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AIM Backs Reasoned, Long-Term Approach to Transportation

Posted by Brooke Thomson on Oct 30, 2019 7:08:11 AM

Virtually everyone in Massachusetts agrees that the commonwealth must repair, update and rethink its transportation system.

trafficsmallJust ask employers in metropolitan Boston where workers navigate daily reliability issues on the MBTA or persistent congestion on the Southeast Expressway. Or manufacturing companies in the Berkshires that struggle to ship products over back roads to the Turnpike. Or restaurants on the Cape that await customers locked in multi-mile backups over the Sagamore or Bourne bridges.

Improving the complex Massachusetts transportation system will require patience, prudence and compromise to reach a solution that lays the foundation for long-term economic growth. The 3,500 members of Associated Industries of Massachusetts know as business people that sorting out the financial, logistical and operational elements of transportation reform will take years of debate and continued analysis.

AIM supports a reasoned, long-term approach built around Governor Charlie Baker’s $18 billion transportation bond bill now pending in the state Legislature. That bond bill acknowledges what Transportation Secretary Stephanie Pollack told the AIM Executive Forum in September – the first step in any reform must be to remove current structural impediments that prevent the Department of Transportation and the T from spending the money that the taxpayers have already given them.

AIM believes that Massachusetts policymakers must provide procurement and policy reform to the transportation system before investing money into an outdate infrastructure.

AIM believes that any solution to the transportation issue must factor in the need to reduce greenhouse gases in the transportation sector to comply with state laws to reduce global warming. 

AIM supports transportation initiatives that are fair to people of all income levels and all regions of the commonwealth.

AIM acknowledges that the commonwealth may need to develop more revenue for transportation in the next three to four years once structural reforms have been accomplished. More work needs to be done to determine the best method of raising revenue and AIM recommends a deliberate approach to funding issues.

Here is AIM’s position on transportation:

AIM supports policies and responsible new investment to reduce congestion; grow capacity to deliver capital projects; lower carbon emissions in the transportation sector and ensure accountability and transparency in transportation investment spending.

  • AIM supports the governor’s bond bill – specifically those provisions that provide employer tax incentives, address congestion and put in place new Department of Transportation (MassDOT) and MBTA management and procurement tools;
  • AIM emphasizes the importance of procurement and contracting reform to get money flowing to projects at an accelerated rate. We support creating $1.4 billion in additional MBTA capital availability by changing the $127 million in annual appropriations to contract assistance or by increasing the annual Base Revenue Amount and Dedicated Sales Tax Revenue amount to the MBTA by $127 million.
  • AIM is open to reducing transportation emissions by supporting the Transportation Climate Initiative (TCI), a regional collaboration of 12 Northeast and Mid-Atlantic states and the District of Columbia that seeks to improve transportation, develop the clean-energy economy and reduce carbon emissions from the transportation sector.
  • AIM remains concerned about raising the gasoline tax because it is regressive and has a punitive effect on less populated regions of the commonwealth;
  • Because AIM is the statewide business association, we support a transportation plan that meets in a fair manner the diverse needs of all regions of the commonwealth;
  • AIM supports studies exploring congestion pricing as a means of reducing or mitigating congestion. Congestion pricing must apply equally to all industries and all types of vehicles and not target specific industries such as ride-sharing companies;
  • AIM supports policies that add governance structures to ensure accountability and transparency in transportation revenue spending;
  • AIM supports $105 million in transportation funding in the supplemental budget currently in conference committee on Beacon Hill: $50 million for MBTA, $40 million for Chapter 90, $10 million for municipal complete streets program.

The AIM Board of Directors continues to discuss details of a transportation proposal. The ongoing discussion reflects the importance that the Board attaches to the transportation debate.

Please contact Bob Rio, Senior Vice President, rrio@aimnet.org, for updates on the transportation debate.

Topics: Massachusetts Legislature, Transportation, Charlie Baker

Transportation Chief Takes Strategic Approach

Posted by Christopher Geehern on Sep 27, 2019 11:09:51 AM

Transportation Secretary Stephanie Pollack thinks of the increasing frustration among Massachusetts commuters in terms of “good days” and “bad days.”

While average commute times have not increased substantially in recent years, Pollack said drivers are encountering more frequent bad days in which a 40-minute commute can turn into a 60-minute ordeal.

