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REPORT: SALES TAX HAS NOT BEEN MBTA LIFELINE, AS ENVISIONED .: The State House News Service

REPORT: SALES TAX HAS NOT BEEN MBTA LIFELINE, AS ENVISIONED

By Michael P. Norton
STATE HOUSE NEWS SERVICE

JAN. 10, 2018.....The MBTA's share of sales tax revenues has fallen short of original projections and failed to deliver the stable funding source lawmakers envisioned when they overhauled the agency's finances in 2000, according to a new report.

Sales tax revenues represented 60 percent of total MBTA revenue in 2003, but declined to a 48 percent share in fiscal 2017, despite an increase in the sales tax rate from 5 percent to 6.25 percent in 2009, the Massachusetts Budget and Policy Center said in its report.

An advancing 2018 ballot question would roll that sales tax rate back to 5 percent, while a constitutional amendment marked for the ballot this year would impose a 4 percent surtax on households with income above $1 million, with the resulting revenues targeted for education and transportation.

MBTA service levels, expansion plans, fares, equipment, debt and management have been focuses of constant debate over the years, with Beacon Hill remaining under pressure to improve the transit system that regularly causes people to be late for or miss work or personal appointments and make it more reliable for casual users and commuters, including the labor force in and around Boston.

Before 2000, sales tax revenues had increased 5 percent a year on average but actual growth in the "penny on the sales tax" allocated to the MBTA has averaged 1.5 percent, the report said, noting the 2007 Transportation Finance Commission regarded a 3 percent growth rate as the worst-case scenario.

"The annual revenue generated by a penny on the sales tax is now $219.5 million less than was projected in the original finance plan for dedicated sales tax funding," the report said. "If the previous twenty years' growth rate had instead continued, the MBTA's penny would be worth almost $400 million more a year than it is today."

Consumer buying patterns and sales tax collection discrepancies, as well as the exclusion of the MBTA from sales taxes on meals, have contributed to the trend, the report said. Service purchases are exempt from the sales tax and sales taxes are not collected on all online purchases.

In 2000, when the MBTA funding reform law was adopted, Kevin Sullivan, who served as transportation secretary at the time, called it "an extraordinary step -- one that in the long term is a win for the T and a win for Massachusetts."

Concerns over MBTA service levels, finances and management grew so dire in 2015 that the Legislature and Gov. Charlie Baker passed a special law that put the transit agency under the oversight of a control board and enabled the MBTA to forge ahead with outsourcing without being vetted by the auditor's office.

In September, Lt. Gov. Karyn Polito announced that Baker would sign an executive order "in the coming weeks" to create a new commission that would review the state's transportation needs and how they could be funded. More than three months later, the administration still has not established its transportation review commission.

-END-
01/10/2018


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