Public Statement: We Must Address Serious Transportation Needs In Massachusetts, But the Governor’s Proposal Is Not Serious
Public Statement: We Must Address Serious Transportation Needs In Massachusetts, But the Governor’s Proposal Is Not Serious
Contact Micaela Dawson at 617-723-2277 ext. 203, mdawson@pioneerinst.wpengine.com,
or Jim Stergios 617-818-1730, jstergios@pioneerinst.wpengine.com
The following is a Public Statement from Jim Stergios, Pioneer Institute’s Executive Director.
Tonight, Governor Patrick will address the General Court, state and local officials and the general public on the year just completed and the one ahead. In his remarks he will focus, in part, on transportation infrastructure and other investment needs.
Pioneer Institute commends the governor for several important actions in the area of transportation, such as delivery of the “Fast 14” bridges north of Medford, as well as his focus thus far on infrastructure maintenance and repair. We have publicly supported this work to date. Our transportation work has covered needed reforms as well as meeting real public needs, enhancing accountability to the public, and funding. Most recently, in Beyond the Gas Tax (2006), Our Legacy of Neglect (2007), Getting There (2009), and numerous reports on innovative project delivery, we have laid out the right steps forward.
The need to address infrastructure maintenance and repair is akin to any other liability the state faces – and there are many, including the unfunded liabilities for state and local pensions and for state and local health care benefits for retiring public employees. These liabilities stretch into the tens and tens of billions and make the Commonwealth one of the most indebted states in the country.
With (1) the implementation of several key reforms and (2) a serious plan in place that focuses on real and immediate needs such as safety and congestion, Pioneer Institute understands and supports the need to generate adequate infrastructure funding. Unfortunately the governor’s plan, announced earlier this week, is not a serious proposal, whether in terms of economic benefits, the promised but as-yet unimplemented reforms, the scope and focus of projects, or the extent of (and perhaps method for raising) new revenues.
The governor’s transportation report bases itself on outsized predictions of the economic multiplier effects of government spending on transportation. Rollout of the governor’s plan was preceded by a supportive report from the Boston Foundation and a business group using “multipliers” in a way that is entirely exaggerated. The suggestion that every dollar of transportation investment will yield $2.04 in economic activity is wildly overstated and reminds any serious analyst of the puffed-up projections of proponents of the Convention Center developments in the 1990s.
If such a multiplier is accurate, why wouldn’t we simply spend 10 times more money on transportation? The multiplier claims omit the negative multiplier effects of raising taxes and fees by hundreds of millions of dollars. The extent to which the “plan” was not properly crafted or vetted can be seen in the inclusion of such off-the-wall ideas as a new payroll tax, as if the nearly 50 percent increase in the effective payroll taxes of all Americans that took effect on January 1 was not regressive enough.
I hope we do not need to restate obvious facts such as the double-digit unemployment numbers in many parts of the state outside the Greater Boston region. Taxes have serious impacts and such wild proposals as were included in the plan are not helpful. They hurt real people.
We need to complete the cycle of reform. Some reforms have come – but nothing close to the $6.5 billion promised by legislators at the time of the 2009 Transportation Reform Law. Still, granting that those were overblown estimates of cost savings, with a few more steps, we recognize that it’s time to start thinking about funding.
We still lack the level of transparency promised in the 2009 Transportation Reform Act. MassDOT has shown a puzzling reluctance to provide public transparency on performance metrics. Pioneer developed the basis for a strong accountability system, which staff at MassDOT has continued to work on. Their “scorecard” transportation performance metrics has only been presented at hearings, but needs to be improved to focus on customer (not agency) needs and made available to the public. After the Big Dig, transparency has to be the cornerstone for any call for new public debt and investment.
In addition, we must review that the number of public employees paid out of the capital accounts is as close to zero as possible – and remains that way, even if new revenues are made available.
The governor is overstating real and immediate transportation needs. Gov. Patrick’s new blueprint gives the same old interest groups the tools to repeat the mistakes that got us into this mess in the first place. Our transportation problems stem in part from 14 new transit projects built as part of an agreement to let the Big Dig go forward more than 20 years ago. The expansion binge — pushed by many of the same groups lining up behind the governor’s plan — came without a funding source.
