Almost 20 years ago, a penny of the sales tax was dedicated to the MBTA to be a steadily growing source of revenue for the transit system. But despite some help from the Legislature, the sales tax transfer has grown slower than the economy, creating a persistent gap between the projected funds and actual sales tax transfers. Sales taxes have underperformed for the MBTA as a result of a shift to services, some transactions moving online, and exclusion of fast-growing meals tax revenues from the MBTA. An appendix explains the formula for determining the MBTA sales tax transfer and how other sales taxes are allocated.
Where do the resources come from to operate Massachusetts’ transportation system, and where is the money spent? A detailed chart shows state revenues and spending for transportation operations and debt service in Fiscal Year 2015. The width of each arrows represents the amount of dollars that flow from one source or activity to another.
Effective economic policies can create a more highly productive state economy and make it possible to improve economic opportunity and security for working families. This paper examines the economic research on the relationship between effective investments in education and transportation and improved economic productivity. The paper also examines the economic effects of tax reforms that can fund those investments.
The Joint Ways & Means transportation package uses a combination of new tax revenue and increased fees to shore up MBTA finances and move MassDOT employees from the capital budget to the operating budget. It is significantly smaller than the Governor’s earlier transportation package and it does not include the Governor’s investments in education.
In recent days, the Governor has proposed: 1) increased funding for education; 2) fixes and improvements to our transportation system; 3) a revenue plan to pay for these initiatives. We analyze how they would affect Early Education & Care, K-12, Higher Ed., Transportation, the Sales Tax, and the Income Tax.