Friday, February 27, 2009

One More Gas Tax Comment

After a district meeting on Monday this week, I traveled back to Boston in the evening. As I was leaving town, I noticed at an area gas station that the price of a gallon of regular unleaded gas was $1.91. On my way to Boston, I stopped at a Shell Station in Templeton, just outside of Gardner. There, I filled my tank for $1.79/gal. Not only was it cheaper there, but I saw several stations in Cambridge with lower gas prices!

North Adams Mayor John Barrett has been complaining for the past year that gas prices are higher in the Berkshires than elsewhere in the state. I have made numerous phone calls to complain about the higher prices (and prices are even higher in South County). I have been told that transportation is the difference in price, but that makes no sense. The station at Templeton is at least as far away from gas distributors as is my district. And it doesn’t explain why prices invariably go up every week end.

That means that Berkshire County residents are expected to pay more per gallon than those areas that will actually see a benefit from this gas tax. Let me see; more per gallon, in an area where the rural nature means we use more gallons to travel and the weather and hilly terrain mean we actually need our SUVs and we don’t have the option of mass transit.

Just another reason to find a better way to pay for our transportation system.

Saturday, February 21, 2009

More on the Gas Tax

In 1986, I first ran for state representative and one of the things I talked about was our need to repair or replace the Hadley Overpass in North Adams. This is the longest span in Berkshire County and was in bad shape. Here we are in 2009 and the Overpass is finally being rebuilt twenty-three years later. We are not replacing it, but rebuilding the existing structure after years of being told we have to replace it and much dithering back and forth on replace/repair.

The machinations over this bridge are, in a nutshell, why it is difficult for me to vote for a proposed 19 cent gas tax in Massachusetts. We have poured money into the greater Boston area and have neglected the rest of the state as we did so. Now, my constituents are asked once again to send money to Boston for its road and mass transit systems.

This is unfair. When I entered office, over 80% of the bridges in Berkshire County were substandard. These were not unsafe, but needed work. Today the number is still around the same. For years the western part of the state has seen money diminish for roads and bridges. We have witnessed time and again the postponement of bids for work, and we have lived with lousy roads in an area that doesn’t have the luxury of a sprawling mass transit system. In all that time, I have never complained because Boston and the surrounding areas have been a powerful economic engine for the state. However, enough is enough and I am very reluctant to vote for more money to once again bail out bad projects, decisions, or management. If we had had the same percentage spent here as in the eastern part of the state, we could have been part of the economic engine for the state.

Today, the people of my district subsidize the MBTA with one penny on the sales tax even though they are not within scores of miles of that system. We passed this as we were told that a penny from the sales tax and forward funding for the “t” would take care of them and we wouldn’t have to spend any more money on this system. Live and learn. Hiring practices, inefficiencies in new construction and ridiculous pension benefits are piling up new costs on this system.
For years we have waited for the “Big Dig” project to be done so that we could expand road construction in other parts of the state. The cost overruns on this project were legion and here we are after the system is in place and we are being asked to pay once again.

While I know that we need to come up with a plan to fund our transportation needs, I am unclear as to why people actually using the roadways that need to be paid for can’t pay a greater share for that benefit. The people going north/south on the Big Dig should pay for this. Many of the people in my district live in rural towns where a car is a necessity. They should pay a modest increase in the gas tax in order to repair their roads and bridges. And they shouldn’t be penalized for having SUV’s in the more hilly and snowy terrain of the Berkshires. In some areas, these are necessities.

Finally, I can’t fathom the Governor’s desire to eliminate any tolls when the entire system in fiscally insolvent. People of the Metro West area should not be asked to shoulder the burden of paying a disproportionate share of the Big Dig debt obligations. However, the solution seems to be to shift that disproportionate share to others rather than those who actually use the roads. Keep the tolls as they are and supplement these with a gas tax increase that is an acceptable size. And put the tolls back on exits one through four. I have been saying this since Gov. Weld eliminated these tolls and no one on Berkshire County has ever complained that I want to tax them more. Most of the travelers through these exits are not from Massachusetts!

Fixing our transportation system is a difficult problem and I know that it will cost us more money in order to right our system. However, the Governor’s statement that this will cost about as much per week as a large cup of coffee is wrong on two counts. First, in the Berkshires we tend to drive more because of the lack of mass transit and the rural nature of our population. It would not be unreasonable to put 20,000 miles on our vehicles per year. That would work out to a cost of $16.00/mo. That’s a lot of coffee. And new more energy efficient vehicles are nice, but unaffordable to people in lower income levels that have a hard time keeping the old car going on their income. A new car doesn't just mean more car payments, but higher insurance costs, excise tax, etc.

