Posted by Christopher Geehern on Mon, Apr 15, 2013 @ 07:20 AM
The Massachusetts Senate approved a transportation funding bill Saturday that would dedicate approximately $800 million per year in new taxes and other revenue to roads, bridges and public transit by 2018.
The Senate measure is larger than the $500 million package approved on April 8 by the House of Representatives, but still well below Governor Deval Patrick’s original proposal to raise $1.9 billion annually for transportation and education by raising the income tax and corporate taxes. The governor praised the Senate bill on Saturday as a significant step toward a “safe, functional, modern transportation system to keep pace with a growing economy.”
Senators voted 30 to 5 to approve the same basic group of tax changes passed by the House - $110 million from increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation; $161 million from a tax on computer services; $110 million from tobacco taxes; and $83 million from changes to utility classification and sales sourcing.
The Senate bill adds revenue from several sources, including $40 million by requiring utility companies to pay for light poles and other structures on public rights of way, and $80 million by redirecting 2.5 cents per gallon from the gasoline tax currently earmarked for cleanup of underground storage tanks.
A conference committee will now hammer out differences between the two versions, but analysts expect the final measure to be closer to the Senate’s $800 million number. Governor Patrick had threatened to veto the House blueprint, but has not said directly whether he would sign a final bill with the Senate numbers.
Associated Industries of Massachusetts has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as the one on computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.
AIM also remains encouraged that both the House and Senate bills would require the MBTA and Department of Transportation to accelerate reasonable benchmarks for revenues, savings, and reforms. A menu of reforms approved in 2009 was supposed to generate $6.5 billion in savings over 20 years, but has so far reduced costs by just $500 million.
“Employers understand the need for Massachusetts to maintain a transportation infrastructure that supports economic growth. The Senate and House measures solve the immediate and long-term structural deficit of the state transportation system,” said John Regan, Executive Vice President of Government Affairs at AIM.
The increase in the gasoline tax would cause an average driver to pay an additional $12 to $30 per year to fill the tank. The Legislature said it did not want to rely solely on increasing the gas tax because gas consumption has declined in recent years and is expected to continue to fall.
The plan would provide “forward funding” for regional transit authorities in 2014 and allow the Department of Transportation to move all employees onto the operating budget by 2016, ending the current practice of paying for personnel with borrowed funds.
Information provided by the Legislature indicates that their proposal to apply the sales tax to software modifications and systems design does not impose taxes on cloud-based services such as remote data storage. Downloads of computer games, music and books would also remain outside the new sales tax.
Other elements of the Senate bill include:
- A provision directing the Department of Transportation (DOT) to move towards open road tolling on major routes other than the Turnpike.
- A commitment to transfer up to approximately $160 million per year from the general fund to the transportation fund in years beyond Fiscal 2018.
- A directive to the MBTA to pursue naming rights sales on its stations and other assets.
PriceWaterhouse Coopers Analysis of Business Taxes in Murray/DeLeo Plan
Ernst & Young Analysis of Tax on Computer Services
Posted by Christopher Geehern on Mon, Apr 08, 2013 @ 06:31 AM
Senate President Therese Murray and House Speaker Robert DeLeo last week announced a proposal that would increase gasoline, tobacco and certain business taxes to close an operational deficit in the Massachusetts transportation system that is set to reach $548 million by Fiscal Year 2018.
The legislative plan would generate $110 million by increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation. It also raises $161 million from a tax on computer services, $110 million from tobacco taxes and $83 million from changes to utility classification and sales sourcing.
The measure is more focused than Governor Deval Patrick’s earlier plan to spend more than $1.9 billion a year on transportation and education. The governor sought to increase the income tax from 5.25 to 6.25 percent, eliminate 44 personal exemptions and deductions, reduce the sales tax from 6.25 to 4.5 percent and raise corporate taxes by $500 million annually.
John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts, said employers are encouraged that the Murray/DeLeo proposal requires both the MBTA and Department of Transportation to meet reasonable benchmarks for revenues, savings, and reforms.
“Although we would have preferred that the plan rely more heavily on transportation-specific sources of revenue, we nevertheless believe that the proposal announced by Senate President Murray and Speaker DeLeo takes a meaningful step in the right direction by solving the immediate and long-term structural deficit of the state transportation system.” Regan said.
The increase in the gasoline tax would cause an average driver to pay an additional $12 to $30 per year to fill the tank. The Legislature said it did not want to rely solely on increasing the gas tax because gas consumption has declined in recent years and is expected to continue to fall.
The plan would provide “forward funding” for regional transit authorities in 2014 and allow the Department of Transportation to move all employees onto the operating budget by 2016, ending the current practice of paying for personnel with borrowed funds.
