Massachusetts House Passes Transportation Funding Proposal

Transportation Revenue Debate Summary - Debate on this bill, formerly H. 4508, concluded in the House on 3/5/2020. This bill now moves to the Massachusetts Senate.

The new bill is now H. 4530

• On March 4, 2020, the Massachusetts House of Representative approved a major tax bill (113-40) that is estimated to generate more than half a billion dollars for transportation infrastructure. The House debated for nearly 8 hours
• The legislation is estimated to bring in $522 million to $612 million per year
• In the bill the state's 24-cents-per-gallon gasoline and diesel taxes would increase by 5 cents and 9 cents.
• The House's proposal also seeks increases to the corporate minimum excise tax from $456 for all companies to a tiered structure at the top of which companies with more than $1 billion in sales would pay at least $150,000
• Transportation network companies such as Uber and Lyft would be subject to higher costs as well. The bill would increase the $0.20-per-trip flat fee to $1.20 for each non-shared ride and $2.20 for every luxury ride, while keeping the cost the same when users carpool. It is important to note that the legislation does contain language aimed at preventing the companies from passing those hikes directly onto riders.
• Rental car companies would be required to pay sales tax when they purchase vehicles for their fleets, a tax from which they are exempt under existing law
• The legislation does not call for adjustment of roadway tolls to incentivize off-peak travel, a practice referred to as congestion pricing, but it does require a one-year study of the topic.
• One amendment that was adopted would see the Fiscal and Management Control Board that oversees the MBTA grow from five seats to seven, adding representation for the city of Boston and another municipality in the T's coverage area, the original House bill proposed extending the board from its July 1 expiration to 2023 with a further extension to 2025 possible, but it left the structure in place

• Section 11 of the bill would edit the list of exemptions in the state’s sales tax law (Chapter 64H of the Massachusetts General Laws) to add “sales of rolling stock used by common carriers to transport goods in interstate commerce.”
  Similar language (in Section 14 of the new bill) would also exempt “storage, use or other consumption of rolling stock, used by common carriers to transport goods in interstate commerce” from the state’s 6.25% use tax, which applies to equipment purchased out-of-state. Under current law, the 6.25% sales tax on a $150,000 truck purchase would generate $9,375 in revenue for the Commonwealth’s Transportation Trust Fund.
  In a prepared statement, Kevin Weeks, the executive director of the Trucking Association of Massachusetts, said that 37 other states already exempt truck sales from their sales taxes, and wrote that “the trucking industry in Massachusetts has been in decline as many trucking companies have gone out of business or moved to other states.” The statement from Weeks also notes the 9-cent increase to the diesel fuel tax, which will land squarely on his industry, and argued that eliminating the tax on new trucks would give fleet owners an incentive to operate “newer, cleaner, and safer trucks in the Commonwealth.”

• The House did not include proposed amendments that would have scrapped or blunted several of the tax and fee hikes or an amendment that would have repealed the gas, corporate and vehicle sales tax sections of the bill if and when surtax on household income above $1 million takes effect

• Governor Charlie Baker opposes both the gas and corporate tax increases that are included in the bill

Older Information on this bill:

On February 26, 2020, House Democratic leaders announced a bill H.4508, An Act relative to transportation finance, that they will ask legislators to vote on next week as part of a package that could raise over $600 million in new funding for transportation.

The package, which is projected to generate between $522 million and $612 million in new annual revenue, will be used, leaders said, to shore up existing operating budgets for the MBTA and regional transit authorities, and backstop a multi-billion capital borrowing plan.

We thank the House for their leadership on this proposal to address our statewide transportation crisis. The proposal outlined in H.4508  is a step forward and enables new, needed investments, including dedicating funding to public transit across the Commonwealth. ACEC/MA looks forward to this proposal advancing through the legislative process, where we will work to strengthen the final bill to further advance equitable and efficient transportation for all Massachusetts residents.

An Act relative to Transportation Finance Bill Summary: 

• Raise $522-$612 million in new annual revenue for transportation
  • Will be used to fill the state's accounts more robustly, allowing for larger annual budgetary injections into public transit and road maintenance assistance each year and help pay for capital projects the Governor’s Administration suggested funding through borrowing.
  • MBTA would also see $27 million in new revenue each year
  • The state's 15 regional transit authorities would also gain a $15 million annual transfer.
• Increase in fees on ride-hailing trips through apps such as Uber and Lyft
  • The fees on shared rides would stay the same, but single-person rides would be taxed at $1.20 and luxury and livery vehicles would pay $2.20 per ride.
• Eliminate a sales tax exemption on the purchase of new vehicles for rental car companies (worth nearly $110 million)
• Proposes to raise the state's 24-cent gas tax to 29 cents per gallon, generating an estimated $150 million to $175 million in new revenue.
  • The tax on diesel fuel would climb 9 cents to 33 cents.
• Propose increasing the $456 minimum tax paid by corporations.
  • The tax structure would have 9 tiers, companies with less than $1 million in sales would see no increase, but at the top tier, companies with over $1 billion, would pay a minimum of $150,000.
  • Would generate $100 million to $150 million in new revenue.
• Charge a new out-of-state fee for TNC drivers for pickups in MA – the fee would be 50 cents.
  • Would generate $130 million to $145 million in new revenue.
• $10 million annual fund for rural transit assistance.
• Amendments to this bill are due by 5 pm on Friday, February 28, 2020. The bill will be taken up by the House during the week of March 2, 2020