Second, this is on top of other tax and fee proposals. I drove approximately 29,000 miles back and forth to Boston last year. Some of that is paid for by per diems, but much is not. For me, in my income bracket, this proposed tax would be an inconvenience. However, we have many people living from paycheck to paycheck in the Berkshires and throughout the state. We had an increase in our unemployment rolls of 16,800 last month. Those people are living on an unemployment check. If all of the plans being floated around were to occur, the average family may be paying more for their alcohol, candy, meals, hotel stays (yes, people from the Berkshires pay this on the Cape or elsewhere in the state. It is not just a tax on out of state visitors.), telephone service, broadband, as well as the recently raised tax on cigarettes. Add to this higher local fees to make up for lost state revenues and that family living week to week could experience a $30-40 increase in their monthly bills or more. Where does this money come from?

Again, I know we have to pay for our transportation system. But we must keep in mind that we are in the worst fiscal climate in 70+ years. People can’t rely on state services given the constraints of our budgets. Every dollar is precious. We need to be intelligent and innovative in our thinking. And we need to be fair to all of the citizens in the Commonwealth, regardless of where they live.

Saturday, February 14, 2009

Gas Tax Proposal

The recent pronouncement from Governor Patrick over a 29 cent gas tax increase has resulted in many phone calls, emails, text messages, and people stopping me on the street asking me what the hell we are thinking in state government.

First, let me say I am not in favor of a 29 cent gas tax. That said, we have a serious problem with our transportation systems in Massachusetts and we need to do something about it. A commission formed to look at this has indicated that we need to spend $19 billion on our roads and bridges just to stay where we are in terms of the shape of our roads. That is not a good place. In 1986, when I was first elected to the legislature, approximately 85% of our bridges in Berkshire County were substandard. That doesn’t mean they were unsafe, but indicated that we needed a lot of maintenance. Today, the number is pretty close to this in spite of the work that we’ve done over the last 23 years. It is clear that we need to do more for our transportation system.

Of course, we need to do more than “run in place”. Here in Berkshire County, we need to increase the amount of money spent on our regional transportation system, the BRTA. We need to do so throughout the state. Sen. Stan Rosenberg and I have established and chair a caucus on regional transportation and the needs in our areas are many and urgent. We need to look at rail for both passengers and freight in Massachusetts. There are better and greener ways to move people around.

The dilemma is how we pay for this. We need a long term strategy that will take care of our back commitments and let us plan for the future. There is no one good solution to this. Any solution has to incorporate a lot of differing strategies in order to stabilize our transportation system.

I started by saying that I was not in favor of a $.29 gas tax. That said, we have not had an increase in the tax since 1992. It has remained at 23.5 cents since then. It has to go up modestly. Here are the gas taxes for the surrounding states:
Vermont $.20
New Hampshire $.20.6
Maine $.27.4
Rhode Island $.31
Connecticut $35.5
New York $44.5
At 23.5 cents we are at the low end regionally. However, if we are to ask people to pay more for gas tax, there are a series of other things that need to happen prior to a vote on the gas tax. Here is my list of suggestions

First, we need to enact the “Olver amendment”. This was an amendment that Congressman Olver used to add to every transportation bill when he was the State Senator from Amherst. It would ensure that each region of the state received a benefit from the gas tax or any transportation plan. If people in my district pay more for a tax, they should reasonably expect that that money will go towards improvements in Berkshire County. One of the problems many of us have with the new proposals is that the administration proposes, and that every news report covers, mentions the dire need to fund the “Big Dig” debt and the MBTA in Boston. After years of road and bridge neglect in order to pay for the big dig, the people of Western Mass can’t be expected to continue to pay for these.

Neither should we expect metro west to continue to pay more than their share from turnpike tolls. However, the Governor has indicated a desire to remove the tolls all the way across the state to Route 128. This is unfair. They shouldn’t pay more, but should continue to pay to use the turnpike. And given our financial situation, a suggestion to remove tolls at this time is silly. In fact, as a Western Mass legislator, I have advocated for a reinstatement of the tolls on exits one through four. We need the revenue, and studies indicate that a vast majority of the users on these exits are from out of state.

I realize that the Governor wants to charge tolls on the borders of the state, but there are far too many ways to circumvent the western borders on back roads throughout the Berkshires. You would create less congestion and make more money by simply reinstating the exit 1-4 tolls.

Lastly, but foremost, we need to reform our current system. We pay far more per road mile than surrounding states and we need to know why that is. We need to examine the policies and practices of surrounding states and take their best practices to streamline our system and its costs. This needs to happen before we increase any fees, tolls or taxes.

Changes in Latitudes; Changes in Attitudes

Well, the House members have finally received committee assignments for the new biennium. For the first time since 1992, I am not a chair of a major committee. I have been reassigned as the vice chair of the Standing Committee on Bonding, Capital Expenditures and State Assets. It is disappointing, but this is still a paid position and the committee will be active in the capital projects from around the state as well as the federal stimulus bill.

