Massachusetts Governor Proposes $0.19 Increase in State Fuel Tax to Support Transportation Projects
20 February 2009
As part of a comprehensive reform plan to simplify the Commonwealth of Massachusetts’ transportation system, Governor Deval Patrick is proposing a fuel tax increase of $0.19 per gallon—a 81% increase of the current $0.235 per gallon. The increased fuel tax is intended to be in lieu of an increase in tolls.
With Federal fuel taxes included, the tax on gasoline in the state would be $0.609 per gallon, and the tax on diesel would be $0.669 per gallon. That would give Massachusetts the highest gasoline tax in the US, and the fourth highest tax on diesel (behind Hawaii, New York and Connecticut), according to recent figures from the American Petroleum Institute.
Future increases in the state fuel tax would follow the Consumer Price Index. The state’s fuel tax has not been increased since 1991, and has declined in real value by more than 33% since that time, the governor said. The Governor said he will not support an increase in the gas tax without several other restructurings and reforms outlined in his plan. Proceeds of the additional $0.19 per gallon are to be allocated as follows:
- 4 cents to roll back proposed toll increases on the Mass Turnpike;
- 6 cents to preserve current MBTA services and prevent a fare increase;
- 1 cent for Innovative Gas and Toll Solutions;
- 1.5 cents for Regional Transit Authorities;
- 1.5 cents for targeted regional road projects;
- 3 cents for rail projects outside of Boston; and
- 2 cents to address the costly practice of paying for personnel with bond funds.
We also made choices not to fund certain needs. For example, we were not able to fully fund the gap in the MBTA’s state of good repair program, or MassHighway’s “Statewide Road and Bridge”program. Though these are important, too, and have been similarly neglected over the years, an increase in the gas tax beyond 19 cents was just too much to ask. We will have to find other ways to address these outstanding issues.
Raising the gas tax is a last resort, and without it, our economy will suffer. Our long-term job growth and economic security, along with the safety of our roads and bridges, depends upon both major reforms and new revenue now.
—Governor Patrick
The Commonwealth’s transportation system faces an estimated $15 to $19 billion funding gap in the next 20 years to maintain the current network of roads, bridges and transit for safe, reliable service. A 2007 report issued by the Transportation Finance Commission stated: “The cost of this neglect will be felt in our regional economy and in our way of life. … Business as usual will not suffice.”
The governor and his transportation team, led by Transportation Secretary James A. Aloisi Jr., are proposing a series of reforms, including:
Creating a consolidated Executive Office of Transportation with four Divisions: Highway, Rail & Transit, Aviation & Port, and Registry of Motor Vehicles;
Abolishing the Turnpike Authority and creating one highway, tunnel, and bridge system;
Consolidating state aviation assets;
Creating an Office of Performance Management to ensure public accountability and transparency; and
Enacting all Transportation Finance Commission Reform (TFC) Recommendations, including creation of a Private Project Ombudsman to streamline project development, which could save $2.5 billion over 20 years.
The Transportation and Economic Security Plan also proposes a series of “Green” initiatives that encourage more fuel-efficient vehicles and “Buy and Build Green” provisions.
These initiatives will encourage environmentally responsible practices and give people the opportunity to drive less with increased access to transit, bicycling and walking:
Public transportation investments outside of Greater Boston;
Mandating Massport to participate in public transportation initiatives serving its facilities;
Authorizing a “green car” sliding scale for new automobile registration fees;
Adopting and implementing “Buy Green” and “Build Green” provisions; and
Authorizing “Complete Streets” Initiative to encourage bicycling and walking.
thank god I live close to the New Hampshire (Live Free or Die) border so I can conveniently fuel up out of state.
Posted by: Mannstein | 20 February 2009 at 01:05 PM
They are dead right to increase the tax.
Compared to most of Europe and Japan, the US is undertaxed on gasoline.
It is a pity it was not a federal tax.
+ now is the time to do it when oil is very cheap - a few more cents a gallon won't hurt at this stage.
It is an easy tax to avoid over time, just change your car to a more fuel efficient one when it is time to change.
For Decades we have had fuel far more expensive than this in Europe and Japan, and people just get on with it. Noone has died, we just don't drive cars the size of tennis courts (or wannabe military vehicles).
In New Hampshire, they may live free, while in Iraq they die.
Posted by: mahonj | 20 February 2009 at 01:33 PM
Ill always remember when california upped the tax on diesel and all the truckers installed larger tanks and just didnt fill in cal.
