Transportation funding: Taxes or tolls?

December 3, 2008
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Stephen J. Silviera, who served as chairman of the Transportation Finance Commission, chatted with readers about some of the proposed ideas to close a funding gap in the Massachusetts transportation system.

Stephen_J__Silveira: Welcome to today's transportation finance discussion. The general question for the day is more taxes? more tolls? neither? both?

kenatri: Aren't we paying enough taxes already? this should be a 'no brainer". Neither. State politicians and State legislature should cut expenses just like the rest of us.

Stephen_J__Silveira: The Transportation Finance Commission looked at this issue. We developed 28 recommendations to solve the Commonwealth's transportation shortfall - 22 cost savings recommendations and 6 revenue raising recommendations. The problem is that all of the cost savings measures together add up to less than $2.5B, which means we'll need more revenues.

argyle44: Why should we raise tolls? We all use the roads, why do I have to pay because I drive on the pike for work?

Stephen_J__Silveira: The pike has been a toll road for quite some time. So, deciding whether or not you want to pay tolls should factor into your decision on where you want to live. However, I agree that expanding tolling so that more people pay in small increments, is a better, fairer way to operate the system.

scott: didn't the state just pay for the 'fly-over' project at the Sagamore bridge to ease Cape traffic and why shouldn't the state pay for all tunnels and bridges through taxes. and why does the Tobin bridge fall under Massport when other bridges do not?

Stephen_J__Silveira: I agree with the idea of having the transportation system paid for more broadly through a system of user fees - gas tax today, open road tolling (no booths) in the future. Transportation is one of the few government services where it is reasonable to have the users bear the burden in direct proportion to their use of the system.

Pchunta: I think we should do both increase the tolls nominally and add a percentaged based tax. This should alleviate the short fall. Why hasn't a peak time tax been introduced? $2 off peak 4 peak? This would alleviate congestion and promote public transport.

Stephen_J__Silveira: The problem I have always seen with peak period pricing is that we'll all end up paying the peak prices. Most people don't have the flexibility to decide when to use the system. They use the system when they have to take their children to school (dictated by those who run the schools) and when they have to get to work (dictated by those they work for and/or their clients. So, there's not a lot of flexibility.

scott: Everyone derives some benefit from the infrastructure, from travel and tourism to shipping. Most fresh flowers come through Logan. Shouldn't the costs should be shared by everyone.

Stephen_J__Silveira: I agree that sharing the costs broadly and having the fee paid - toll, tax or fare- relate to the actual cost of the service being provided is most fair. By the same token, having a government subsidy to account for the shared benefits that you describe, is appropriate as well.

orville: You say we should expand the toll system, but why should we in Western Mass. pay tolls? All the $$$ the state spends on the road goes to Boston (hello, Big Dig), so why should we have to pay for it?

Stephen_J__Silveira: Roads cost money to plan, design, build, maintain and operate. So, we should all plan on paying for their use. We're kidding ourselves if we think we can use something without paying for it. Also, it is very unlikely our children will find this the least bit funny because they're going to end up with the bill if we don't pay.

ss: When is the state going to address the real issue: uncontrollable cost and unsustainable increases. Starting to sound a lot like GM.

Stephen_J__Silveira: The Commonwealth does need to address the cost side of the equation. Some important steps have been taken recently such as beginning to eliminate police details. But, I have never seen numbers that add up to the amounts we need to solve our problems, on the cost side alone.

The_Horn: If gas taxes were raised, wouldn't that be punishing people (like me) who DON'T use the Pike?

Stephen_J__Silveira: All roads cost money to operate. the Pike is the most expensive, but there is nothing "free" about any of the other roads.

Pchunta: What do you think of the percentage tax on gas that is used by Wisconsin(I think)?

Stephen_J__Silveira: Some states do have a percentage tax in lieu of or, more often (I think) in addition to, the flat fee. We certainly need a mechanism so that we don't have to continue to have these discussions. The Transportation Finance Commission (TFC) recommended an 11.5 cent increase and then to have the amount adjusted by CPI thereafter.

The_Horn: But we pay excise tax don't we? I paid over $400 in excise tax this year! Isn't that for the "roads?" And what about all the taxes the state takes from my paycheck? I have no kids so you can't use the school excuse, and we pay for trash pick up so you can't use that excuse! What are you DOING with my money????? Big dig???

Stephen_J__Silveira: One, I don't actually work for the government, so I'm not doing anything with your money. Two, we do pay excise taxes and that money goes to your local communities to maintain local roads, which also aren't free.

jd55: How does the Turnpike bond rating nearing junk status affect things?

Stephen_J__Silveira: No good can come from that, as they say. The Turnpike must have a balanced fiscal plan to prevent unnecessarily wasting money on financial transactions that won't help the conditions of our roads and bridges one iota.

thrifty: The taxpayers decided on November 4th that we would allow the state to continue to tax our wages, what would the state have done about this issue if we had taken away that source of income? Seems to me that since we were gracious enough to let the state tax us, they can better spend the money they take, and not keep gouging us. We are all trying to hang on to our homes, our cars, our jobs, and the state wants to charge us even more to live here? I get no raise next year, and my husband is taking a pay cut. Hello, Massachusetts Government, stop spending! Look at your expense reports, look at bloated salaries, etc. I am sure a portion of this could come from an expense that is not necessary.

