State Case Study

By 2013, transportation stakeholders in Massachusetts had been warning for years that the state’s investment in transportation was falling far behind the need. The situation grew so dire that transportation debt threatened to consume all the money available for system maintenance and improvements. To make matters worse, the state had been borrowing to cover its annual transportation operating budget for years. In 2013, the governor and legislature, with support from a broad-based campaign by their constituents, took up the issue.

In addition to recognizing the need for increased investment in transportation, the Massachusetts legislature also understood the importance of reforming how Massachusetts invests in transportation. The legislature passed two bills in the early 2000s that helped to lay the groundwork for successful revenue legislation in 2013.

Image from Transportation for Massachusetts’ storybook on the 2013 campaign, A New Day for Transportation in Massachusetts.

Image from Transportation for Massachusetts’ storybook on the 2013 campaign, A New Day for Transportation in Massachusetts.

The first, in 2000, restructured the Massachusetts Bay Transit Authority (MBTA) budgeting practices. Historically, the MBTA would spend money and then send the state an annual bill. The legislation provided the MBTA with its first-ever fixed revenue stream: revenues from one cent of the state’s then five percent sales tax.However, even with a dedicated source of funding, MBTA’s finances did not improve as much as anticipated, in part because sales tax revenue growth fell short of projections.

The second measure, enacted in 2009, restructured how Massachusetts’ transportation agencies and offices. Specifically, the legislation merged the Executive Office of Transportation and several other transportation agencies into a multimodal department of transportation, the Massachusetts Department of Transportation (MassDOT). Merging seven different transportation agencies into a single agency with one Secretary enabled Massachusetts to realize greater efficiencies and cost savings. This legislation also restructured MassDOT’s funding sources of gas taxes, motor vehicle fees, sales taxes and toll revenue, with a portion of the funding appropriated by the legislature.

At one point, 100% of MBTA fare revenues went to paying down debt, in part because Big Dig-related debt largely ended up on the MBTA books. Flickr photo by Josh Jackson

At one point, 100% of MBTA fare revenues went to paying down debt, in part because Big Dig-related debt largely ended up on the MBTA books. Flickr photo by Josh Jackson.

Both Governor Deval Patrick and the legislature recognized that simply restructuring how Massachusetts operates and funds its transportation system was not going to overcome a projected shortfall of up to $19 billion just to maintain the system over 20 years. The urgency grew in early 2012, when the MBTA — operator of Boston’s “T” transit system — announced it would hike fares as much as 43 percent and cut service to balance its books. Transportation advocates argued this was not a one-time problem, but the result of chronic underfunding. The crisis cast a spotlight on the need to stabilize the agency’s finances and also mobilized many advocates whose support would prove to be instrumental.

“The T cannot balance the budget on the backs of riders. There has to be a broader policy solution that really involves addressing the revenue questions,” said transit advocate Joan Tighe, co-coordinator of the Fairmount/Indigo Line Coalition, following a legislative hearing on the issue.

In January 2013 Gov. Patrick’s state budget proposal included $1.9 billion in new annual revenue, with a substantial amount dedicated to transportation. Patrick argued that the increased revenues dedicated to transportation would fully fund the state’s regional transit authorities, reduce the state’s transportation-related debt and create economic opportunity across the state. To pay for the increased investment, the governor proposed a wide variety of revenue raisers largely unrelated to transportation. His proposal would have also raised transit fares, tolls and registry fees and implemented electronic tolling throughout the state.

Legislative leaders responded by announcing a much smaller funding package that would direct approximately $500 million annually to transportation. Transportation advocates quickly denounced that sum as inadequate and rallied hundreds of grassroots calls to legislators. Gov. Patrick said he would veto such a bill because it would not meet the state’s needs. In just 12 days, both the House and Senate passed versions of that funding package without major changes from the first legislative proposal. The legislature’s final agreement, which would raise an average of $600 million per year, was passed over Gov. Patrick’s veto.

The legislation raised revenue through a variety of funding mechanisms, some directly related to transportation and others not. The transportation-related measures included:

  • Hiking the gas tax by 3 cents per gallon, raising about $90 million per year.
  • The tax also was to be indexed so that it would rise automatically with inflation, raising an additional $1 billion over ten years. Indexing was subsequently repealed by a voter initiative in 2014.
  • Dedicating 2.5 cents of the underground storage tank fees to the Commonwealth Transportation Fund and indexing the fees to inflation to raise approximately $80 million per year.
  • Dedicating all revenues raised from the motor vehicle sales tax, about $415 million a year, to the Commonwealth Transportation Fund.
  • Reintroducing tolls at several exits of the Massachusetts Turnpike to raise $15 million annually.

