Businesses Weigh in on Transpo Taxes, Fees

By Bruce Mohl, CommonWealth, October 30, 2019

Support for increases broad, but not unanimous.

ON THE EVE of a long-anticipated legislative debate on transportation, most members of a coalition of Massachusetts businesses see a need for some form of new revenue, but there is little consensus on what taxes and fees should be increased and some organizations say no new funding is needed at all.

Jim Rooney, president and CEO of the Greater Boston Chamber of Commerce, said a survey of the 28-member group indicated “near unanimous” support for additional revenues as long as they are coupled with accountability and project delivery reforms. Rooney said there was “strong majority support” for increasing ride-share fees, creating a task force to come up with a statewide tolling initiative, and launching a transportation climate initiative to put a price on the carbon contained in automobile fuels. He said there was majority support for raising the gas tax, and mixed views on whether it made sense to combine a gas tax hike with the transportation climate initiative.

Rooney said 20 of the 28 members responded to the survey, so not every group was counted. A number of organizations known for close ties to the Baker administration – Associated Industries of Massachusetts, the Massachusetts High Technology Council, and the Massachusetts Competitive Partnership – said they saw no need for additional transportation revenues.

The business support for new revenues, combined with widespread backing from transportation advocacy groups, should give lawmakers some cover as they consider higher taxes and fees. But the level of business support reflects geographical and political realities that are also likely to play a factor in the legislative debate.

“There’s a voice from the business community for revenues, but the farther away you go from Boston it’s a more cautious voice,” said Wendy Northcross, the CEO of the Cape Cod Chamber of Commerce.

Rick Sullivan, the president and CEO of the Western Massachusetts Economic Development Council, said his car-dependent region needs to be remembered as lawmakers debate transportation legislation. “Whatever this package is going to look like in the end, it’s got to be sensitive to regional equity,” he said.

The so-called Massachusetts Business Coalition on Transportation was formed in response to House Speaker Robert DeLeo’s call for the state’s business community to explore whether some consensus on transportation revenues could be reached. The Baker administration has said existing revenues, plus the money from a transportation bond bill and the transportation climate initiative, are sufficient. By contrast, key lawmakers in the House and Senate appear convinced that a bolder revenue package is needed.

Rooney said DeLeo’s charge was clear. “The business community has historically been good at saying no, but he wanted us to give him an indication of what we could support,” he said.

According to Rooney, most business groups were willing to support some sort of revenue-raising initiative, although several of those contacted said they were still consulting with members on specifics. Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, said her group would support a short-term increase in the gas tax and is open to increased tolling and some increase in the existing 20-cent government assessment on ride-shares. She said there appears to be widespread support for the climate transportation initiative in the business community, but she said she wouldn’t do that and hike gas taxes at the same time, since they would both drive up the price of gasoline at the pump.

Jon Hurst of the Massachusetts Retailers Association said his group supports the transportation climate initiative, but would not bundle that with an increase in gas taxes. He said the group would support increasing the current rideshare fee to $1 along with some expanded tolling.

Three business groups indicated in interviews or statements that no new revenues are needed, at least for now. Jay Ash, a former Baker cabinet secretary who now runs the Competitive Partnership, which represents the CEOs of the state’s largest for-profit companies, said the group sees no need for new revenues beyond what’s contained in the governor’s transportation bond bill and his push for the transportation climate initiative.

Associated Industries of Massachusetts adopted a similar stance, although the group said in a statement “that the Commonwealth may need to develop more revenue for transportation in the next three to four years once structural reforms have been accomplished.”

Mark Gallagher, a vice president at the High Tech Council, said he did not agree with the view that there was near unanimous agreement for raising additional revenue among coalition members. He said state tax revenues have exploded in recent years, with the state racking up billion-dollar surpluses. “We simply do not understand how anyone could say we have a revenue crisis in Massachusetts,” he said.

The Greater Boston Chamber offered the most detailed revenue plan, along with a rationale for why it is needed. Rooney said the T’s operating budget is already showing signs of stress that will only worsen as demands on the agency increase and debt service costs rise.