“If one day in five takes 60 minutes, you now have an hour commute every day. You plan your life as if it’s an hour and that’s why everybody feels worse,” Pollack told 300 business leaders at the AIM Executive Forum this morning.

The insight is one of many to come from a strategic effort by state officials to understand the underlying transportation challenges facing the commonwealth before identifying solutions. A comprehensive approach to transportation, according to Pollack, covers a daunting range of issues from improving capital planning at the MBTA to highway management to housing development to telecommuting.

“We have laid the foundation for hitting the accelerator and getting these things done,” Pollack told the audience.

She said the two largest challenges facing the transportation system are climate change and traffic congestion.

Massachusetts is seeking to meld the need to reduce greenhouse gas emissions with funding for new transportation initiatives through the regional Transportation and Climate Initiative. TCI is a regional collaboration of 13 Northeast/Mid-Atlantic states working to reduce carbon emissions through a “cap-and-invest” program or other mechanism that establishes a price for transportation emissions.

Pollack noted that transportation accounts for almost half of greenhouse gas emissions in Massachusetts.

“TCI was not proposed to be a revenue source. It was proposed because it is proven mechanism that has worked in electric sector. It is our best bet to make a dent in transportation greenhouse gas emission.”

Traffic congestion in Massachusetts has reached a “tipping point,” according to a report issued in August by the Baker Administration, which  has signaled support for solutions ranging from allowing commuters to pay to bypass gridlock to reserving bus lanes on highways. The report offered 10 major conclusions:

  1. Congestion is bad because the economy is good.
  2. The worst congestion in the Commonwealth occurs in Greater Boston.
  3. Congestion can and does occur at various times and locations throughout the Commonwealth.
  4. Many roadways are now congested outside of peak periods.
  5. Congestion worsened between 2013 and 2018.
  6. Simple changes in travel time on an average day do not capture the severity of the problem.
  7. Massachusetts has reached a tipping point with respect to congestion.
  8. Many commuting corridors have become unreliable, with lengthy trips on bad days.
  9. Congestion has worsened to the point where it reduces access to jobs.
  10. We should be worried about congestion on local roads, too.

Modernizing the MBTA will plan a big part in helping to reduce the number of cars on the roads, Pollack said. Total capital spending at the T will increase to $9.3 billion between now and 2024, but capital delivery needs to increase to $1.5 billion annually to fund reliability and modernization.

“When enough people use transit and they have a reliable way to get to work, you can take out some of the peaks and get to reasonable balance of good says and bad days,” Pollack said.

Governor Baker in July filed a transportation bond bill seeking $18 billion in additional capital authorization to invest in building and modernizing a transportation system that meets the needs of residents, businesses and cities and towns statewide. The authorization would be used to fund existing programs as well as several new initiatives designed to lessen impacts from roadway congestion and ensure reliable travel throughout the Commonwealth.

Topics: AIM Executive Forum, Transportation

An Open Letter to Raise Up Massachusetts

Posted by John Regan on Aug 26, 2019 8:30:00 AM

Editor's note - Raise Up Massachusetts, the coalition of community organizations, religious groups and labor unions behind the so-called "millionaires tax," sent an open letter to legislators last week maintaining that "the current transportation and education funding crisis" is the responsibility of the business community. AIM President and CEO John Regan responds.

Dear Raise Up Massachusetts, 

We are in receipt of your open letter to the Massachusetts Legislature regarding “significant and lasting” investments in education and transportation. 

Small BusinessOf interest was the following sentence: “In fact, business groups are actively organizing to avoid paying their fair share.” 

Given that we worked together for months to craft a compromise on paid family and medical leave, I believe that your letter represents a serious statement of position and concern, rather than a political stunt. We spent too many hours sitting across the bargaining table from one another for me to question the fact that you believe that businesses do not pay their fair share.  

But that assertion does not comport with facts: 