Additionally, the legislation as passed also would have applied the state’s 6.25 percent sales tax to a variety of computer software, generating an estimated $160 million a year. Though little noticed during the law’s adoption, it later triggered fierce opposition from the state’s technology community, who complained that vague wording meant it could impose a $500 million annual tax burden on Massachusetts companies. Facing vocal opposition from an important sector, the legislature quickly repealed this provision of the revenue package. However, the “tech tax” revenue was not strictly dedicated to transportation to begin with, so its repeal had little to no effect on transportation funding.

T4America partnered with Transportation for Massachusetts (T4MA) on a conference to support and encourage their efforts in pioneering a more inclusive, sophisticated approach to picking projects through the newly created Project Selection Advisory Council.

T4America partnered with Transportation for Massachusetts (T4MA) on a conference to support and encourage their efforts in pioneering a more inclusive, sophisticated approach to picking projects through the newly created Project Selection Advisory Council.

To bring greater transparency to how the new dollars would be spent, the law also created a Project Selection Advisory Council tasked with developing uniform criteria for developing the comprehensive state transportation plan, which guides MassDOT’s five-year spending plan. The eight-member council is made up of three members appointed by the Governor, one member each appointed by the president of the Senate, the minority leader of the Senate, the speaker of the House of Representatives and the minority leader of the House of Representatives, and a representative of the Massachusetts Municipal Association.

Stakeholders in Massachusetts who supported increased investment brought together a broad set of constituencies to make the case, including business, environmental, health and equity constituencies, metropolitan planning organizations across the state, and local elected officials. Transportation for Massachusetts (T4MA) organized a coalition including:

  • The 128 Business Council and the Alliance for Business Leadership
  • Regional transit authorities from across the state
  • The Massachusetts Association of Community Development Corporations
  • Environmental organizations, such as the Conservation Law Foundation and the Environmental League of Massachusetts
  • Regional planning agencies
  • Grassroots organizations, such as Neighbor to Neighbor and Alternatives for Community and Environment
  • Advocacy groups, including WalkBike Worcester, the Livable Streets Alliance and the MBTA Advisory Board

Transportation for Massachusetts mobilized members to make the case for greater investment in transportation to editorial boards, elevating the issue with residents and building support. Transportation for Massachusetts leveraged public hearings on the funding shortfall, turning out residents to testify about the importance of addressing shortfalls in funding and some of the critical components of this legislation. Coalition members also testified before the Joint Committee on Transportation on the benefits of greater investment in transportation.

Image from Transportation for Massachusetts’s storybook on the 2013 campaign, A New Day for Transportation in Massachusetts

Image from Transportation for Massachusetts’s storybook on the 2013 campaign, A New Day for Transportation in Massachusetts.

Proponents of increased investment pointed out that the state gas tax had not been raised since 1991 and had since lost almost half of its purchasing power, leading to the overwhelming maintenance backlog. In making the quality of life argument, proponents highlighted the variety of constituencies that would benefit.“Throughout the campaign,” Transportation for Massachusetts leaders wrote in a post-campaign report, “our message focused on the economic value of better transportation for residents across the state. We stressed that every person, whether rural, urban, low-income, young, old or disabled, deserves good transportation choices.”

For commuters and shippers, for example, proponents calculated that congestion costs $77 million per year in wasted hours and fuel. In addressing the burdens on low-wage workers, they highlighted that families earning less than $13,000 a year spend 42 percent of their income on transportation. These messages helped to create broad support for the legislation from around the state.

Transportation for Massachusetts and its growing number of allies quickly learned that continuing adequate funding for transportation requires an ongoing effort. After the 2013 revenue package passed, organized conservative opposition mounted a ballot measure campaign to repeal the requirement to automatically index the gas tax in the future. Voters were persuaded to eliminate these future tax increases; the measure passed with 53% in favor in November 2014. The 2013 revenue campaign and the subsequent referendum demonstrate the need for a broad-based coalition to continue advocating for and protecting transportation revenue.