Governor Patrick did an on-line chat with Boston.com readers yesterday, in which he pretty much dropped a bombshell:
[Comment From Stephen DiCiaccio]
Good Day Governor Would you be willing to raise the gas tax as opposed to raising tolls? I think this would be fair to all commuters. Thank you. SteveGovernor Deval Patrick: Maybe. I hate the proposed toll increase, like everybody else; but we have avoided tolls for so long that the bills for the Big Dig debt at the Turnpike are coming due and we will get hit with a whopper of a late fee if we don’t raise the tolls. The gas tax could be a serious alternative on three conditions:
First, what’s enough? I can’t see asking people to pay a gas tax to avoid just this latest round of toll increases. Let’s consider what would be enough to remove the tolls or at least assure we do not have to raise them so sharply again. Let’s also consider how we put the T on a more financially sustainable basis. There is a lot of Big Dig debt there, too.
Second, how do we dedicate a gas tax? I would want to be sure that it is “sealed off” so that it could not be used for non-transportation purposes when the next good idea comes along.
Third, what is the set of reforms the gas tax supports? We have six different agencies responsible for different parts of the transportation network. Why not have one? That way we get closer coordination of the development and implementation of transportation policy, and probably save a few bucks, too.
Mistah Speakah was pleased: “Hopefully we’re riding in the same car now.”
The gas tax is really the only fair way to go. Seven-dollar tolls are ridiculous, and not sustainable. Our 23.5-cent gas tax is middle-of-the-pack nationally, and is relatively low by regional standards (of the New York/New England states, CT (44.1), NY (41.2), RI (31), and ME (29.1) are all higher, and NH (19.6) and VT (20) are only a couple of cents lower). One estimate I found predicts an extra $34 million of annual revenue for each one-cent increase. I mean, $34 million here, $34 million there, pretty soon you’re talking real money.
If the Gov uses this opportunity to wipe out the tolls and set the state’s transportation bureaucracy on a firm footing going forward, that’s a really big accomplishment.
We’re getting there…
He’s getting there.:
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p>Should start a prediction pool:
a: Gas tax. Yes or no. How much
b: Cut local aid. Yes or no. How much
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Was this one of Alosi’s ideas? It’s back on the table.
Did he get that .02 reversed?
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p>Can we exempt areas with no public transportation?
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p>I know Sal doesn’t give a damn, as he can walk to the State House from the North End, but some of us have to drive a mile to get a loaf of bread.
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p>As for local aid – the combined local aid of all of Barnstable County doesn’t come close to the $100 million to the city of Boston alone.
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p>We’ve been paying for the Mass. Turnpike and the MBTA and its money-losing follies for decades with our tax dollars. Now, double the gas tax to bail them out? Together we can!
A county of 225,000 residents get less aid than a city of 600,000!
The fiscal picture is rather complicated, isn’t it.
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p>The biggest budget in history, with tax revenues that won’t support it.
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p>A turnpike authority with debt ratings so bad that its bonds have junk status and a notice of a call on covenants of $400 million. You gotta love the LeBovidge line about the $400 million call:
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p>Literally.
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p>So with a big budget, declining revenues, the largest per capita debt load of any state in the US:
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p>1: Gas tax. Romney used it as a band-aid: $90 million or so. Gas tax certainly won’t address the budget short-fall AND the Authority’s deficit, except at 20 cents. So I think you’re right about 20 cents being necessary if the Governor intends to address the budget deficit with a tax increase, but other than from the greenies and moonbats, the backlash from a 20 cent gas tax would be extreme. IMHO.
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p>I don’t think he’ll try it. 5 cents maybe; 20 cents, hard to see, particularly with gas around $1.80. Imagine the press if the Governor pushes gas over $2. Oh well, it’s my fault. Someone told me if I voted Yes on Question 1, my taxes would go up. I guess they were right.
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p>2: Combine the Authorities. Take the debt heavy Pike and dump it into port authority or else have the State guarantee the debt. You know, the state with the highest per capita debt load already. What would that do to the overall debt ratings? Hint: take polluted water and add it to pristine water and what do you have.
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p>3: Toll I-93. Would someone closer to Boston, explain to me why that’s off the table?
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p>4: Sell the pike. Privatize the pike and abutting land. I wrote it before. It’s the only solution remaining.
And maybe I missed the new math but how does the ownership change the arithmetic?
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p>If the state sells it for anything close to the debt incurred on that strip of land, private buyer is going to have to charge everything the state was going to charge plus more for financial transaction fees, higher interest rate likely, gotta figure they’re gonna squeeze a few cents profit as well.
