A ballot initiative with far-reaching implications for our economy will be decided thisfall. If you’re following the local news, you might think I’m talking about the repeal of casino gambling. I’m actually talking about the proposed repeal of the indexed gas tax.
A key aspect of the landmark 2013 transportation finance legislation was a provision to index the gas tax to inflation. This means that the gas tax, currently a flat tax of 24 cents per gallon, will gradually increase every year to keep pace with inflationary pressures. Without indexing, every year our transportation funding is effectively decreased by inflation. With the index, our transportation system receives roughly the same amount of funding each year, adjusted for inflation. Our gas tax did not increase at all from 1991 to 2013, resulting in decades of dwindling funding.
The slogans for repeal are very seductive. Indexing has been dubbed by some as the “forever tax,” because it will forever adjust itself to reflect inflation. For those voters who hate taxes of every kind, the gas tax index may seem especially insidious.
The Case For Transportation
But there is another side of this issue that receives short shrift. Without a well-maintained transportation system, we cannot get all of our workers to their jobs. Whether they travel by foot, bicycle, car, bus, trolley, subway, train or boat, funds generated by the gas tax subsidize each commute. Just as importantly, all of the goods and services that are the lifeblood of our economy are shipped using that same transportation network. Without a robust transportation system, our economy will falter.
Instead of investing in our transportation system, for several decades Massachusetts has allowed a serious maintenance backlog to accumulate in our transit systems. While we can defer maintenance year after year, at some point the bill will come due. When a failure occurs, the economy suffers exponentially due to lost efficiency. We find ourselves having to pay for the emergency repairs as well as the permanent repairs – a highly inefficient use of limited capital. This says nothing of the potential for lost lives and injuries when there is a catastrophic failure.
In 2007, the Transportation Finance Commission found that the state had accumulated a $15 billion to $20 billion deficit in transportation spending – our deferred maintenance. This deficit in spending compromises our safety and economic competiveness on a daily basis. In addition, study after study has shown that investments in transportation infrastructure are critical to maintaining our economic position in the global economy. Groups as diverse as the Boston Society of Civil Engineers, the Massachusetts Competitive Partnership, the Massachusetts Taxpayers Foundation, AAA, and the Greater Boston Chamber of Commerce all oppose repeal of the index – with good reason.
Ensuring Our Safety And Economy
What does the increased gas tax mean to the average voter? And why index the gas tax anyway? The gas tax increase (including indexing) represents $5 per driver per year in increased funding. That is roughly two cups of coffee. This was the political compromise that was needed to ensure a sustainable source of revenue for our transportation infrastructure needs. Are there other ways to achieve the same outcome? Yes, but the gas tax index hardly seems like a huge investment for the return expected in safety and economic competitiveness.
Ultimately, the voters will have their say this fall. But if the gas tax index is not the answer, what is? Rejecting the gas tax index will result in a funding shortfall of more than $180 million per year over a 10-year period — totaling $1.8 billion by the end of a decade. These funds have already been pledged to tackle our most pressing transportation needs across the state. Without the gas tax index, many projects critical to our economic competitiveness will be in jeopardy. The bottom line is, we can’t eliminate the index without identifying some other source of revenue.
As the election season bears down on Massachusetts, we all should take the time to educate ourselves about the implications of repealing the gas tax index. It is a complicated subject, prone to emotional response and irrational discussion. But it is quite possibly the most important ballot initiative for our economy in several decades. Listening to the debate about repealing the casino legislation, you might never know that we are on the precipice of causing a major roadblock to economic competitiveness on the Massachusetts superhighway to the global economy.
William F. Lyons Jr. is president of Fort Hill Cos. of Boston.
