Real Estate Blog

10 Key Features of the Massachusetts Transportation Funding Legislation

08/27/2013 | by John J. Slater III


Real Estate Blog

10 Key Features of the Massachusetts Transportation Funding Legislation

By John J. Slater III on August 27, 2013

The ULI Boston Infrastructure Council, which I Co-Chair, has in recent years engaged in an effort to demonstrate to the real estate community and other business constituencies the economic impact of a robust regional transit system. In furtherance of this effort, in June 2012 the Council issued a report entitled “Hub and Spoke: Core Transit Congestion and the Future of Transit and Development in Greater Boston.” This report examines the negative consequences for regional economic growth of not addressing capacity constraints in Boston’s core transit infrastructure. This Report was a joint undertaking of the Dukakis Center at Northeastern University, A Better City, MASCO and ULI Boston and released concurrently with a study prepared by the MAPC.

The Hub and Spoke Report documented the congestion at the core of the transit system. Various segments of the Green, Orange, Red, and Silver Lines all currently exceed their capacity during portions of the day. The Report also demonstrated the need for additional capital spending to remedy increasing transit congestion which impedes future economic development in areas served by public transportation. A copy of the Report may be obtained at here.

As anticipated, the Massachusetts Legislature took up the issue of transportation funding in this legislative session. Both the House and Senate offered competing versions to Governor Patrick’s transportation funding plan. Following initial passage of a compromise bill by the Legislature and subsequent rejection of the Governor’s proposed amendments, the Legislature on July 24, 2013, overrode the Governor’s veto of the transportation finance law. It has been estimated that this legislation will provide $800 million in net new tax revenue by 2018.

Following is a brief summary of key features of the transportation funding legislation:

A. Revenues generated from taxes:

  • A three cent per gallon increase in the gas tax, which is now indexed to inflation.
  • Net new revenue from motor vehicle sales tax to be allocated to the Commonwealth Transportation Fund.
  • A $1 per package increase in the cigarette tax.
  • An expansion of the sales tax to certain computer and software services.  This element of the tax package has proven to be the most controversial.  A coalition of business groups recently announced an effort to repeal this tax through a ballot referendum.

B. Revenue from MassDOT Sources:

  • Mandate for MassDOT to raise 51% of the cost of its operating budget through own source revenue (tolls, fees and the like) by FY 2018.
  • MBTA fare increases to be implemented more regularly but with a limit of no more than a 5% annual increase every two years.

C. Other Provisions:

  • A Project Selection Advisory Council is to develop transportation project selection criteria;
  • The Green Line Extension and the South Coast Rail Project are required to be funded.
  • MassDOT employees must be moved off of the capital budget over time.
  • MBTA must seek private sponsorship for extended operating hours.
  • There are also provisions affecting the Regional Transit Authorities, including the requirement to develop a comprehensive regional transportation plan.

To maintain the Commonwealth’s economic standing, it is critical to invest in our transportation infrastructure.  The ULI Boston Infrastructure Council will continue to be engaged in discussions regarding projects that may be funded with this additional revenue and, in particular, to keep at the forefront the critical need to address core transit congestion.

More information about the ULI Boston Infrastructure Council may be found here.

John J. Slater III – Partner

John J. Slater III is a partner in the firm’s Real Estate Department and Business Law Group.