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p>Let me guess, your ideal scenario, a la DC republicans:
1) Sell the pike for less than the outstanding debt on it
2) Stick the MA gov’t with continuing debt payments
3) Let whomever bought it charge as much as the MA gov’t was gonna anyways
4) ???
5) Profit!
The idea isn’t new. There were hearing on the matter in 2008, and in 2007 the sale/leaseback activity was very active, although it’s grown silent lately as credit market have contracted.
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p>There are multiple components: 1) the road 2) the service plazas 3) abutting land. Each is valuable in its own right.
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p>So your framework:
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p>1) The value of the pike has no relationship to the outstanding debt. The value is what it is. The debt is what it is. Any relationship is coicidental.
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p>2) Also wrong. The pike gets cash upfront for its investment and pays off its debt.
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p>3) You finally got one right. The private parties would operate the pike under negotiated terms of service.
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p>4) I have no idea what your question marks are for.
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p>5) And yes, the private party purchasing the Pike would expect to profit from i) the continued collection of tolls and/or ii) lease payment from the State.
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p>Besides, you’ve a better suggestion? I laid out alternatives and reasons that I think each alternative is a non-starters. You merely criticize, and poorly I might add, the only solution that’s left.
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If the government can’t match revenues to the costs of servicing the outstanding debt without unacceptable fees..
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p>Why would a private org be able to?
The only government revenues are the tolls plus some fees from the service islands.
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p>The government has i) underutilized the service islands ii) over spent on the overhead, making it mile-for-mile one of the most expensive roads in the world and iii) done nothing whatsoever with respect to abutting land development.
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p>So you i) sell the Pike for the PV of the future tolls minus upkeep ii) sell the service island and iii) sell access ramps to abutter/developers, all to pay off the outrageous debt.
The problem now is that it’s a pretty good solution at the worse possible time: debt markets are dry and commercial real estate is depressed.
That the things private enterprise could do with it but the government couldn’t add up to fairly small change. What, raise the fees on the service islands? Sell them outright, isn’t that just the expected value of the fees over time more or less?
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p>This:
i) sell the Pike for the PV of the future tolls minus upkeep
still seems to add up to “socialize the debt costs, privatize the profits” to me unless the government got one hell of a deal. I mean, I wouldn’t take on that amount of debt for the privilege of running the pike, why would any sane venture capitalist?
What other choices does the government have? Raise taxes, borrow money, sell things. Pick one.
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p>Bidders. You’d have dozens of bids. Every big banking house that left on Wall Street would bid plus any number of REITs and hedge funds. UBS, Goldmans, …
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p>Think how underutilized the Pike is. You drive from NYC to Boston. Up 84 and take the last exit that dumps you onto the Pike. Drive 5 miles and all you have to choose from is a Mobil Station snackbar and a McDonalds after 150 miles. Plus at that toll booth the state probably owns 100 acres plus any number of vacant privately owned abutting acres. Don’t you figure that any number of restaurants wouldn’t mind being there.
In concessions at this or that location..
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p>What I’m not seeing here is any scenario for privatization that doesn’t leave the government completely holding the bag as far as our ridiculous debt obligations.
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p>So I’m just not seeing this as a solution.. I mean if you want to say sell off this or that chunk of land and pay down debt with it, I’m all ears. But you can’t just shout “privatization!” over and over again as if by the very fact of being private it’ll fix our problems.
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p>Especially if the problems, like the debt, are still very much public.
It’s only taxes, borrow or sell. That’s it. Else, there’s a 4th choice: default.
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p>I’m not saying they should or should not privatize. I’m saying they’re left with little choice but to privatize because new taxes at the necessary level are unpalatable and new borrowing is dangerous.
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p>Time will tell; that’s just my new year’s prediction: there’s a private pike in our 2009-2010 future.
I’m saying I don’t see how privatizing changes the calculus, besides mixing things up enough that people might not know who to blame.
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p>Government will still be paying down debt and still need to fund that somehow (taxes or borrow)
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p>Private entity taking over will still have operational costs that need to be funded, plus probably some new ones as well (fees)
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p>How’s that make us better off than just keeping the major cross-state in the public trust? Seems like it’s just moving the money around, plus losing a lot of future public control over an important piece of infrastructure.
And I just got home after coming up 84 from the CT/NY border.
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p>First of all, the entire stretch of 84 through CT is less than 100 miles, and it’s not barren. You pass through Waterbury and Hartford, and there’s plenty of exits the entire length with all kinds of restaurants from fast food to diners to decent meals.
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p>You make it sound like Mt Vernon NY to Holland MA, and that’s just nonsense.
