By Michele Fuetsch, Staff Reporter This story appears in the July 29 print edition of Transport Topics.
Massachusetts has become the latest state to increase taxes on diesel and gasoline, with lawmakers last week approving a transportation funding plan that adds 3 cents to the state’s 21-cent tax.
Gov. Deval Patrick (D) had vetoed the bill, saying the increase was not large enough to cover the revenue loss anticipated with the scheduled drop in toll rates in 2017 on the western section of the Massachusetts Turnpike.
On July 24, however, both the Senate and House voted to override the veto.
“While it is no secret that today’s transportation finance package shortchanges our transportation needs, it still represents a step forward,” Patrick said. “Now, it’s time to put these resources to work.”
In all, the transportation measure contains $500 million in new taxes that take effect within seven days of the bill’s passage. Massachusetts followed Wyoming, Vermont, Virginia and Maryland, all of which passed new transportation taxes this year.
In addition to increasing the per-gallon fuel tax, the Massachusetts bill indexed the tax, meaning the new 24-cent levy will rise annually with inflation.
The bill also contains a $1-a-pack tax on cigarettes and requires that a 6.25% sales tax be applied to computer and software services. That new revenue will be dedicated to transportation.
In the final days of the debate over transportation funding, Patrick tried to get lawmakers to increase the fuel tax by more than 3 cents if the turnpike tolls were lowered.
He said lower tolls would cause too large a loss in revenue to support road maintenance. Supporters of lower tolls, however, have argued that the bonds that financed the highway were paid off, so tolls should be lower.
The final measure fell short of the $1 billion a year in new revenue Patrick wanted for transportation.
In January, the state’s Department of Transportation issued a report that said the transportation funding problems were staggering and the debt load at some transportation agencies was so large they had issued bonds to pay salaries.
That report also said that to reach the revenue levels needed to pay the debts and upgrade deteriorating infrastructure, the state would have to raise the fuel tax by 30 cents.
In answer to the DOT report, Patrick proposed an overhaul of the tax system that would have shifted transportation funding off per-gallon fuel taxes.
The governor proposed an idea that gained little traction with lawmakers — generate billions of dollars in new revenue for both transportation and education by raising the income tax rate to 6.25% from 5.25% and dropping the sales tax to 4.5% from 6.25%.
