As part of his budget, Baker is again proposing a controversial plan to speed up how the state collects sales taxes, a concept that his administration said could produce $317 million in extra funding but one that lawmakers rejected last year.
State officials have said that the T was already slated to receive more than $1.1 billion in dedicated revenue from the state sales tax next year. But Baker is proposing to find $135 million more for the beleaguered transit agency through some high-wire budgetary maneuvers.
About $40 million would be generated by his plan to accelerate sales tax collections, which would require businesses that collect at least $100,000 in sales taxes to more quickly remit them to the state. He’s also projecting better-than-expected sales tax revenue in general, which his aides say would pour another $21.8 million into the T.
The rest, totaling $73 million, would come from the proposed fee hike on ride-hailing trips offered through companies such as Uber or Lyft. Baker’s plan would increase the per-ride fee from 20 cents to $1, and carve out 30 percent of the $120 million the state would collect in total for cities and towns, while setting the rest aside for the T and other transportation spending.
A second-term Republican, Baker had ran on a platform of generally opposing fee and tax hikes, though he’s signed a variety into law during his five years in office. He’s also pushed back against calls to raise taxes to find more revenue for the T, though his budget proposal indicates he’s open to other ways to scraping together extra funding.
Baker has already targeted ride-hailing companies, blaming them on Tuesday for clogging the state’s roads with “very little oversight.” He said the explosion of trips across the state has also placed added stress on the state’s roads, bridges and transit systems, pushing him into action. State data shows ride-hailing companies completed more than 81 million rides in 2018, and Baker has estimated last year that they could top 100 million in 2019.
“It’s very important and it’s clearly popular,” Baker said of ride-sharing apps at a State House press conference Wednesday. But, he added, “there’s a lot of disruption that comes with this. This is a significant issue and one we need to deal with it.”
The idea appears to have backing in the House, where Speaker Robert A. DeLeo said raising the fee is “actively being considered” by lawmakers for their own transportation financing bill, which DeLeo has promised to take up this year. The Winthrop Democrat said his budget chairman, Representative Aaron Michlewitz has “expertise” in the area, an apparent reference to Michlewitz’s work helping craft the 2016 law regulating the industry.
“I look forward to working together on a transportation revenue package that addresses the system’s urgent needs,” DeLeo said.
In a statement, Uber said it shares the “state’s goals of reducing congestion and investing in mass transit, but we have concerns with any proposal that would result in a substantial tax increase for riders.”
“While the state’s own congestion report said that ride-sharing accounts for only four percent of vehicle traffic, ridesharing must be part of the solution,” the statement said, adding that Uber worked with Boston officials in the city’s creation of dedicated pick-up and drop-off zones.
Baker had teased the proposed $135 million infusion into the T during his State of the Commonwealth address Tuesday, saying it would go toward the agency’s “operating funds.” The framing was notable: A scathing report on the T’s safety culture said there is widespread concern among workers that the agency’s push to quickly complete some capital projects has come at the expense of its daily operations.
Budget writers have regularly carved out additional money for the T’s operating budget since Baker took office, including $127 million each of the last three fiscal years. By adding the $73 million from the ride-share fee hike next fiscal year, it would push the transfer to $200 million, according to his administration.
It’s one of several transportation-related proposals Baker is including. He’s also pitching a new board to replace the MBTA’s expiring five-member Fiscal and Management Control Board with seven-member panel that would include his secretary of transportation, five other gubernatorial appointees, and a municipal appointee tapped by the communities that pay an appropriation to the T each year.
The budget proposal would increase the state Department of Transportation’s budget by nearly $78 million to $423.5 million in total, including a near $9 million jump in spending at the Registry of Motor Vehicles following its high-profile failure to track alerts on law-breaking Massachusetts drivers.
Baker’s budget plan also sets aside $355 million in new spending on K-12 education. Most of that, about $303.5 million, would go toward direct aid to begin fulfilling the promise of pumping $1.4 billion extra into local schools over seven years under the revamped school funding formula lawmakers passed last year.
After back-to-back years of budget surpluses topping $1 billion, analysts warned that state was entering a far more challenging fiscal year that could force Baker and lawmakers to make unpopular decisions. One watchdog projected the state was facing a $900 million budget gap, though Baker officials demurred Wednesday when asked if they identified something similar, calling the budget process fluid.
To bolster his spending proposal, Baker is also relying on the state collecting $35 million in revenue from still-undefined sports betting legislation that lawmakers have yet to commit to passing. It also leans on $16 million from a tax on opioid manufacturers that Baker has proposed, but lawmakers rejected, last year, according to Baker’s budget secretary, Michael Heffernan.