The results are predictable. Just as the Big Dig drained money from other state road projects, new transit lines diverted funds from maintenance to expansion. Today, nearly half the MBTA’s $8.6 billion debt can be traced to building, operating, maintaining and paying debt service on those projects. So can much of the T’s $3 billion maintenance backlog.
We need to stop calling the same old political projects “transportation needs.”
Compounding past mistakes, the report includes no mention of what these projects will cost to operate and maintain over their lifetime, instead focusing only on construction costs over the next decade.
The $1.02 billion annual number is hyper-inflated with a wish list that includes South Coast commuter rail, passenger rail from Boston to both Springfield and Cape Cod, and even between the Berkshires and New York City, over $40 million a year for bike and pedestrian projects, a doubling of Chapter 90 local project funding.
Finally, it is the height of irresponsibility to offer over $3.1 billion in state funding to the MBTA. The T is an important institution and needs additional funds for track, signalization and new rolling stock. But it is also an agency with questionable efficiency. It should receive smaller investments for maintenance and infrastructure – and only after proving through on-time delivery and improvements in service should it receive the next investment.
The governor is putting a bad economy at further risk. Governor Patrick has been coy in setting off rafts of trial balloons. Massachusetts has no business establishing highly regressive payroll taxes (truly a wacky idea) or increasing job-killing sales and income taxes. The most efficient way to raise transportation infrastructure funds is through user and “user-like” fees such as modest increases in gas taxes and transit fares, as well as moving ahead with new tolling mechanisms such as HOT lanes, congestion pricing on new projects and major highways such as I-93 (which would require federal approval).
Our View
With completion of the reforms, confirmed through a public hearing, Pioneer Institute believes it is reasonable to increase our focus on maintenance and repair with additional revenues of $250 million a year ($2.5 billion over the 10-year horizon referenced by the governor).
Any attempt to raise taxes and fees for transportation must implement the full cycle of reforms promised in 2009 and be manageable for the agencies, and address real rather than political needs. Finally, it must not put an undue burden (compared to the benefits) on taxpayers and economic growth.
We believe the $250 million increase should come in the following form:
(1) $192 million from a 6-cent increase in the gas tax (to 27 cents a gallon), a measured increase that does not put Massachusetts fueling stations at a disadvantage
(2) $15 million from modest fare increases for mass transit riders (5 percent every biennial period)
(3) $30-40 million through some mix of new tolling mechanisms (HOT lanes, having motorists who drive during rush hour pay more, electronic tolling) and directing the savings from moving to an automated (cashless) toll collection system to fund capital projects
Given our checkered history with transportation funding and our considerable carried debt level as a state, any new plan must devote at least 90 percent of new transportation revenue to existing assets until maintenance backlogs are eliminated. Key metrics to ensure this focus include: Holding the limits in place until no more than 5 percent of the state’s bridges are deficient, the MBTA is in a state of good repair, and road quality is improved.
Closing
Friends may criticize our position on this issue as opening up the field to the politicos who will aim to leverage it for even larger increases. To that I can simply say that it is not Pioneer’s business to play politics or pretend to negotiate or position ourselves. We have in the past (though not this year) supported increases in education funding as part of a reform agenda, just as we supported in 2008 increased borrowing for the Accelerated Bridge Repair program.
Pioneer is a point of reference for thinking people who want real answers. Our job is to point the right way forward for Massachusetts.
The governor’s plan is not serious and, in parts, borders on slapdash. It is rife with analytic mistakes and provides no real justification for the projects it chooses to fund. The lack of thought that went into it should give no comfort to the public or to legislators as they try and map out a real road to meeting our transportation needs.
A 21st century transportation system doesn’t require asking taxpayers to pay for an array of low-use, politically expedient expansions at the same time as they pick up the tab for a 20-year transit expansion binge. Instead, it requires investment in decidedly old-school concepts like properly maintaining what we have, so that residents can get where they need to go in a timely manner.
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Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.