  • Massachusetts employers provide 3.2 million private-sector jobs at a mean annual wage of $63,910 to the citizens of Massachusetts (US Bureau of Labor Statistics); half of those 3.2 million jobs are in small to medium-sized businesses (US Small Business Administration) 
  • Massachusetts employers pay more than $3.3 billion annually in corporate excise and other state taxes (Massachusetts Department of Revenue) 
  • Massachusetts employers pay $4.9 billion annually in local property taxes to support schools, public safety and municipal services (Massachusetts Department of Revenue) 
  • Massachusetts employers pay $22.8 billion per year to provide health insurance to their employees (Center for Health Information and Analysis)
  • Massachusetts employers generated more than $567 billion worth of goods and services during 2018 (US Bureau of Economic Analysis)
  • Massachusetts employers pay nearly $2 billion annually for workers compensation insurance premiums to protect the financial security of injured workers.
  • Massachusetts employers pay nearly $2 billion annually into the state unemployment insurance system.
  • Massachusetts employers will on October 1 begin to pay another $1 billion annually for the new paid family and medical leave program. 
  • The top 100 corporate charitable contributors in Massachusetts compiled by The Boston Business Journal gave more than $300 million to Bay State non-profit causes last year, including AIM Vision Award winner Cummings Foundation, which donated $34 million to charity.  This is just a slice of the money and time companies give to support their communities. 
  • State tax collections increased nearly 7 percent during the past fiscal year, surpassing budget benchmarks by $1.1 billion.  

Thousands of hard-working Massachusetts employers, from software startups to corner grocery stores, spend every day paying their fair share to the commonwealth by providing economic opportunity and prosperity from Boston to the Berkshires. 

These employers understand the need to address intractable issues such as transportation and education, but they also understand that the recent examples provided by Connecticut and New Jersey prove that you cannot solve these problems by punitively taxing certain businesses or individuals. 

I am delighted to engage in serious conversations with Raise Up and any other groups seeking to ensure the economic future of Massachusetts. 

Sincerely, 

John R. Regan, President & CEO 
Associated Industries of Massachusetts 

Topics: Education, Transportation, Taxation

Uber Envisions New Transportation Model

Posted by Christopher Geehern on Mar 30, 2017 4:16:43 PM

The ride-sharing app Uber has logged the fastest ascent in Silicon Valley history, growing from a startup eight years ago to a company operating across 450 cities in 73 countries and serving 40 million customers each month.

But the company’s Boston-based regional manager, Meghan Verena Joyce, said the company’s ultimate objective is much larger - to merge traditional transportation infrastructure with new technology to create a new model of moving from one place to another.

“I often wonder whether my daughter will ever have a driver’s license,” Joyce mused as she spoke to 300 people at the AIM Executive Forum in Waltham this morning.

The new transportation model, Joyce said, will make efficient use of private automobiles and public transit to reduce traffic congestion, greenhouse gas emissions and land-intensive parking. It will create a system in which everyone – including people in low-income urban areas often left out of the transit grid – will have access to reliable and affordable transportation.

“We believe there is a better way,” said Joyce, a Harvard MBA who served as an associate at Bain Capital and as a senior policy advisor at the US Treasury before joining Uber in 2013.

The challenge is not the one billion automobiles that exist worldwide, according to Joyce, but the solitary manner in which we use them. A show of hands from the audience indicated that the vast majority of people had driven to the Executive Forum with only one person in the vehicle.

Joyce said that Uber has already taken steps to integrate technology with existing transportation infrastructure to streamline the system. Many Uber customers in Boston combine ride-sharing with the MBTA, while others use a modified car-pooling initiative called UberPOOL to share rides with neighbors who travel to the same locations at similar times.

Almost one-third of Uber trips in Great Boston come from UberPOOL, according to Joyce. In San Francisco, where UberPOOL has existed for a longer time, the program has reduced car traffic in that city and saved an estimated 6.2 million gallons of gasoline while cutting carbon dioxide emissions by an estimated 55,000 metric tons.

Joyce said Uber’s vision also includes providing transportation options for people in low-income urban areas. People in Dorchester and Mattappan, who she said formerly waited an average of 25 minutes for taxi pickups, now enjoy 96 percent reliability and pickups within 3-5 minutes with ride sharing.

“Our vision is to create a transportation ecosystem that is better for everyone,” she said.

Topics: Associated Industries of Massachusetts, AIM Executive Forum, Transportation

Budget Plan Includes T Reforms, Troubling Tax Reversal

Posted by Brad MacDougall on Jul 8, 2015 11:17:00 AM

A proposed $38.1 billion state budget to be debated today on Beacon Hill contains no broad-based tax increases and makes substantive public-transportation reforms sought by the business community.

State_House_and_One_BeaconEmployers are disappointed, however, that the spending blueprint reverses an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. Repeal of the so-called FAS 109 deduction, which had been postponed as the state revenues declined during the recession, could harm capital-intensive national and global companies.

