The Pioneer Plan for Massachusetts’ Transportation Needs

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Expect more on the Pioneer Plan for Transportation in the coming days. Already in January, we issued a detailed Public Statement on the governor’s transportation plan. Expect in the next week or two a full report. In the interim, here is a further fleshing out of our view.

The Governor has used the bully pulpit to focus the legislature, the media and the public on trasnportation. That’s the positive. The negative is that he has done a poor job of articulating the real benefits and real challenges our transit, highway and bridge systems face. The fact is that few of the reforms promised in 2009, with the passage of the2009 trasnprotation law, have been enacted. There’s been no $6.5 billion in savings, and the governor’s promise to address even basic items like the number of individuals paid out of bonded capital accounts (translation ~ borrowed money) has not occurred. That was supposed to happen given the increase in the sales tax from 5 to 6.25%.

Worse, the governor’s transportation plan is a head-dodge. All the new projects he is proposing is the height of irresponsibility with the T saddled with billions in debt, and with 30% of its operating budget already going to debt service. And you wonder why the Authority is incapable of keeping its head above water financially.

The answers are:

(1) We need all the reforms we can get.
(2) We need to recognize that the transportation system is underfunded even if we were able to wrench all the reforms out of the system. No amount of reform will get us to a funding level adequate to making the system work in an acceptable way.

As we are about answers, it is pretty clear what the path forward has to look like. Pioneer Institute believes it is reasonable to increase our focus on maintenance and repair with additional taxes and fees on the order of $250 million a year ($2.5 billion over the 10-year horizon referenced by the governor). We believe that this level of tax increase will not put an undue burden (compared to the benefits) on taxpayers and economic growth, nor will it put Massachusetts at a disadvantage competitively vis-à-vis bordering states. But any tax or other revenue

• Must be tied to the implementation of the full cycle of reforms promised in 2009
• Must be manageable for the agencies, and
• Must address real rather than political needs. Translation: No new mega-PatrickLegacyAtTheExpenseOfThePublic projects.

We believe the $250 (perhaps up to $280 million) in new revenue 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. This increase would come in two parts: immediately in year 1 if conditions below are met; and again in year 3 if progress is made on key metrics
2) $15 million from modest fare increases for mass transit riders (5 percent over the initial biennial period)
3) $30-50 million by directing the savings from moving to an automated (cashless) toll collection system to fund capital projects
4) $5-15 million through additional reforms to the MBTA
5) $10 million through some mix of new tolling mechanisms (HOT lanes, having motorists who drive during rush hour pay more, electronic tolling)

Given our checkered history with transportation funding and our considerable carried debt level as a state, any new plan must devote 100 percent of new transportation revenue to existing assets until maintenance backlogs are eliminated. Moreover, with the immediate increase in the gas tax of 3 cents, we believe that MassDOT must take four actions in concert with the legislature in year 1:

1) We must develop a four-year plan to cut the number of individuals paid from bonded capital accounts to 25 percent of the current level. That will require stopping other programs and making hard decisions.
2) We must make an initial downpayment in year 1, by reducing the number of individuals paid out of bond cap by at least 200.
3) We must re-establish Management Rights at the MBTA and within the overarching MassDOT system.
4) We must develop a set of clear metrics, published on a public website that form the basis for decisions about the additional 3-cent gas tax increase, which would occur in year 3. Key metrics to ensure accountability for the new revenues include :

Highways & Bridges
• Reduction in deficient bridges
• Reduction in Congestion
• Improvements in Rural Primary Pavement Condition
• Improvements in Urban Interstate Condition
• Improvements in Rural Interstate Condition
• Lowering the Administration Disbursements per Mile
• Increasing the Maintenance Disbursements per Mile

Movement toward a “State of Good Repair” (Urban Transit Bus Fleet Age; Asset Conditions by Asset Type for Buses; Urban Transit Rail Fleet Age and Average Estimated Condition; Vehicle Age, by Type; Condition of Track; Condition of Signalization
Operational Performance Metrics: (Speed) Average transit passenger carrying speed, Passenger-Mile Weighted Average Operating Speed by Mode; (Vehicle Use) Unadjusted Vehicle Occupancy: Passengers per Transit Vehicle, Percentage of Seats Occupied; and also Revenue Miles per Active Vehicle; and (Frequency/Reliability) Distribution of Passengers by Wait-Time, Passenger Wait-Time, Average Distance Between Failures;
Safety: Annual Transit Fatalities, Annual Incidents and Injuries, etc.
Finance: Farebox Recovery Ratio Approaching National Norms, Reduction in Debt Service, etc.

A prototype for such a publicly accountable system, including several environmental measures, was developed by Pioneer Institute in 2010.

If we must increase taxes and fees, it must be modest and it must be matched by reforms. The only way that we should provide revenues is to fix the problem we have — it should not exacerbate the problem (as is the case with the governor’s plan). Finally, those revenues have to be tied to real reforms — and should only flow with the implementation of those reforms.

As noted at the time of our Public Statement,

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.

Follow me on twitter at @jimstergios, or visit Pioneer’s website.