MEMORANDUM TO: FROM: DATE: RE: Governor Patrick Secretary Davey April 3, 2013 Impact of the Joint Ways

and Means Proposal on Transportation

OVERVIEW In summary, the proposal released yesterday increases funding for transportation by increasing the gas tax, increasing support from the General Fund and significantly increasing tolls, T fares, RMV fees and other unnamed revenue sources. While the plan makes substantial progress in closing the operating budgets for the MBTA and MassDOT, there is an alarming lack of support for fixing our roads, bridges and trains. Yesterdays proposal provides just $600 million over five years to fund what has been universally identified as at least a $13.2 billion minimum backlog in needed repairs to existing roads, bridges and trains. At a time when federal funding is shrinking and after years of neglect for infrastructure across the state, this proposal offers another short-term band-aid. In addition, the plan provides no funding for new transportation projects such as South Coast Rail, South Station expansion and the Green Line Extension. (It should be noted that by not investing in new trains for the MBTA, we will lose federal funding for the Green Line Extension, doubling the state cost for this legally mandated project to $1.3 billion.) If enacted, the proposal announced yesterday will fail to adequately address our long-term needs for a safe, modern and efficient transportation system. The proposal will not reduce the number of structurally deficient bridges; it will not provide sustainable funding to fix the current highway and transit systems; it will result in significantly higher tolls, fees and fares; and it will not make overdue investments in areas of the state that have been too long ignored.
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OPERATING BUDGETS Yesterdays legislative proposal would raise $500 million in new revenues for transportation, allowing us to address many operating needs: o The proposal would eliminate the annual operating deficits of the MBTA in the next four years, by inclusion of additional state funding and regular fare increases (estimated 7% in FY2015 and 13% in FY2016.) o After three years, the proposal would fund MassDOT employees entirely on the operating budget. After two years, it will fully fund the annual snow and ice budget. These changes will rely on a combination of new taxes and increases in tolls and RMV fees. o The proposal would forward fund the Regional Transit Authorities. o The proposal would support the current capital transportation plan; however, there is broad consensus that the current capital plan seriously underfunds basic maintenance and state of good repair. CAPITAL NEEDS It has been publicly noted that the legislative proposal would not fund expansion projects such as the Green Line Extension, South Coast Rail or improvements to South Station. Less obvious is that the proposal provides relatively no new funding to support the existing roads, bridges and transit systems in the Commonwealth. Based on our initial analysis, the proposal seems to assure a slow but steady decline in the quality of the states transportation system. Last year, the Legislature ordered MassDOT to do a comprehensive study of the states transporation assests and finances to determine the true need. In January of 2013, MassDOT released a detailed study which showed that due to a lack of investment during the Big Dig, the state needs to spend nearly $13.7 billion more than is currently planned.

Your proposal fully funded that unmet need. Yesterdays proposal only provided capacity for $1.1b of the needed $13.7 billion. If the Legislature also enacts increased funding for Ch 90, that will leave just $600m to meet the needs. This means we will have to reevaluate our current capital program and potentially redirect funds to more critical needs. Also, as a result, many specific, popular and necessary projects will not be built, including the I-91 Viaduct in Springfield, the I-93/I-95 Interchange in Woburn, and the I-93/I-95 Interchange in Canton. Further, the replacement of Orange, Red and Green Line cars will not occur and necessary and vital improvements to the Ts infrastructure will not be made. RTA buses will continue to fail and exceed their useful life. Important construction projects and their attendant benefits for employment, mobility, and the environment are not the only things that will lose out under yesterdays proposal. Less obvious but equally important state of good repair projects will be back-burnered without sufficient funding, forcing MassDOT to allow the quality of our shared infrastructure to further decline and associated delays and inconveniences to mount. Your proposal called for over $1 billion in capital investment over ten years in the Commonwealths bridges. This would allow us to fix the hundreds of structurally deficient bridges in Massachusetts, building on the marked improvements in quality under the recent Accelerated Bridge Program. Many Massachusetts bridges were built in the 1950s and 1960s, and many are now coming due or are over-due for maintenance and rebuilding. MassDOT has dedicated significant resources over the past years to repairing those bridges, but the Legislative proposal contains no funding to continue this work. A failure to build these projects will force the residents of the Commonwealth to continue to contend with decaying infrastructure and excessive congestion, deprive all of us of the multiuse paths that bring value and enjoyment to our communities, and reduce our regional and national competitiveness.

