For public officials around the nation looking to fix beat-up roads and bridges or buy new buses and subway cars, it’s one of the most reliable turns in the playbook: Raise the gas tax and watch the money flow in.
But as the Massachusetts Legislature prepares to debate a massive fix to the state’s beleaguered transportation system — one that could include a stiff increase in the gas tax — they might take note that it may not be such a reliable source of revenue for much longer.
Gas tax collections by the state have barely increased over the past five years — just 2.5 percent since fiscal year 2015, the first full year after lawmakers last increased the tax, by 3 cents, to 24 cents a gallon, according to Massachusetts tax collection data.
This, despite a period of powerful economic growth in Greater Boston that added hundreds of thousands of more vehicles to the roads, and saw the rise of Uber and Lyft from spunky upstarts to transportation powerhouses providing more than 80 million rides in a year, as well as high-speed delivery service from Amazon and other retailers that have flooded streets with trucks.
The main driver behind this trend is long-developing improvements in fuel efficiency, as more and more motorists get around to replacing older cars with hybrids and vehicles that get significantly higher gas mileage.
Even supporters of a gas tax increase acknowledge that it simply isn’t keeping pace with the growth in driving and may not be reliable over the long term.
“The gas tax is not, and should not be, a sustainable revenue stream for supporting our ongoing investment in transportation infrastructure,” said James Rooney, president of the Greater Boston Chamber of Commerce, which backs a 15-cent gas tax phased in over three years. “We’re trying to reduce emissions and consumption of gasoline,” he said, adding that “at some point,” gasoline will fade away as a fuel source for vehicles.
Given the state of traffic on pretty much any day of the week, one would think the state would be rolling in money from the gas tax. And true, collections were at an all-time high last fiscal year — about $675 million.
But that’s not much more than the $658 million the state collected between July 2014 and June 2015. Meanwhile, the rate of driving in Massachusetts since around then has surged by at least 8.9 percent, according to data the state reports to the federal government.
The erosion of gas tax collections is only going to accelerate with the emergence of electric cars. They’re still in their advent around Massachusetts. But while sales remain modest, they are accelerating fast, almost doubling in a single year, to around 9,000 in 2018, according to the Association of Global Automakers.
Moreover, officials in Massachusetts have outlined a goal to end the sale of gas-powered vehicles in the state by 2040, and auto manufacturers seem increasingly close to breaking into the mass market with new models of electric cars — from the midpriced Tesla sedan to Ford’s debut of a new electric Mustang muscle car.
“The electric cars are getting better, there’s more charging, people are getting more comfortable with electric,” said Craig Carlson, a Boston-based automotive consultant.
Carlson predicted that by 2025, electric vehicles may be popular enough to be a drag on gas tax collections. Time wise, that’s not far away for a state Legislature that has often let years go by between major transportation initiatives.
Right now, there aren’t a lot of viable alternatives to the gas tax in use. Earlier this year, the Federal Highway Administration said it awarded seven states, including New Hampshire and California, a total of $10 million to study other ways to raise money for road works. Most of these efforts revolve around charging motorists based on how much they drive rather than how much gas they buy.
Oregon has a program that charges car owners by the mile — currently 1.7 cents; participants volunteer to be in the program and receive a credit on the fuel taxes they pay through the year. Utah is launching a pilot program that will waive annual registration fees for owners of electric and hybrid vehicles and instead charge them 1.5 cents for every mile they drive.
Efforts to undertake similar experiments have waxed and waned in Massachusetts. Even so, local transit advocates and business leaders note that an increase in the gas tax would still raise gobs of money upfront, crucial for a state with a public transit system that has a seemingly inexhaustible amount of repairs and upgrades to make.
Other funding initiatives may be more productive in the long term, they say, but would not immediately generate the money they believe the roads and rails need right now. Most estimates show that every 1-cent increase to the gas tax would raise an additional $30 million in revenue.
“Yes, the world is going to look different in 30 years,” said Chris Dempsey, director of the nonprofit Transportation for Massachusetts. But, “the reason to raise the gas tax isn’t to face a 30-year issue. It’s to face an issue today.”
A gas tax hike was widely expected to be a major component in a House of Representatives initiative to generate new transportation revenue this fall. But House leaders delayed action until at least this winter as members struggled to finalize a plan.
Key lawmakers in the House were not available for comment last week.
The last gas tax increase, in 2013, was the first adjustment in two decades. At the time, lawmakers also indexed the tax to the rate of inflation so it would rise automatically. But voters repealed that aspect of the law a year later. Since then, gas tax receipts have risen at less than the rate of inflation, according to Bureau of Labor Statistics.
Massachusetts has the 31st highest gas tax in the country, according to the Tax Foundation, a Washington, D.C., tax policy nonprofit.
The falling value of the gas tax has also been a concern of those who study transportation at the federal level. The national gas tax has remained at the same level since 1993, and economists have cited increasing fuel efficiency as a reason to explore other ways to fund roads, such as through tolls or mileage-based fees.
Massachusetts lawmakers flirted with this concept in 2016, when they agreed to test a program that would charge drivers based on miles driven, because of concerns that the gas tax may eventually become obsolete. The measure was vetoed by Governor Charlie Baker, who said he could not support such a fee if it was in addition to the gas tax.
Meanwhile, some environmental advocates caution against assigning specific taxes or fees to electric vehicles too soon. Today, the lower cost of operating an electric vehicle is a major factor for people in abandoning gas-powered cars, said Staci Rubin, an attorney with the Conservation Law Foundation.
“We need to incentivize them,” she said. “If we’re at a point in the future where we have widespread electric vehicles, that’s great and then we can rethink revenue.”
While the gas tax would likely be part of a legislative package, some business leaders have called on lawmakers to take a more comprehensive approach that at least acknowledges that gas taxes are likely to have less power over time.
At the chamber of commerce, for example, Rooney wants the Legislature to create a task force to study other forms of pricing the roads, such as increased tolls or other technology, to account for a future with fewer gas-powered cars, and to report back with a plan in a year.
That idea won more support from Rooney’s peers in the business community than a gas tax hike, which has divided employer groups across the state.
Associated Industries of Massachusetts, for example, has argued it would be unfair to lower-income people or those with no alternatives to driving. But according to a survey compiled by the chamber, there is more support within the business community for studying alternative roadway pricing ideas.
A gas tax hike would likely be divisive among voters, too, as a recent poll by the MassINC Polling Group found. Most voters would oppose a one-time 15-cent increase, though the poll found narrow support for three 5-cent increases phased in over time.
A majority of respondents also said they would oppose adding tolls to Routes 95 or 93, and were closely divided over whether to charge higher tolls at peak periods, with 46 percent in support and 47 percent opposed.
More popular ideas were to tap into real estate developers for money and apply higher fees to ride-hailing trips.
But the overwhelming majority of those polled agreed on one thing: 77 percent said the state needs more transportation revenue. The Baker administration has long argued that it does not need to increase taxes or fees to pay for transportation, though it has implemented two MBTA fare hikes within the last four years to help fill transit budget gaps.
Baker has also said he opposes a gas tax hike, but is supporting a new kind of fee on motor fuels. This would be instituted by states in the Northeast on wholesale fuel suppliers as way to put a price on carbon emissions from motor vehicles and ultimately reduce tailpipe emissions. This, too, won wide support in the poll.
The governor has also largely opposed the idea of congestion pricing — using tolls to discourage some driving in busy parts of Boston while raising revenue to improve public transit. However he has suggested the state will consider creating separate travel lanes on highways where commuters can pay higher tolls to bypass traffic in adjacent lanes.