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p>Would more restaurants like to be there? Yes. For example, the exit you refer to (Charlton) has:
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p>McDonald’s (Drive Thru Open – 24/7)
LavAzza
Auntie Anne’s
Ben and Jerry’s
Fresh City
Papa Gino’s/ D’Angelo
izone sunglasses
Gulf Fuel/Diesel
Gulf Express Convenience Store
ATM
Internet Cafe*
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p>So, you’ve got burgers, coffee, pretzels, ice cream, sandwiches, pizza, and a convenience store. Not exactly high class dining, but certainly more than a McDonalds and a gas station.
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p>Finally, the reality is that in terms of revenue, real estate is a small fraction of their revenue, and your plans wouldn’t change that. Tolls make up 84%, and restaurants make up a whopping 6%. 10% is made up of “rentals”, “court fines”, and “other”.
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p>So lets say they doubled their real estate take — they’d bring in another $16 million a year. Not pennies, but a half penny — a half penny in gas tax a year.
Be serious. You walk into those service plazas and you see a gas station and a mcdonalds. Then, here and there are some minor kiosks and food handlers. Those service plazas are totally unutilized. Your response is the same you’d hear from the Soviets in the 80s when they’d visit the US and remark why Americans need so many choices.
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p>Further, the adjacent land behind the service plaza is blocked from access to protect from toll jumpers. Some enterprising developer could combine the acreage into a mall, restaurants, (casino?)….
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p>But, it doesn’t matter what you or I think. What matters is what Mr. Ailosi thinks, and what Governor Patrick thinks. And just today in the Boston Globe: PATRICK ASKS BIDS FOR PIKE PLAZAS.
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p>There ya go.
stomv is correct, gary is wrong, gary is pouting and pretending that 7 fast food joints and a convenience store is the same as one fast food joint, doesn’t like being called out for being flat out wrong when he’s exaggerating to try to make a point, and finally it doesn’t matter what stomv opines on a political blog because he’s not the governor, nana-nana-boo-boo.
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p>Grow up.
So, if your argument is that the service islands are bountiful vistas of consumer choice at least know that in Charlton, the internet cafe wireless is shut down and fresh city closed some time ago and the convenience store is owned and operated by the gulf gas station, and Ben and Jerry’s is seasonal. Other than that, your cut and paste from the Pike website is spot on.
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p>My points: 1) the service island are underutilized 2) drive in, and what you see, is a McDonald and a gas station. Oh yeah, and I think the typical visitor may notice or not that there may be some other stuff and 3) the State knows they are underutilized, else why would the Governor seek bids from private parties, and 4) nana-nana-boo…makes no sense. What’s that mean?
… that, without any data, any notion that they could be more utilized is an assumption.
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p>When I need a service area, my needs are usually pretty well defined. If there were additional services to be had, I’m not sure I’d pull into a service area any more or for any more reasons than I do now.
It’s an assumption or opinion or whatever you want to call it.
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p>But, it’s an assumption shared by the administration, else why ask for bids.
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p>If you think it’s fully utilized, then the value is equal to the present value of the future net cash from existing rent agreements. If it’s not fully utilized, then the value is equal to what bidders think it might possibly yield in the future. It’s irresponsible to assume the former without checking out the latter.
So we’re going to decide weather or not to bid something out, but the only way to figure out the value, which we’ll want to know before we decide to take bids, is to…. take bids? Something seems out of order here.
linked
refer to a hilarious South Park episode involving the Underpants Gnomes. These small creatures, who steal underpants from children’s drawers late at night, and who claim to be business experts, have a three-step plan to create an enormous fortune:
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p>1. Collect underpants
2. ?
3. Profit!
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p>I have heard that the Underpants Gnomes have been used in business schools to explain what happened in the dot-com boom. In any event, it’s one of the funniest South Parks ever.
Along the lines of then a miracle occurs…
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1) Doesn’t allow it’s board members to sell back their vacation time at 100% upon resignation
2) Doesn’t spend upward of $70,000 in salary and benefits to hire toll collectors
3) Has enough oversight to prevent itsemployees from stealing the toll collections
4) Doesn’t have a pension system that requires health coverage and pension benefits for life while allowing it’s employees to retire in their 40s and 50s
5) Doesn’t overpay politically connected insiders for consulting or legal services
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p>I’m also willing to bet that a private company could find a more profitable use for the property rights (right of ways, easements, etc) associated with the turnpike. There’s the profit.
Profit!
in the highway department. That will allow for more money up front because the sale won’t be accompanied by the maintenance obligations. The maintenance for the road will increase costs for the state in the long term, but the Turnpike Authority will get more up front to settle its debt and any potential increase in the gas tax could be avoided until later when the economy is better. Plus the Turnpike Authority has been so horrible at doing much of anything that any decrease in it’s responsibilities should be a plus.
