10.6 Adequate Public Funding

Since 1956, Massachusetts and other states have received large annual appropriations of federal funds raised through the national gasoline tax for highway construction.  These highway bills, typically adopted by Congress for a six- or seven-year period, have in recent decades expanded to include capital funding for public transportation, highway safety, congestion mitigation and air quality, transportation applications of information technology, scenic beautification, and bicycle paths, among other projects.  The most recent such legislation is the Safe, Accountable, Flexible, Efficient Transportation Equity Act:  A Legacy for Users or SAFETEA-LU, which was enacted in August 2005, nearly two years after the expiration of the previous Transportation Efficiency Act for the 21st Century (TEA-21).

Most highway funds are allocated by formula to state departments of transportation.  Some categories of such funding can be “flexed” from one type of use to another and others—called earmarks—are tied to specific projects.  Members of Congress have shown an increasing tendency to list specific projects directly in the text of the highway bill.  These earmarks have grown from a few hundred “demonstration projects” in the 1970s to thousands of “high priority projects” today. SAFETEA-LU also provided funding for public transportation, including both “entitlement” programs that allocate funds on a formula basis and competitive funds such as the New Starts and Small Starts programs which provide a share of the capital costs of new transit projects. 

Massachusetts also generates its own transportation funds through a state gas tax, highway tolls (on the Massachusetts Turnpike and Tobin Bridge), and bonds backed by general revenues.  Local governments receive state assistance for major roadway reconstruction under the “Chapter 90” program, but must largely rely on general sources of revenue, such as property taxes, for routine roadway maintenance and policing.

Following the funding reform called “forward funding” that was implemented in 2001, the Massachusetts Bay Transportation Authority (MBTA) receives 20% of state sales tax revenues, or one penny of the five cent tax, with a guaranteed floor of $645 million annually.  For its fiscal year 2007 budget, the state sales tax revenue was projected to provide 55% of the T’s revenues.  Fares were projected to provide 28% of revenues, assessments from cities and towns in its service area another 10% of revenues and the remaining 7% would come from non-fare revenue such as advertising and real estate transactions.  Under forward funding, the MBTA must meet its expenses using only these sources of revenue and no longer receives annual appropriations.