“AIM continues to review the final budget for Fiscal Year 2016, but the budget conference committee has generally maintained the kind of spending discipline that employers support,” said John Regan, Executive Vice President of Government Affairs.

“The proposal lays the groundwork for real changes at the MBTA, changes intended to prevent the widespread service breakdowns we saw this past winter.”

The committee budget increases spending by 3.5 percent, less than the predicted 4.8 percent consensus on revenue growth. Unrestricted local aid would rise by $34 million and local education aid by $111.2 million.

The MBTA reforms provide Governor Charlie Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.

The budget contains other good news for employers as well:

  • Requires state executive offices and agencies to develop measurable, outcome-based performance goals and metrics.
  • Forms a special commission to improve state agency information-sharing capabilities to facilitate new business registration.
  • Authorizes the commissioner or revenue to offer an amnesty program for tax penalties in 2016.
  • Provides $2 million to the Workforce Competitiveness Trust Fund, which will train new workers in manufacturing, hospitality and other high-need industries.

Beacon Hill observers say the FAS 109 deduction is being repealed to pay for an increase in the earned income tax credit for low-income workers. The reversal sends a troubling signal to employers that previous agreements on major tax policy may be changed on a whim.

“It certainly does not help the commonwealth’s reputation for consistency on tax matters,” Regan said.

AIM and other business groups will recommend today that the governor veto the FAS 109 repeal.

The 2008 Combined Reporting tax law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.

Fiscal Year 2016 began on July 1. If the Legislature approves the blueprint today, it goes to Governor Baker for his review. The Governor has 10 days to review the budget and take action - approve or veto the entire budget, veto or reduce specific line items, veto outside sections or submit changes as an amendment to the budget for further consideration by the Legislature.

The Legislature can override the governor’s vetoes with a two-thirds vote in each branch. The House must vote first to override any vetoes before they may be considered by the Senate.  

 

Topics: Massachusetts state budget, Budget, Taxes, Transportation

What Does the New Tax Bill Mean to Employers?

Posted by Brad MacDougall on Jul 28, 2013 11:14:00 PM

TaxesWhat does the $500 million tax bill approved by the Legislature last week mean for employers?

  1. Gas Tax:  Includes a 3 cent per gallon increase in the gas tax.  The current rate is 21 cents per gallon and the new tax will be 24 cents per gallon.  The gas tax is also indexed to inflation, and automatic increases to the gas tax will become effective on January 1, 2015.  See the Department of Revenue’s guidance on this new tax.
  2. Cigarette Tax:  For retailers, the cost of pack of cigarettes will increase by $1.  Businesses selling tobacco products should consult the Department of Revenues guidance on the impact tax rates for all tobacco products.
  3. Sales and use tax on computer and software services:  This new tax was originally proposed by Governor Patrick in January and was altered by the House and Senate to exclude “the cloud” and “data processing.”  AIM urged the legislature to focus on transportation-related taxes and revenues rather than implementing new business taxes.  Employers that purchase or offer computer and software services should review the recently released Department of Revenue interim guidance on this new tax.  The effective date for collection of the tax is July 31, 2013 and the DOR’s interim guidance provides additional information regarding the transition period. Feedback needed:  AIM is seeking your feedback on the DOR’s interim guidance to share with the department.  To learn more read:  TIR 13-10: Sales and Use Tax on Computer and Software Services Law Changes Effective July 31, 2013).  In the near future, the DOR will also publish a working draft of regulations impacting the implementation and applicability of the new tax.  The working draft is not yet available, but you can click here to read the current regulation 830 CMR 64H1.3. AIM member feedback on this document will also shape AIM’s comments to the DOR during the future public comment period.

    Feedback needed:  AIM is seeking your feedback on the DOR’s interim guidance to share with the department.  To learn more read:  TIR 13-10: Sales and Use Tax on Computer and Software Services Law Changes Effective July 31, 2013).  In the near future, the DOR will also publish a working draft of regulations impacting the implementation and applicability of the new tax.  The working draft is not yet available, but you can click here to read the current regulation 830 CMR 64H1.3. AIM member feedback on this document will also shape AIM’s comments to the DOR during the future public comment period.
  1. Tax Regime Change from “cost of performance” to “market sourcing”:  The final bill impacts corporate excise taxes by altering how Massachusetts sources sales, other than sales of tangible personal property, to the Bay State for sales factor purposes if a corporation’s “market” for the sale is in Massachusetts.  
  2. Utility Corporation Tax Change:  The final bill eliminates the classification for utilities.  Those levies would represent a tax increase on companies that deliver electricity, gas, water and telephone services. 
  3. FAS 109 Deduction:  The FY14 Budget included a third delay in this deduction by publically traded companies that file combined reports.
  4. Brownfields Tax Credit:  The FY14 budget also included an extension of the brownfields tax credit to 2018.
  5. DOR Administrative Tax Changes: Included in the FY14 budget were several DOR tax administrative changes impacting electronic records, pass-through entity, and a federal offset program.

