas tax. VMT could be dynamic, charging motorists less while driving off-peak or in rural areas, charging them more while driving on congested urban roads or during peak hours. If we raise the gas tax as I suggest, and add VMT, we can start bringing adequate revenues back into the system. The Transportation Finance Commission concluded that a 5-cent-per-mile VMT on the Interstate system alone (excluding state highways) would generate $550 million a year, or $5.5 billion over 10 years. That figure assumes that VMT replaces turnpike tolls on Interstate 90, and it is net of the cost of collection. For most motorists using Interstate 90, this 5-cent-per-mile fee would end up costing them less than the current cost of turnpike tolls. If you include state highways like Routes 3, 20, 9 and 7 within the VMT regime, the revenues generated are more robust than any we have known in our lifetime – well over a billion dollars of net new revenue.
Perhaps the best aspect of VMT is its adaptability. VMT by definition is fair: you pay for what you use. VMT doesn’t charge you for Main Street, or other local roads. Out-of-state license plates can be captured and assessed through conventional border tolls and video technology. VMT can charge you more if you are using the roads at a premium time or in a congested area, and less if you’re driving in more rural areas.
We have talked and talked about congestion pricing. VMT enables us to do something about it. Think of it: we can have a base VMT price, applicable to everyone. We can charge motorists in rural areas like Berkshire and Franklin counties, where people must typically travel longer distances between destinations, the base price. Then we could charge premiums above the base charge for a variety of reasons: premiums for travel within more suburban and urban corridors, or within chronically congested corridors or during rush hour. Those premium charges – the “delta” between the base VMT price and the premium price – can be dedicated to public transportation needs across the Commonwealth as a way to improve the system’s service and reliability, encouraging and sustaining modal shift.
A final word about privacy: a significant pilot project in Oregon demonstrated unequivocally that a VMT program can be put in place without threatening anyone’s reasonable privacy expectations. The data retained did not include origin and destination or locational information – it simply gathered and retained miles traveled.
Third, we should introduce a carbon impact parking assessment in communities within the MBTA district on nonresidential surface and structured parking facilities with 20 or more spaces, and dedicate those funds to transit. This assessment would be the foundation for funding Transit Improvement Districts, a new approach to generating significant net new revenue. A Transit Improvement District would be a specific targeted area within a city or town that seeks to encourage new development or redevelopment, and that depends in large part upon the availability of public transportation. A Transit Improvement District would operate in two ways: first, it would identify parking as a specific set-aside revenue source; second, it would enable the public and private sectors to leverage this dedicated fund to make important investments in public transportation (and safer pathways for pedestrians and bicyclists).
Suffolk Downs, which is seeking one of the state’s casino licenses, is a good example of a potential Transit Improvement District. To date, there has been no serious discussion of implementing a major expansion and improvement of the Blue Line – a transit line that currently serves the site, and that could become a mobility lifeline enabling a safer, greener, more sustainable and more community-friendly approach to getting people to and from the proposed development. At Suffolk Downs, for example, I have suggested that a daily parking fee assessed on customers (or, if the owners choose to offer free parking, the fee could be paid by them) would be a new and reliable revenue stream that could be dedicated to a new transportation improvement fund. Monies from the fund could be dedicated in part to the exclusive use of the Transit Improvement District. The Back Bay could be another Transit Improvement District, ID, as could the Seaport District. Here is the point: proximity to public transportation is a critical public benefit that the private sector can use to reap profits through development that is accessible because it is green mobility-friendly. This is the opportunity moment for state leaders to enact a comprehensive policy. That policy might even include allowing a portion of Transit Improvement District payments to be taken as a corporate tax credit for owners of assessed parking facilities.
Fourth, we should reconsider how Massport can become a more effective participant and leader in accelerating the use of public transportation to get to and from Logan Airport and the Seaport District. Massport’s primary mission of managing a safe and efficient international airport will benefit from a more active role improving mobility choices to and from their facility at Logan for both workers who have jobs at Logan, and for air travelers. Today, Massport makes a variety of contributions toward public transportation, including to the Blue and Silver Lines that serve the airport, but more can and should be considered.
