This article is the second in a series examining mechanisms to fund the MTA’s Capital Plan for 2015-2019. The agency that serviced over 1.75 billion subway riders last year — 5.6 million riders on an average weekday and 6 million on weekends — has proposed a $32 billion budget to fund standard maintenance and repair, service expansion and improvements, and continued construction of the 2nd Avenue line, among many other projects that will ease overcrowding, delays, and breakdowns of our trains, subways, and buses. Unfortunately, a $14 billion funding gap ($1B was funded in the State budget approved in March) threatens the continued viability of the MTA. The Move NY Fair Plan is the only viable proposal on the table which can provide much of the funding needed to fill the gap, but unless serious discussions are had in Albany in the last weeks of the legislative session, the future of the MTA — and our lifeline to work, entertainment, shopping, and family & friends — is very much up in the air. And as the MTA goes, so goes the entire New York State economy.
In the coming days, we will look at fill-the-gap alternatives to the Move NY plan, none of which individually or collectively can bring faster, safer, fairer transportation to New Yorkers and many of which are dead on arrival: Filling the Gap with More Debt; Filling the Gap with a New Gas Tax; Filling the Gap with an Increased Sales Tax; Filling the Gap by Increasing the Payroll Mobility Tax; Filling the Gap by Reinstating the Commuter Tax; Kick the Can Down the Road: Doing Nothing.
II. Filling the Gap with a New Gas Tax
The tremendous drop in gas prices and the increasingly unsafe state of our nation’s roads and bridges have prompted many to call for an increase in the federal excise tax, which has been frozen at 18.4 cents per gallon on gas and 24.4 cents on diesel since 1993. Coupled with the financial woes of the federal Highway Trust Fund and the political jousting in Washington, the future of our transportation infrastructure is in jeopardy. While the federal gas tax has remained stagnant, states have periodically increased (or decreased) their gas and diesel taxes. Since 2013, ten states have raised their gas tax, with many more looking to follow suit.
Could New York be next?
The jury is still out. In January New York ranked as the state with the highest gas tax in the continental United States. According to the American Petroleum Institute, total state taxes are 44.46 cents per gallon; add to that the federal tax of 18.4 cents, and New Yorkers were paying 62.86 cents per gallon for the gas tax in April 2015. In comparison to our neighboring states, New Jersey drivers pay 32.9 cents per gallon, while Connecticut residents fall closer in line with New Yorkers at 59.26 cents per gallon. The national average for the same month was 48.85 cents per gallon.
The Move New York Campaign isn’t opposed to an increased gas tax. As the New York Times noted in January, the federal gas tax would be 30 cents today, had it kept pace with inflation. And with the disrepair of our roads and bridges as well as the very real impacts of fossil fuels on our environment, there’s an argument to be made that raising funds for the Department of Transportation with this sort of funding is a sound policy approach.
Then What’s the Problem?
The biggest problem is just how many copper pennies it would take to raise the type of funding needed to fill our transportation infrastructure needs in the New York metropolitan region. When bonded, the Move NY Fair Plan generates $15 billion, much of which would go toward filling the gap in the MTA’s proposed $32 billion 5-year Capital Plan, as well as $375 million annually in dedicated funding to our roads and bridges (not in the proposed MTA plan). To raise that kind of money, New York State would need to increase the gas tax within the MTA’s 12-county region by a shocking 52 cents per gallon, for a combined total tax of $1.15 per gallon of gas for car owners. (And you thought the Sunoco lines on Jersey’s Palisades Parkway were long already!)
Another inherent problem with instituting taxes in lieu of tolls for roads, bridges, and mass transit is the risk of being raided. In 2014, New York State Comptroller Thomas DiNapoli issued the report, “The Dedicated Highway and Bridge Trust Fund: A Shrinking Investment in New York’s Future,” in which he noted that only 22% of the $3.8 billion collected from highway taxes and fees in the State’s 2012-2013 Fiscal Year was allocated to capital improvements. The rest was put toward servicing debt and operational costs. DiNapoli stated in his accompanying press release:
“Taxpayers have paid billions in taxes and fees into a fund that was created to keep our roads and bridges in good repair. Now, more than three-quarters of this money is siphoned off to pay for borrowing and operating costs of state agencies, leaving fewer dollars for improving our infrastructure. While the state is making progress with its capital planning, New York needs a reliable source for investment in its transportation infrastructure and should restore the use of this fund for capital purposes.”
Interestingly, the results of a recent Mineta Transportation Institute survey show that Americans are willing to pay an increase in the gas tax, as long as they can be assured it becomes a dedicated stream of revenue for transportation projects. Only 31% supported an increase, when told the money would go to general transportation improvements. However, the support grew exponentially for specific projects:
- 71% support for improving transportation maintenance
- 64% support for improving safety
- 52% support for reducing local air pollution
- 65% – a near “supermajority” – support for public transit
Last month, NYS Assemblyman Jim Brennan (44th District) introduced legislation to establish a new infrastructure funding authority that would collect revenue through a variety of methods, including a new gas tax. The bill (A07103) seeks to fill the MTA’s gap as well as generate funds for the New York State road and bridge budget, which Brennan noted is projected to have a $4 billion short fall. Brennan’s bill would increase the state gas tax by 10 cents and generate $500 million annually. In addition, the bill would impose half of one percent income tax increase on those earning $500,000-$2,000,000 and a mandatory New York City contribution of $60 million the first year, with an additional $60 million per year thereafter.
In introducing legislation to address the needs of New York State’s transportation infrastructure, Brennan stands out as a leader willing to tackle the funding of one of New York’s most important assets and the engine that drives our economy. Whether the bill gains enough traction to come to a vote during this legislative session is yet to be seen. As we move ever closer to the end of June, however, one thing is certain: we need — and deserve — a fully-funded capital plan for the MTA; and we need funding for our roads and bridges.
Filling the $14 billion gap through a new gas tax alone would be exorbitantly high for drivers within the 12-county MTA region (remember that 52 cent increase per gallon?) and penalize those who have no other transportation alternatives. Most importantly, a new gas tax on its own would not do what the Move NY Fair Plan does: bring toll equity to the region’s commuters and businesses and reduce the grinding traffic jams that plague the metro region, its people, and the economy that sustains us.