New taxes and fees aimed at expanding the existing pool of resources to fix the state’s ailing transportation systems appear dead for the 2019-2020 lawmaking session after Senate leadership ruled them off the table, in effect nullifying a House vote to approve more than half a billion dollars in hikes aimed at funding responses to worst-in-the-nation traffic and unreliable public transit.
However, the move doesn’t mean taxes won’t be part of forthcoming solutions, with lawmakers on the lookout for ways to close massive state budget gaps and a proposal hurtling toward the 2022 statewide ballot that calls on the state’s wealthiest to deliver an estimated $2 billion in new taxes for education and transportation.
The decision by Senate leaders to push transportation taxes aside for now came as refreshing news to critics of higher taxes but frustrated activists who spent months pressing for action on Beacon Hill, and it could prompt House lawmakers to walk back some of the transportation-related borrowing they previously authorized.
And if finding consensus on tax-raising legislation had been a laborious process earlier this year, it will likely prove challenging again when the next General Court convenes its two-year session starting in January with economic effects of the pandemic likely to be lingering and a 2022 income surtax ballot question looming.
In the short term, with two weeks remaining before the scheduled end of formal lawmaking business, House and Senate leaders could face a difficult negotiation process as they work toward a final transportation bond bill.
Now that the added funding the tax bill proposed is out of the running, the House will likely push to scale back the scope of an $18 billion, multi-year borrowing bill it approved that would fund a range of major capital and maintenance projects, according to Transportation Committee Co-chair Rep. William Straus.
“If revenue’s not provided, then no, you cannot sustain the $18 billion in spending,” Straus said in an interview.
A $16.9 billion Senate transportation bond bill is up for consideration in the Senate Thursday.
Straus stopped short of openly criticizing the Senate for upending the session-long push toward bringing in and spending more money on aging and overcrowded transportation infrastructure, adding that he is confident the two branches can find a bond bill compromise once they begin the conference committee negotiation process.
He made clear, though, that the House no longer views the full borrowing bill it passed in March as viable on its own, particularly with the pandemic punching a hole in state tax revenues estimated at anywhere from $2 billion to $8 billion.
In March, one day after approving a tax and fee bill that Democratic leaders estimated would raise more than $500 million each year, the House added about $3.5 billion through the amendment process to a $14.5 billion bond bill that had emerged from its Ways and Means Committee.
Straus declined to put a number on how much he believes would be affordable without the increased gas tax, corporate minimum excise tax, ride-hailing fees and sales tax on rental car purchases that were features of the House revenue bill.
“It’s hard to promise the public that we can be spending $17 or $18 billion on transportation when, two things: we don’t have added revenue that we knew we needed before COVID, and COVID has reduced revenues,” Straus said. “With revenues going in a downward direction, I don’t know how the Senate has the financial data to sustain increases in transportation spending.”
“Kicking the Can”
Almost immediately after the House adopted its two landmark transportation bills, virtually all attention on Beacon Hill shifted to pandemic response.
The Senate kept mostly quiet on how it would address the transportation issue for nearly four months before making clear last week that the borrowing bill set for debate Thursday would be it — a decision that would leave the tax and fee increases untouched.
Sen. Joseph Boncore, Straus’s co-chair on the Transportation Committee, linked the pivot away from the search for new revenues to the major damage inflicted on the state’s financial standing by the outbreak.
“When the long-term economic outlook becomes clear and we can better assess what the state needs as a whole, post-COVID, then we can begin the conversation again about what revenues we’ll need,” Boncore said last week.
By signaling it would not support tax or fee hikes this month, the Senate effectively blocked any new transportation revenues from securing approval until 2021 or 2022, a step that stung many organizations and activists who had spent much of the past session making the case that the system needed more money.
Chris Dempsey, director of the Transportation for Massachusetts coalition, said the Senate bond bill includes valuable policy suggestions but that he believes it will extend the “status quo” unless it brings in new money.
“It is hard to see how a bond bill that does not increase recurring revenue available for transportation is going to fix our worst-in-the-nation traffic congestion, repair a dilapidated transit system, or help cities and towns repair potholes and fix sidewalks statewide,” Dempsey said in an email. “The bond bill is a list of authorizations, not actual projects. These projects and improvements only get built when the state has the borrowing capacity to get them done. Without new recurring revenue to increase that borrowing capacity, many worthy projects will stay on the drawing board and never actually have a groundbreaking or ribbon-cutting.”
Dempsey’s group and other activists joined Somerville Mayor Joseph Curtatone on Wednesday to press lawmakers into adopting amendments that would impose percentage-based ride-hailing fees — the House’s revenue package would increase flat fees on the services — and would direct funding toward other major projects.
After the event, Curtatone told the News Service that the Senate’s decision to turn away from a 5-cent hike in the state’s 24-cents-per-gallon gas tax and other transportation revenues stalls momentum on needed changes.
“If we’re going to do this, we can’t keep kicking the can down the road and we can’t take just baby incremental steps,” Curtatone said. “To not do so will leave it incomplete and, again, just defer responsibility to take on this challenge for another generation.”
Gov. Charlie Baker criticized House leaders in February for initially proposing a smaller version of his $18 billion borrowing bill and argued that his version could make key investments without increasing taxes.
On Monday, Citizens for Limited Taxation wrote a memo to all senators expressing appreciation to the Senate Ways and Means Committee for “avoiding” new transportation taxes. CLT also said it was “refreshing to hear” Boncore say the $16.9 billion bond bill was affordable without the passage of additional revenue sources.
“Living within our means is the hallmark of fiscal responsibility, whether among your constituents in their daily lives or their expectations from those they elect to represent them,” CLT wrote. The group urged senators to strike a bond bill measure that CLT says would allow municipalities and regions to generate new taxes for transportation projects outside of Proposition 2 1/2, which limits property tax increases.
According to Straus, regional ballot initiatives could deepen inequities because lower-income communities have less of a tax base on which to build transportation funding.
“I don’t think it’s fair to ask those communities to meet the same standards that some of the wealthier either counties or municipalities face,” he said. “If anything, I think this kind of system could separate us more than bring us together.”
Lizzi Weyant, director of government affairs for the Metropolitan Area Planning Council, threw her support behind the Senate’s regional ballot initiatives proposal, arguing that the questions allow communities to fund bike lanes, bus lanes, regional transit and other projects they otherwise might be unable to afford without state-level action.
She acknowledged that there are some equity questions about the system, but added that “lower-income and rural communities really want to see this kind of investment because it’s the only way they’re seeing significant dollars for transportation in their communities.”
Lawmakers have until July 31 to finish any business that requires a roll call vote, which would include resolution of a final bond bill.
Should this session end with no new transportation revenue sources on the books, Straus said the House will likely pick up the charge again starting in 2021.
“I can’t predict what the House will do, but I can say this: if new revenue is not provided in this session for transportation, then the added revenue need will still be there, and I assume the House would step up again to address it,” Straus said. “The operation of our transportation system is not an issue that the Legislature can ignore.”
Supporters of the constitutional amendment imposing a 4 percent surtax on household income above $1 million, which needs one more vote from the Legislature to go before voters for final approval in November 2022, say it could generate as much as $2 billion per year for education and transportation.
(Copyright (c) 2020 State House News Service.