To learn more about these issues or to learn more about AIM’s Taxation Committee and the tax issues AIM members get involved with, please contact Brad MacDougall, Vice President of Government Affairs at 617-262-1180 or bmacdougall@aimnet.org.

Topics: Issues, Taxes, Transportation

Legislature, Governor Lurch Toward Budget, Tax Resolution

Posted by John Regan on Jul 3, 2013 8:19:00 AM

The Massachusetts Legislature and Governor Deval Patrick lurched toward final approval yesterday of a $34 billion state budget for the fiscal year that began Monday and a $500 tax package required to fund that budget.

Massahcusetts State BudgetThe Fiscal Year 2014 spending blueprint includes several measures affecting the cost of health insurance – it eliminates the Fair-Share Assessment created under the 2006 state health reform, drops the requirement that employers collect and retain the Health Insurance Responsibility Disclosure (HIRD) form, and replaces the current $67.20 per employee contribution to the Medical Security Trust Fund with a $50 per employee contribution to fund subsidized health care.

The measure also appropriates $2 million for the Massachusetts Manufacturing Extension Partnership.

Governor Deval Patrick has 10 days to consider the budget, which passed Monday after largely party-line votes in the House of Representatives and Senate.

The governor yesterday rejected and sent back to the Legislature the $500 million transportation finance bill because he believes it does not include enough revenue to fix the commonwealth’s roads, bridges and public transit systems. The governor proposed that the finance package, which increases the state gasoline and cigarette taxes and imposes a levy on software services, also boost the gas tax at least three additional cents beginning in 2017 when the tolls on the western portion of the Massachusetts Turnpike are set to come down.

House Speaker Robert DeLeo and Senate President Therese Murray immediately declared the governor’s proposal dead on arrival. The Legislature is expected to vote on the bill with the changes proposed by Patrick after the July 4 holiday.

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.

“Last week, the Legislature passed a carefully calibrated revenue proposal that solves long-standing financial problems within the transportation system," Murray and DeLeo said in a statement.

"The administration’s proposal tying the question of tolls in Western Massachusetts - a plan not even mentioned in its original bill - to a 4 cents gas tax increase places too high a burden on the taxpayers of our state. This threatens working families and businesses still fighting to overcome the financial downturn. Therefore, we will ask our respective chambers to reject the administration’s proposal.”

Elimination of the Fair Share Assessment and the HIRD form were priorities of the AIM Health Policy Committee.

“We’re delighted that the Legislature included these items that will have an immediate benefit for employers struggling with the high cost of providing good health insurance coverage to their employees,” said William Grant, Chair of the Health Policy Committee and Chief Financial Officer at Cummings Properties in Woburn,

House Ways and Means Committee Chairman Rep. Brian Dempsey said lawmakers have been prudent about rebuilding the state’s reserves after the recession.

Dempsey said the spending plan would leave Massachusetts with more than $1.5 billion in its stabilization account at the end of fiscal 2013, making it one of just four states with more than $1 billion in its rainy day fund. He said the Legislature also approved the first increase in unrestricted local aid for cities and towns in five years, and made investments in early education and elder care to reduce waiting lists for pre-school and home care services.


Topics: Massachusetts state budget, Issues, Taxes, Transportation

Senate Passes Transportation Bill; Tax Debate Nears Resolution

Posted by Christopher Geehern on Apr 15, 2013 8:20:00 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.

TaxesThe 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

 

Topics: Massachusetts senate, Issues, Taxes, Transportation

AIM Urges House to Pass Murray/DeLeo Transportation Plan

Posted by Christopher Geehern on Apr 8, 2013 7:31:00 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.

TrnasportationThe 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.  

   

Topics: Issues, Taxes, Transportation

Davey Calls for Long-Term Transportation Funding Solutions

Posted by Christopher Geehern on Mar 30, 2012 3:45:00 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.

Topics: Events, AIM Executive Forum, Transportation

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