TARGETED EXPANSIONS While subsequent bond bills may authorize new expansion projects such as South Coast Rail, Green Line Extension, South Station Expansion, the Inland Route, Cape Rail and other projects, there will be no funding available under yesterdays legislative proposal to actually build those projects. In addition, the proposal effectively doubles the cost to the state of the legally mandated Green Line Extension. In order to be eligible for federal funds for this project, the state must make investments in the MBTAs State of Good Repair program. While your proposal made those investments, the legislative proposal released yesterday does not. Therefore, the state will have to someday fund the entire $1.3 billion cost of the project. MBTA The Legislative plan does not provide any additional investment for state of good repair projects. This means that the pace of accessibility improvements to a system built in 1897 is unknown. Given the age of the bus and rail cars, the T will continue to retire unsafe vehicles that without the capacity to replace, will lead to longer commutes, waits for customers and crowding. The lack of funding for signal, power and bridges will further degrade on time performance, leading to longer rides for customers. Finally, additional security and customer service agents and late night service is unattainable. REGIONAL TRANSIT AUTHORITIES A significant proposed decrease in the amount of new funding available for our Regional Transit Authorities, which provide a lifeline for transit-dependent residents and employees outside of the MBTA district. While The Way Forward includes $100 million per year in new funding for the Regional Transit Authorities, the Legislature is offering $12 million per year, indexed to inflation. This is an $88 million reduction in proposed funding. Regional Transit services customers will continue to be left behind as our ability to invest in additional bus routes, improved commute times and improved
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reliability will be eliminated. Lack of weekend and night service will continue to be the norm outside of metro Boston. ECONOMIC DEVELOPMENT Investing in infrastructure, as you know, is a job creation and economic development program. Over the past ten years the Federal Highway Administrations (FHWA) Office of Transportation Policy Studies has calculated the employment generated from federal-aid highway projects. In Massachusetts, the FHWA currently estimates that 34,779 jobs (11,921 construction oriented jobs; 5,405 supporting industry jobs; and 17,453 induced employment jobs) producing employment income of $1.3 billion would be supported by each $1.25 billion in highway capital expenditure. Thus, one job is supported for every $35,941 in federal and state spending on highway and bridge improvements. The failure to fund the proposed $5.1 billion in road and bridge expenditures will eliminate or defer over 141,000 estimated jobs. SUSTAINABILITY Yesterdays proposal puts an emphasis on MassDOT raising new revenues upwards of $200 million annually to supplement new funding to be provided by the Commonwealth. Yesterdays proposed finance plan would require these new MassDOT revenues be generated by steep increases in MBTA fares, fees for transactions at the Registry of Motor Vehicles, and tolls on the Massachusetts Turnpike. These are the only sources of revenue directly controlled by MassDOT, and thus the only avenue it can pursue to meet the new revenue targets laid out by the Legislature. Yesterdays proposal also provides no flexibility to use RMV fees at the T or tolls charged on the turnpike for other transportation programs. It perpetuates a siloed and segmented transportation funding program. Your proposal assumed predictable increases in MBTA fares (5%
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every two years), RMV fees (10% every five years) and Turnpike tolls (5% every two years). In order to cover the targets required by the Legislature, however, MassDOT would have to institute dramatic and unpopular increases. IMPACTS If sufficient revenues to address this gap are not advanced, we must consider options that include weight restrictions on bridges, cessation of projects and the closure of registry branches or other services to create sufficient funding for capital investment. Closure of registry branches will lead to longer waits for customers on an intermittent basis the average resident visits the registry once every two to five years. This occasional inconvenience and, the resulting frustration, must be measured against the daily frustration of millions commuting on antiquated and congested rail, transit and highway networks. We will be forced to adjust our operating budgets to provide sufficient funds to improve mobility, access to jobs and opportunities for economic development.