A short list of public transportation improvements that ought to have some level of Massport financial participation include working with the MBTA to bring the Silver Line bus directly to the Airport Blue Line Station. This low-cost initiative would enable a temporary Blue-Red “connector” that, while not optimal, is in the spirit of the SL4 service previously described – doing more with less;. Other options include implementing a priority signalization system at D Street on the South Boston Waterfront enabling airport-bound Silver Line busses to have “traffic light priority” rides to Logan and helping fund the environmental and permitting studies associated with extending the Blue Line to Lynn, and connecting the Blue and Red Lines under Cambridge Street. These Blue Line improvements will directly benefit Massport by enabling more people (workers and travelers) to access Logan in an affordable, efficient, and environmentally friendly way.
With specific respect to the extension of the Blue Line to Lynn, I was a skeptic of this proposal until I became secretary and actually saw how it would work. The MBTA currently owns a large garage facility in downtown Lynn that is significantly underutilized – those parking spaces could be filled with workers and travelers from Lynn, Saugus, Swampscott, Beverly, and other North Shore communities, providing efficient and quick travel to Logan Airport, downtown Boston, or Suffolk Downs while decongesting chronically clogged highway systems from the North Shore/Cape Ann area. The Blue Line extension would also help spark economic growth in downtown Lynn.
Finally, decision makers ought to consider imposing a specific carbon impact assessment on parking at Logan Airport. Four important urban transit initiatives – Blue Line to Lynn, Silver Line, Urban Ring, and Red to Blue – all have one theme in common: getting workers and travelers to and from Logan Airport by public transportation. The success of these initiatives will determine whether Logan can survive as a viable facility well into this century, or whether it will continually be constrained by access limitations. The 2009 transportation reform legislation that we filed included a $2-per-day assessment on parking at Logan Airport, a proposal that was not included in the final bill. Our estimate was that such an assessment could generate a steady stream of $10 million or more every year, a revenue stream that can be used to pay for critical design and engineering work on the transit projects I have mentioned.
Fifth, the state needs to relieve the MBTA of two crushing burdens: the Big Dig debt that the T unfairly carries, and the cost of the Ride, which has become unsustainably expensive. Some form of cost sharing must take place, or the MBTA will never really be able to get out of the funding conundrum it continually finds itself in. Perhaps the most effective way to deal with this formidable issue would be to use a dedicated portion of the increased gas tax to begin paying off this burden. That dedicated revenue should come equally from the net new gas tax allocated to highways and transit.
My solutions may not be easy to accept. They may be politically unpopular with some. Beguiled and misled by the “reform before revenue” slogan of 2009, we have lost precious time solving this problem. And once again, a disproportionately higher number of those least able to afford it – the poor and the middle class, students and the elderly – are being asked to pay more, while automobile drivers are held harmless.
There is no way to craft a fair, credible, sustainable, and effective financing solution for public transportation in Massachusetts without asking all citizens to participate in the solution. There is no way to do it without turning to technology to help fill the revenue gap that exists and that will increasingly worsen as the power of the gas tax diminishes. The old ways have proven ineffective and, worse, inequitable. Finding and implementing a long term, structural, and fair solution requires broad and bold action, the type of political action that requires both skill and courage.
The solutions do not require another study, nor do they need to be vetted with experts - that has happened under the auspices of the bipartisan Transportation Finance Commission, and the MBTA Advisory Board. They simply need to be implemented.
In the past, the perceived realities of politics – of an unpopular gas tax, of the need to demonstrate “reform” in whatever form as a prelude to a serious revenue discussion, of the fear of introducing significant change to the public, whether it be in the form of a VMT system or some other technology-driven alternative – have made it virtually impossible to have the “adult conversation” that state leaders say they want to have. We need to have both the conversation and a commitment to act upon it. The decisions that will be made, or left unmade, in 2013 will shape our future for better or worse. We all have a stake in the outcome, and we all need to do our part to make that outcome a positive one.
James Aloisi, a former state secretary of transportation, is a senior vice president at KCUS Inc., a transportation consulting firm.