Thursday, January 11, 2018

MassBudget: How the MBTA is held back by slow growth of its major funding source

MassBudget  Information.
 Massachusetts Budget and Policy Center  Democracy.
How the MBTA is held back by slow growth of its major funding source

Many workers and families in Massachusetts depend on the Massachusetts Bay Transportation Authority and Regional Transit Authorities to get to work, school, grocery stores, and other essential activities. The MBTA provides transit services connecting 175 cities and towns containing almost three-quarters of the Massachusetts population. But the MBTA has a persistent funding problem.

The Massachusetts Budget and Policy Center's new report, "How Slow Sales Tax Growth Causes Funding Problems for the MBTA," explains how the MBTA's largest source of funding has fallen $219.5 million short of original projections.

Legislators established Forward Funding in 2000 to dedicate a "penny" of eligible sales tax to the MBTA, so the system would have an adequate source of growing revenue. At the time, the conservative estimate was for an average growth rate of three percent a year. Instead, average annual growth has been less than 1.5 percent. While the Legislature has provided other funding over the years, the failure of the penny of sales tax funding to meet projections has contributed to structural funding problems at the MBTA.

MassBudget: How the MBTA is held back by slow growth of its major funding source

In addition to sales taxes overall growing slowly, the sales tax "penny" dedicated to the MBTA has grown more slowly than general sales tax revenues because taxes on prepared meals are excluded. Tax revenues from meals have grown more than three times as quickly as total sales tax revenues. They have grown as a share of total sales tax revenue from 12.8 percent in Fiscal Year 2001 to 17.9 percent in Fiscal Year 2017. If sales taxes dedicated to the MBTA had grown at the same rate as sales taxes overall, the MBTA's penny would have been worth an additional $49.9 million in Fiscal Year 2017.

Read the full report here.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.

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