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p>Then again, Aloisi is the new Transportation Secretary so the former problems of the Turnpike might now reappear in the highway department. I would be more confident in having someone who “knows where the bodies are buried” if he wasn’t the mass murderer who created most of the bodies in the first place.
You could ride a bike. Rollerblade. Walk. You could even bake it at home!
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p>If you exempt areas with no public transportation, you (a) create a local incentive to eliminate marginal public transportation and (b) will invite folks into your town to buy gas; the additional traffic certainly doesn’t benefit you or your town.
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p>The miles of road per person in your neck of the road is way higher than in mine; we subsidize your roads, you subsidize our mass transit. Seems reasonable to me.
Should I be taking my laundry down to a nice rock to avoid impacting wastewater as well?
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p>The unceasing ARROGANCE of the temporarily abled! @#&%#$!
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p>And Ch. 90 road monies don’t run multi-million defecits like the MBTA does. I’d trade that debt in a heartbeat!
…secret plan to screw over the mobility impaired. His advocacy for Mass Transit is a smokescreen for his desire to do away with non-human powered transport for all time. Your discovery, of course, completely justifies your 3.
Since Lynne is so upset, I upgraded you to a ‘4’…I had no idea you had a posse monitoring your ratings for you, or that you wouldn’t respond directly when you are so affronted.
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p>Please consider this as you do your transportation planning. Almost 50% of the homeowners in Orleans are over 65. Almost 60% of the residents are over 65, and almost 10% are over 70. We have no sidewalks, by and large, and certainly none connecting to shopping areas. The bike trails we have are deliberately through forest areas and in fact AVOID populated areas, as they are considered tourist attractions, not viable transportation. We have no bike lanes on our narrow two-lane roads.
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p>Do you really expect old ladies to rollerskate around the Orleans Rotary to get to the Stop and Shop, the only supermarket until you go 40 miles east to Provincetown?
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p>Please stop and think what impact the gas tax will have on us, and consider that our gas prices are ALREADY .15 – .20 cents more than across the canal.
Here’s the reality: statewide planning for transit ought to include Orleans, but Orleans is a tiny sliver of MA’s population and certainly can’t be a used as an argument to override good state-wide policy.
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p>There’s no government policy or program which is equally beneficial [or equally harmful] to all. That’s a universal truth.
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p>The fact that you have no sidewalks, non-mixed use zoning and building patterns, and bike trails that don’t get you to commerce… well, that’s a huge function of the choices Orleans has made over the last 50 years. Still, you’ll note that in this thread and others I lobby for sidewalks, bike lanes, mass transit, and loads of other ways to help people get where they need or would like to go. It would be nice if better infrastructure in Orleans for those sorts of things already existed, but the past is the past. Besides, a policy of relying on cheap auto transit for seniors is a really dumb policy because not all seniors will be able to drive safely their whole lives, and if we’d like our seniors in Orleans and elsewhere to live independently their whole lives, ensuring that they have access to transportation is important. Same applies for the disabled of course.
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p>P.S. As for bread, you’ve got at least 4 choices in Orleans: Cumberland Farms, Friends Marketplace, S&S, and East Orleans Deli Market, at least according to CC Find it Online. I wonder if one of those four might even make deliveries — or if that would change as fewer and fewer people drove in Orleans (and elsewhere).
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p>They didn’t starve when gas was $4.00/gallon. If the gas tax goes up $0.30, we’re still only looking at $2.10/gallon, and (hopefully!) money to help Orleansians avoid driving too.
I just called Friends Market in Orleans, and asked if they do deliveries within Orleans. They do! Call back at 10am and speak with so-and-so.
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p>There you have it. Have your loaf of bread delivered right to your door. That’s what I do (peapod and the local market both deliver).
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p>I’ve lived without a car for the last 8 years. It turns out there are all kinds of creative ways to get the things you need and go where you need to go without one. Of course, increasing the options [walking, cycling, mass transit] are important too.
not unless reorganization extends to restructuring the crippling, unfair, and plain-stupid big-dig debt obligations that have been imposed on the MBTA.
