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Massachusetts Governor Vetoes Transportation Bill Because Tax Hike is "Too Small"

Daniel Bier
July 17, 2013, 3:51pm

Last week, Massachusetts Governor Deval Patrick vetoed $240 million in transportation funding from the $34 billion state budget. While MBTA and state transit agencies continue to be plagued by overspending and inefficiency, this move was meant to pressure legislators to approve even larger tax increases asked for by government officials.

The governor’s office had originally requested $1.9 billion in tax hikes. Governor Patrick believes despite the legislature’s rebuff that an additional 3-5 cent increase in the gas tax is needed if tolls on the Massachusetts turnpike are removed on schedule in 2017. Although the legislature seems poised to override the veto without further amendments, the current bill already includes half a billion dollars in new taxes, from a 6.25% tax on “software services” to a 3-cent increase in the gas tax and a $1 increase in cigarette taxes.

While Governor Patrick is correct to call attention to the expiring toll authority on the turnpike, replacing it with new taxes would compound the mistakes of the present bill. Tolls are a more fair and efficient way to fund state roads than general taxes which everyone pays. Pricing on roads also helps manage traffic and control congestion which has reached near crisis levels around Boston—for instance, Sunday’s 25-mile, 8-hour traffic jam out of Cape Cod. Removing tolls is likely to make a difficult situation worse.

There is no compelling reason to replace existing tolls with taxes. Legislators have already signaled a willingness to continue the current system by reinstating tolls that were removed in 1996 on the western end of the turnpike. Moreover, the emphasis on raising revenue to solve the state’s transportation needs is misplaced. In reality, the state’s highway system is marked by overspending and huge administrative costs. According to Reason Foundation’s Annual Highway Report, the state ranks 3rd in transportation spending per mile—nearly 4.5 times the national average—but 43rd in overall performance and efficiency.

The argument over the details of this bill may be a sign that a larger conflict is brewing over transportation funding and priorities. Earlier this year, the governor’s office called for a massive ten-year, $13-billion capital expansion to improve transportation infrastructure throughout the state. The proposal would devote the bulk of this spending to a variety of expensive commuter rail projects that have been postponed or tabled since the Big Dig fiasco. However, it is unlikely that the state could afford these projects without a raft of major tax increases, given the poor condition of its current finances.

Both MassDOT and MBTA are projected to continue running large structural deficits over the next decade, and these shortfalls have frequently been covered with borrowed funds. While this is a short-sighted and increasingly costly practice, the solution is more efficient and cost-effective service, not more taxation. Handing bureaucrats a blank check is merely an invitation to continue business as usual, and taxpayers should demand better performance before rewarding them with new sources of revenue.

A number of options are available to improve transportation in the Bay State, without raising taxes or exacerbating the deficit. Modest improvements in efficiency and reductions in overhead would go a long way towards closing budget shortfalls. Adding high-occupancy toll lanes to highways around the state is an effective way to reduce congestion, as well as generate revenue. This strategy would also allow the state to replace its stalled rail projects with less costly bus transit. Express Bus lines, for instance, operate on HOT lanes and provide service comparable to commuter rail at a fraction of the cost. Public-private partnerships can bring in new sources of capital for these projects, while protecting taxpayers from cost overruns. Policymakers should look at each of these before imposing still more taxes on a weak economy.



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