Posted by: wintermane2000 | 20 February 2009 at 01:51 PM
How about "Live Free AND Die" when the bridge you are driving over collapses because the taxes you didn't pay didn't go toward fixing that bridge.
When will people learn that there is no free lunch? I think a lot of people who want lower taxes and want the government to do less would be very disappointed with the result if it actually happened.
Posted by: Peter | 20 February 2009 at 02:05 PM
I am all in favor of a gasoline tax increase if it is applied to building safer roads and bridges etc. But, subsidizing other services with it like:
# 6 cents to preserve current MBTA services and prevent a fare increase;
is just plain wrong. MBTA riders should bear the entire cost of the MBTA service. It is not fair to tax people from the other side of the state for something they will never use. If the gasoline tax going to subsidize anything, it should subsidize the development of electric cars which are more efficient than anything running on rails.
Posted by: country mouse | 20 February 2009 at 02:11 PM
I'm a Masshole and I support the increase -- with the consolidation of agencies and the removal of some tolls. I think it's a good thing.
As for folks filling up out of state... sure, it will happen to some extent, but most people in MA live at least 30 miles from the border given that Boston isn't on the state line. Furthermore, those who live in the southern half won't save a huge amount by going to RI or CT since those states have high gas taxes too. I'm willing to bet that RI and CT raise their gas tax within the next two years since MA's will be higher. Same may go for VT and ME. NY may, but I doubt the MA increase will have an impact in their decision.
As for NH... they're a wild card. The lege is now very Democratic for the first time in about a century; I doubt they're in a big hurry to touch this hotbutton issue just yet.
Posted by: stomv | 20 February 2009 at 02:16 PM
Hurray for Patrick
I've been advocating raising gas taxes for a long time, and with prices low (even if temporarily), and everybody thinking about national security, energy independence and global warming, it is without question time to strike while the iron is hot.
If the rest of New England follows suit, as they almost certainly will since roadways upkeep is expensive, it might just start the ball rolling and get congress' head out if its collective a$$ as far as figuring out how to pay for America's crumbling bridges.
I left MA 3 years ago, and if anyone is listening, this tax increase will make me _more_ inclined to move back, since intelligent fiscal policy is sexy.
Posted by: Nat Pearre | 20 February 2009 at 03:01 PM
... a 81% increase...
First, Green Car Congress, please use English when writing articles. Try: ... an 81% increase...
This is great news in some ways. As everyone knows, higher taxes will run productive people, and viable businesses, out of the state. Die-hard leftists and people living on the government dole will stay. Mass will bankrupt itself, modeling CA, as hard working people flee to reasonable states. It's fantastic that we allow states to be their own little experiments in government! We all see what leftist did to CA: bankrupt. Now the leftists are trying to make a repeat performance in MA.
Thank you for doing this, MA. Oh, and please keep your leftists in the state. We don't want to ruin the rest of the country. OK, OK... CA and NY are already there.
Posted by: The Goracle | 20 February 2009 at 05:33 PM
Goracle
You said leftist put California in bankrupt ? do your research (again) the deficit went out of control when a certain Mrs Reagan was Governor (not really leftist), lately Swartchy didn't do better in term of budget balance.
Posted by: Treehugger | 20 February 2009 at 05:54 PM
Massachusetts is also known as Taxachusetts. Why can't they cut spending somewhere? Why, if there is a budget shortfall, do they always have to raise taxes? The people of Mass deserve all the crap that's coming their way.
Posted by: ejj | 20 February 2009 at 07:11 PM
No, just because they do it in Europe does not make it right.
But we should look at the results.
High gas taxes hurt many people (and Detroit) but few thing come for free.
This it has to be one of the very best ways to decrease oil imports and energy consunption.
Never mind AWG.
If not this - then what ? Deny that there is an oil import and energy usage problem?
The free market cannot do this.
The hard part is the political guts it takes to raise the gas tax rate.
They say that during the depression, people were willing to make great sacrifices for their children and grandchildren.
Now these same children and grandchildren are willing to stick it to their children and grandchildren.
Low priced gas, morgage relief for houses bigger than we can afford, $780 billion for green goodies.
Posted by: ToppaTom | 20 February 2009 at 07:19 PM
There are 2 types of taxes : taxes on income and taxes on consumption. Taxes on income kill your economy, since they discourage to work (since you have to hand over most of it the state anyway), and/or discourage to create jobs (since the wages will become very high).