I always use the FTA website when comparing tax rates among several states. The FTA site lists different numbers than the ones you cited. http://www.taxadmin.org/fta/rate/motor_fl.html. Here are the tax rates per gallon for MA and neighboring states:
NJ 14.5 cents
NH 19.625 cents
VT 20 cents
MA 21 cents
NY 24.4 cents
CT 25 cents
ME 27.6 cents
RI 31 cents
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p>The International Fuel Tax Association also lists the tax rates for the same states as follows:
NJ 14.5 cents
NH 18 cents
MA 21 cents
CT 25 cents
VT 26 cents
ME 29.6 cents
RI 30 cents
NY 39.1 cents
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p>It’s always tough to compare nominal tax rates across states. NJ has a very low tax rate, in part because of the very high number of tolls. CT, which has no tolls, has a gas tax plus a gross earnings tax on sellers of petroleum products that is virtually the economic effect of an additional gas tax. I’m pretty sure NY allows for additional taxes to be imposed by local transportation authorities. And many states have different rates for gasoline, diesel, gasohol, biodiesel, ethanol, methanol, etc.
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p>There are certainly many different ways to go. MA could give the Turnpike Authority or the MBTA statutory authority to increase the gas tax within a certain geographic area. Or give either entity the authority to impose a vehicle excise tax within a certain geographic area. Or allow either authority to impose a sales tax on parking garage services in a geographic area. Or MA could create more toll roads, or gp ahead with the planned increaee in tolls. Or MA could impose a gross earnings tax on petroleum product sellers.
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p>But all that being said, I like to keep tax administration as simple as possible. I would support paying down the Turnpike Authority debt by increasing the statewide gas tax.
I ran into that problem too — different sources have different numbers. This site says its data are current as of 1/1/08, which was as recent as I could find, and that’s where my numbers are from. But your site agrees with the Secretary of State. Hmm.
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p>Annoying that it’s this difficult to get basic information.
Of that total, 21 cents is state excise tax alone (causing most of the confusion) and 2.5 cents is state tax for the gasoline pollution cleanup fund (or 23.5 cents per gallon total state tax).
I just did some quick google and mass.gov searching but I couldn’t find out much about this gasoline pollution cleanup fund. Do you know anything else about it? How much does revenue does the 2.5% tax generate for the fund each year? How is the money spent? How much is in the fund now? Is there any money there that can be raided and put towards retiring the Turnpike debt?
(and I didn’t check) the money goes toward the environmental costs of cleanup and containment of leaky and abandoned above- and underground gasoline tanks.
Some general info on a crappy web site here. I have no idea what the finances look like or what the price range of a gas tank environmental cleanup look like, but I’d bet that a bad circumstance could be mighty expensive…
from the 2.5% gas tax and storage tank regustration fees. To date, about $200 million has been paid to private owners and about $10 million to municipalities. I’m not sure what the administration costs are, but based on those number I’d think there’s something there if the fund were raided.
There’s never enough money to do the environmentally right thing, and then when we finally plan ahead and save the money ahead of time, it gets raided. Greeeeeaaaaaattt.
It currently collects $75 million per year. It has paid out $210 million total since it’s inception. It’s great that there is a trust find just sitting there waiting to partly reimburse petroleum distribution center owners if they feel like updating their tanks, but if there is more than enough money in the fund currently to reimburse going forward then why not raid some of the excess to prevent the Turnpike Authority’s insolvency. Hell, some of the fund is earmarked to partly reimburse cities and towns for fixing storage tanks. Do you think there are a lot of towns that have excess money to undergo costly storage tank jobs even with the reimbursement? If not then raid the fund to partly reimburse towns for the local aid cut. There should be no sacred cows in the MA budget when trying to get through this recession.
Don’t raid it for other uses. Want to use it to clean up a non-oil-leak-related brownfield? That’s a different story, and a discussion worth having.
And has remained constant since then. The DOR says that it collects about $75 million each year now. I have no reason to believe that that number would be substantially different for any of the years from 1991-2008. That means the fund may have collected over $1 billion in the past 18 years. And it’s paid out just over $200 million. I would hope that theadministration costs are substantially less than $800 million. Ifmy estimations are correct, the fund has a lot of money in it sitting there waiting for storage tank owners to request reimbursement. You want to just keep the money there and keep waiting for those reimbursement requests to come rolling in, or maybe have a discussion as to whether to use themoney for brownfield cleanup. I want to raid the fund to prevent the impending collapse of the Turnpike Authority, or to reduce the sting of local aid cuts. Once again, I would hope that there are no sacred cows when dealing with the budget situation.
Thank you, thank you to the democratic party for screwing every occupant of the commonwealth again. And come this time next year there will be additional taxes to pay for more unwarranted, and fiscally irresponsible spending to reward the plethora of political hacks that populate this
state. Business as usual.
to our beloved state leaders who were in charge of this fiasco, Weld, Celucci, Swift and Romney with their appointments and oversight.
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p>We should also that our Federal government leadership as the Republican House, Senate and White House at the wheel, they ran our country into the ground.