He agreed with Baker’s often repeated contention that the MBTA has adequate funding in its five-year capital plan, but Rooney said that after 2025 revenue sources decline precipitously. “After 2025 you hit a financial cliff,” he said. “We need to plan for the cliff. We have to get after that now.”

Rooney also said the governor’s capital spending plan comes up $6.5 billion short through 2028 on highway funding and fails to provide funding for a number of major projects, including a series of new maintenance facilities for the MBTA, a new subway tunnel connecting the Red and Blue lines, and West Station in Allston. “There’s a lot of unfunded things,” Rooney said.

Rooney said the governance of the MBTA needs to be figured out before the Fiscal and Management Control Board expires next year. He said the control board members should have staggered terms (instead of terms concurrent with the governor), meet less often, and cede a lot of their power to the general manager. “He spends more time telling people what he’s going to do than doing it,” he said, referring to the weekly meetings of the board.

Many T officials say the agency struggles to spend the money it currently receives because it lacks the workforce to get the job done. Rooney said that problem needs to be solved quickly, by hiring from within or bringing in outside consultants and firms. “It’s an unacceptable answer to say even if you give us the money we don’t have the capacity to do these projects,” he said. “If capacity is an issue, then we need a comprehensive workforce strategy intended to deal with whatever capacity issue exists.”

The Greater Boston Chamber says businesses also need to pitch in themselves by promoting telecommuting, coordinating car and van pools, offering pretax transit benefits, and charging for parking at work.

Here’s the Greater Boston Chamber’s revenue plan:

Gas tax – The chamber favors raising the existing 26.54-cent tax by 5 cents a year for three years, which would bring in an estimated $450 million a year once fully implemented.

Transportation climate initiative – The chamber favors a maximum increase at the pump of 10 cents a gallon, which would be on top of the gas tax increase.  Rooney said he expects the transportation climate initiative will take some time to implement.

Ride-hailing fee – The chamber would increase the fee from the current level of 20 cents a ride to between $1.20 to $1.70 for solo rides. Rooney said the organization would favor higher fees for those who ride luxury cars or travel at peak periods and lower fees for those who share rides. The money raised from the fee would go 10 percent to the community where the trip originated, 10 percent to the state’s transportation fund, and 80 percent to public transit in the community where the ride took place. That could be the MBTA in the Boston area or regional transit authorities elsewhere around the state. In western Massachusetts, the money could also go for internet infrastructure that would permit people to use rideshare more easily. “There’s a lot of sensitivity to this not being about the T, not being about Boston. So this geographic concept is important,” Rooney said.

Fares – Rooney said he would freeze MBTA fares for three to five years until service improves significantly. He would also like to see fares used to promote public objectives. For example, he said, commuter rail fares are currently based on distance traveled. Instead, he said, the fares should be set low enough to incentivize people to work in Boston but take advantage of cheaper housing outside of the metro area.

Tolling – The chamber would create a roadway pricing task force that would report back within a year on where tolling gantries should be located and the best way to use them. Rooney said one goal of the statewide tolling initiative would be to make the impact of tolling equitable across the state.

At a meeting of the MBTA’s Fiscal and Management Control Board on Monday about designing the commuter rail system of the future, Tim Murray, the president and CEO of the Worcester Chamber of Commerce, called for a dramatic expansion of service. Asked afterward for his organization’s stance on new transportation revenues, Murray said his group will step up.

“Clearly as a regional chamber of commerce we can’t be at a forum like this with the control board asking for significant upgrades and investments without there being a need for revenue,” he said. “We’re going to have a conversation with our board and kind of finalize that rollout. I think it will be consistent with what Boston is talking about.”

Separately, a nine-member group of business associations, including MassBIO, the New England Venture Capital Association, and the Kendall Square Association, are calling for a wide assortment of revenue and policy measures. The organizations are backing an 18-cent increase in the gas tax, higher fees for ride shares, congestion pricing, the transportation climate initiative, regional ballot initiatives to support local transportation projects, expanded use of public private partnerships, and value capture.

In a statement, the groups said “the funds currently allocated to transportation fall short of getting us to a state of good repair, and don’t begin to make progress on the expansion our economy demands. Any transportation revenue and expenditure package must center on economic equity, regional equity, climate goals, and predictability.”