It will also put your economy on a disadvantage with competitors, since the price of your produced goods will become uncompetitive.
Taxes on consumption are different in 3 essential aspects : They are much less damaging to the economy, since it has much less influence on the merits of working or creating work.
Secondly, they can be directed at very specific types of consumption that can often be (partially) avoided (alcohol, cigarettes, fuel, ...). So you can use your taxes for two goals at a time. To raise money and to change behaviour. "Rich" people won't care for the extra $, and will pay relatively more of the taxes (if they choose to), while "poor" people will (have the choice to) pay less.
Thirdly, since the taxes are imposed on any goods (produced locally or far away) you don't put your own economy in disadvantage. You can even impose taxes preferably of goods that are 100% imported (like fuel).
Anyway, the governement needs money, to pay for essential investments, or to subsidize emerging industries. While wasting tax-money is bad in any scenario, the money that is needed is better collected via taxes on consumption than taxes on income.
Posted by: Alain | 21 February 2009 at 06:46 AM
@ mahonj
Are they still looking for WMD in Iraq or how about the yellow cake which Sadam was supposed to get from Niger. Don't forget the mobile biological labs.
You guys should have listened to hans Blix instead of Bush and Cheney.
Posted by: Mannstein | 21 February 2009 at 09:29 AM
Massachusett's Democrats and their one party Socialist state, have run up taxes so high in Taxachusetts that many citizens flee to neighboring states. Unfortunately they bring their voting proclivities with them, and promptly screw up the states to which they flee. So like an infection Mass Demos spread their infection elsewhere to states like NH and Maine...
Posted by: ExDemo | 21 February 2009 at 12:05 PM
Alain,
I like your analysis, except their is no distinction to Mass Demo politicians and true beleivers.
They need every dime to support their blaoated State. So they support ALL and EVERY tax they can think of, irrespective of type and STILL run deficits and spend more than they have.
Posted by: ExDemo | 21 February 2009 at 12:09 PM
The Republican party had complete control of govt for six years and did absolutely nothing to reduce fed spending. So, don't point the finger at Dems for deficits.
Now is the time to up the tax on gasoline...a federal tax. That does two things: reduce deficits and encourage alternatives to gas. The later would cause a cascade of good things. By all means, raise taxes on gas.
Posted by: danm | 23 February 2009 at 08:25 AM
Hatred towards gas taxes? Meanwhile the Federal government had to inject several billion dollars to keep the Federal road funds up to snuff as the gas taxes are not covering the costs [though I admit this is a different issue since it is a state gas tax].
Income taxes discourage people from working? HA! That is the biggest load of crap I have ever read. High income taxes only discourage the wealthy from paying taxes and encourages them to try to find more loopholes to avoid taxes. Please, show me one doctor, lawyer, CEO, etc that says he refuses to do more work because of taxes and willingly elects less total compensation (CEO's will ask their boards to reduce cash payments and instead increase other benefits that are taxed at low rates or with a tax burden carried by their companies).
Posted by: Patrick | 23 February 2009 at 08:47 AM
The reason it is affectionately known to its residents as TAXachusetts.
Posted by: Reel$$ | 23 February 2009 at 03:22 PM
It's clear that discouraging consumption of petroleum is needed to reduce our energy dependence on countries that support terrorism. The free market won't do it, and we certainly don't need more skyscrapers coming down in flames.
Reducing mass transit cost supports the right type of transportation mode, so this is a win-win.
Posted by: Will S | 25 February 2009 at 05:38 AM
Patrick,
high income taxes will certainly dicourage the wealthy (or anyone else) to pay taxes and search foor loopholes.
But they alse do very obviously discourage people from working, at least in Europe. Income taxes are only on the part above certain income levels, and increase very much with additional levels. For 'normal wages', once you work around 30 hours/week, the part above it is taxed very high (upto 66%). so for 'normal workers', there is a very strong tendency for working less hours/week or if they have extra hours, to just take the hours back later, instead of getting paid the extra money.
For people that can use the 'loopholes', of course they don't feel the discouragement to work more, since they don't feel the high taxes.
So don't misunderstand me, I support relatively high governement spending (In Europe, education and healthcare are almost completely free, and it should be), but that doesn't take away that high income taxes discourage people to work, so it's much more productive to have taxes on consumption than on production.
Posted by: Alain | 26 February 2009 at 01:20 AM