Stephen_J__Silveira: I appreciate that these are certainly tough fiscal times. I also agree that it is imperative that we reduce the cost structure as much as possible. But, an 11.5 increase in the gas tax costs the average driver $66 a year or about 18 cents a day. Most people who are driving (others don't pay) can afford $1.25/week.

Jeff: Why do you think most people don't understand that the gas tax hasn't gone up since 1991, and that there are few other things that we buy that do not go up over time? Isn't it reasonable for revenues to pay for our transportation system to go up over time?

Stephen_J__Silveira: Wisely, most people spend very little time looking at tax structures because they're some combination of boring and annoying - the tax structures, not the people.

Stephen_J__Silveira: Nonetheless, we do need to try to educate people that this is a flat fee and if it is not raised over time it buys less and less

Pchunta: Who takes a toll road to school? Most people driving to Boston are doing so by choice. If it is there choice to drive to work at a peak time then they should pay a peak toll.

Stephen_J__Silveira: Correct. Most people do not drive on a toll road to school, they drive on local roads and then they get on a toll road to get to work at the time that their employer has prescribed. Most workers, especially lower income workers, won't have the flexibility to use the roads at off-peak times.

Pan: How much of a gas tax increase would take care of the present shortfall? How much would be needed to eliminate the Mass Pike Tolls altogether? How much would be needed to get rid of all tolls in MA?

Stephen_J__Silveira: Over the next twenty years an 11.5 cent increase in the gas tax,and then adjust annually for inflation, brings in over $10B. That seems like a good start.

homer: How did costs get so out of whack in the first place? How can we spend what we don't have?

Stephen_J__Silveira: "Business as usual" for decades and decades led to the current situation. We can't spend what we don't have. We can either spend what we have or we can spend and hand the bill to our children who have no say in the matter. Seems like a simple choice, doesn't it?

Lineman: There are only 2 options that are fair. Either 1. Put tolls up on I-93 north and south of the city for drivers who use the Big Dig; or 2. Remove all tolls and raise the gas tax a few cents.

Stephen_J__Silveira: I think there are at least a few more options. But, in general, I like the options that have more people paying more times but in a smaller amounts. The TFC's plan for Open road tolling would charge people to drive on all of the interstates at 5 cents a mile. big savings for the current Mass Pike users, reasonable costs for everyone.

Pan: MA could collect the 5% sales tax along with a constant tax. THis would allow for inflation of gas prices.

Stephen_J__Silveira: It's a little complicated because the gas tax is currently paid only by wholesalers. If we add a 5% sales tax to that, they'll be paying on the wholesale level. Of course, when they pass it along to us, we'll be paying on the retail level, which will mean more profits for them, without the money going to maintain the system.

scott: Would open road tolling require another govt agency, staffing, admin, IT, etc?

Stephen_J__Silveira: Open road tolling cannot pop up out of the ground like a mushroom. Yes, the government would have to spend money to raise money. That doesn't mean the money can't be spent wisely. But, that won't happen without diligence either.

bobby: increase gas tax... biggest no brainer. everyone pays for roads in general, and it eliminates toll booths which cause traffic jams, need employees, and waste fuel.

Stephen_J__Silveira: According to the ad on the radio, refinancing your mortgage is the biggest no brainer...But, having a system where people pay without causing traffic jams - gas tax and/or open road tolling where you pay without stopping, seems to make sense.

Pan: Why go through the expense and Big Brother problems associated with open road tolling when you have a very simple solution, increase the gas tax?

Stephen_J__Silveira: I'm not worried about Big Brother. Having open road tolling allows you to charge people more to use highways which are more expensive to build and maintain, than local roads.

Pan: Inflation has eroded the power of the dollar 50% since 1991 when the gas tax was last set. Doesn't it make sense to increase the gas tax proportionate to inflation?

Stephen_J__Silveira: Yes. 11.5 cents is the amount the tax needs to be raised to adjust it for inflation since 1991. Back then the tax represented about 18% of the cost of a gallon. Today it is much less.

The_Horn: blah, blah, blah... again, I still don't see why we the people need to pay for bad money management on the Governments part. That is just wrong, and how civil wars are started! I'm outta this chat!

Stephen_J__Silveira: Which civil war in particular?

Brent: I agree with Bobby. It makes a lot more sense to use the gas tax collection process that we already have and eliminate the expense and time of collecting tolls. It is the fairest method of managing our transportation assets, the least expensive from the stand-point of fund collection, and removes the bottle-neck caused by toll takers without the need for additional revenue.

Stephen_J__Silveira: It's not a real choice. We couldn't implement open road tolling today even if we all thought that IT had become the biggest no brainer.

Stephen_J__Silveira: The problem is down the road the gas tax won't work because we have all of these other government policies and private actions designed to reduce fuel consumption for other reasons. It may be good for those goals, but the net result would be fewer revenues to maintain our system

Stephen_J__Silveira: That's all we have time for today. Thanks for you time and attention. Let's keep focused on this issue and drive to a solution as soon as we can.

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