Information provided by the Legislature indicates that their proposal to apply the sales tax to software modifications and systems design does not impose taxes on cloud-based services such as remote data storage. Downloads of computer games, music and books would also remain outside the new sales tax.
PriceWaterhouse Coopers Analysis of Business Taxes in Murray/DeLeo Plan
Ernst & Young Analysis of Tax on Computer Services
Richard C. Lord, President and Chief Executive Officer of AIM, commended the Legislature for its proposal and Governor Patrick for initiating a serious and thorough discussion of state spending priorities.
The full House is scheduled to debate the plan later today. Although AIM would have liked to see more reliance on transportation-related revenues and less on increased business taxes, we believe this plan represents a reasonable approach in the midst of a less than robust economic recovery and we encourage the members of the House to support it.
Posted by Christopher Geehern on Fri, Mar 30, 2012 @ 02:45 PM
How significant are the financial challenges facing the Massachusetts transportation and highway systems?
“The people mowing the grass are paid from the capital budget,” Transportation Secretary Richard Davey told more than 200 business leaders at the AIM Executive Forum this morning.
Davey said the plan announced this week to close a $185 million deficit at the MBTA is merely a prelude to a broader debate about how to solve a $1.3 billion annual shortfall in funding for roads, bridges and mass transit in the Bay State. The Department of Transportation (DOT) continues to squeeze savings and efficiency from its three-year restructuring, according to Davey, but he said no amount of administrative overhaul will solve the long-term financial puzzle.
“This system we have currently is one we cannot afford,” said the secretary, who took over the top job at the Department of Transportation in August after serving as general manager of the T.
The Patrick administration announced a plan Wednesday to raise MBTA fares by an average of 23 percent and to eliminate four bus routes and some weekend commuter rail service. Subway fares would climb to $2 from $1.70 – a 17 percent increase – and the cost of a bus ride will climb to $1.50 from $1.25, a 25 percent jump.
Davey called the fare hikes a one-time solution that will still leave the T with a deficit of between $100 million and $110 million next year. At the same time, he said, the T spends approximately $300 million a year less than it should to maintain its system.
The commissioner demurred when asked to endorse a single long-term solution to the financial crisis but said that the commonwealth will need a user-based system to raise revenue. He noted that Governor Deval Patrick’s proposal three years ago to raise the state gasoline tax generated significant opposition.
Davey said that the Department of Transportation has four primary objectives:
- Driving reform to save money and improve service – DOT has its lowest staffing levels in 15 years, has overhauled its retirement system and is using electronic tolling and other technology to deliver services with fewer people.
- Make reform visible to citizens – DOT is already using electronic highway signs to provide commuter information and is exploring the possibility of allowing consumers to renew licenses with smart phones.
- Transparency – The T conducted 30 public hearings and reviewed 6,000 comments before finalizing its fare proposal.
- Running DOT like a business – The agency has been merging functions and facilities, and rewarding employees for creative ideas that boost efficiency.
Posted by Andre Mayer on Thu, Jul 28, 2011 @ 06:01 AM
Fast. Efficient. Innovative. Transparent. Minimizing disruption to economic activity. It’s … the Massachusetts Department of Transportation?
Yes it is. Beset by controversy on other fronts, MassDOT is demonstrating what good government can be in its Fast 14 I-93 Rapid Bridge Replacement Project. The project to replace 14 bridges in the Medford area, part of the Patrick-Murray Administration's Accelerated Bridge Program, is designed to cause the fewest possible construction-related impacts on traffic, businesses, residents and tourism.
The old bridges are being replaced with modular superstructure units that are fabricated off-site, eliminating years of work in the roadway. Work is done between Friday night and Monday morning so as not to affect commuting, and four lanes of I-93 (two in each direction) are kept open for through traffic. An extensive public information effort has been mounted to make drivers aware of ramp closures, potential delays and alternative routes.
To date, 10 of the 14 bridges have been replaced, with each weekend’s work completed, and the roads reopened, ahead of schedule. All work will be completed by the end of August.
More than 80 percent of the $98.1 million project cost will be paid with federal funds, including a $1 million grant from the Federal Highway Administration's Highways for Life program.
The project is already a national model. In mid-July, the Federal Highway Administration held the Fast 14 Bridge Replacement Showcase, which attracted representatives from 26 state departments of transportation eager to learn how to use innovative, customer-centered and safety-driven techniques on their bridge construction projects. Federal Highway Administrator Victor Mendez and MassDOT Secretary Jeff Mullan led a field trip to witness the rapid construction firsthand.
We believe that state highway officials are not the only people in government who have something to learn from this successful project.