One of the problems with government on all levels is that it is reactive rather than proactive in nature. It reacts rather than plans for the future. Since we live yearly budget to yearly budget, and are elected in two year traunches, I guess that this is normal. However, we neglect our long term planning and need to think through the long term effects of short term policy decisions. Take, for example, the issue of gambling. Recent statements by pro-gambling interests have said that we should consider this as it would bring money in very quickly. However, we need to take a look at the long term effects of such a huge policy decision. We can’t look at a short term money grab when the long term effects may include dramatic increases in addiction, bankruptcies, and crime. All of these cost money. We can’t look at short term additions to our budget if there are long term ramifications that lead to state dependency on a few large tax payers at the expense of many smaller diverse businesses making up a more recession resistant stable tax base. Our well being has to include long term as well as short term thoughtfulness over the issues we face.

For many years, the Commonwealth of Massachusetts has neglected our physical infrastructure preferring to spend money on our social service systems. We can’t neglect this any longer. Our ability to compete economically relies on our work force and creative, critical, innovative thinking. That means investing in our public higher education system. It means investing in infrastructure such as site preparation. It means new science buildings to educate people in new sciences. We need to address this need.

Recent reports indicate that we will need to spend upwards of $19 billion over the next twenty years just to run in place with our transportation needs. We need to fix our roads and bridges state wide. We need to get a decent passenger rail system in place state wide. We need to address this need.

Our position as a preeminent life science state means that we need to find ways to dispose of waste and more importantly, have a plentiful source of water. I have raised this issue over the past several years as we have had indications that we are running low on supplies south of Boston and in Boston itself. That doesn’t mean we are running out of water, but it does mean that we need to plan carefully for the future. As the national chair of the Council of State Governments in 2003, I saw the difficulties that western and southwestern states have had as they are running low on water supply. States are suing each other over water rights and rivers such as the mighty Rio Grande are merely trickles as upstream states dam the rivers and take all of the water. We need to address this need.

The federal stimulus bill is a big boost for states. We need to spend it wisely. The reaction of some is to substitute this wherever possible for state funding in our budget while revenues are down. This merely expands the base of the budget in an unsustainable way. We need to look at short term spending priorities that lead to economic projects that continue to give us a return on our investment. (Although taking $60 million off the top for a right handed power hitter for our beloved Red Sox is a pretty good investment too.) We have needs around the state and this gives us a chance to address capital needs in order to advance an economy that will mirror the evolving technology economy of America. With investment, we can maintain our edge in the creative economy. We need to address this need.

All of these should involve a lot of hard work for the bonding committee. I look forward to working on these issues and many others.

I will miss my economic development and emerging technolgies committee. It was designed by our former Speaker for me. And for the first time in 17 years, I will not chair an economic development position. But I have found that any position is what you make of it and starting Tuesday, I will be back in the State House working on the issues I care deeply about.

Sunday, February 8, 2009

Thoughts on the Economy

It has been a while since my last post. This is a busy time of year and I have had little time to post. My daughter is in the Washington D.C. area on an internship for college and I have been there twice in the past few weeks.

At the State House, our former Speaker had me working on a few issues in my committee. I had a reasonable assurance that I was staying there and he had me working on a few issues to help sustain our economy while not spending much money. We had been meeting with businesses, especially small businesses in order to find ways to help. This committee was designed with me in mind by our former Speaker. I love working to solve the complex problems of business to keep people employed. This is a problem that I have worked on since coming to the State House 23 years ago. It is a reflection of the tough times in my district. We now have a new Speaker and I have no idea what he will do, but it has been a great ride.

Some of the things we are working on are finding ways to fund new technologies. New businesses don’t have the same life cycle as traditional manufacturing and banks cannot react to this new cycle because of banking rules and regulations. I have had a few conversations with Congressman Frank and his office about looking to state and federal regulatory changes that would react to the new business paradigm. I have also been actively trying to get state government through their quasi-public agencies to look at loan guarantees for small businesses as well as a way to vette new technologies in order to give the financial industries a level of comfort with new technology businesses.

As example, the old industrial model could be a business buying equipment to build widgets. They would find a site, train workers, buy materials and equipment, and would start building and selling widgets. They would bill customers for widgets and banks lent money based on those receivables and business model. Today, a life science business may not sell product for a decade! Or a defense company may get an SBIR grant to develop new products but has no money to commercialize that product. In these two examples, banks can’t lend money without regulators penalizing the banks based on risk. We need to find ways to finance these businesses. And since new banks aren’t necessarily familiar with new technologies, it is hard to lend to these businesses based on their fiduciary responsibility to their shareholders.
We are also taking a look at streamlining our tax policy in order to treat all forms of telecommunication the same. Right now, we treat wireless companies different from land wired line companies. These are both treated differently than cable companies which are treated differently than satellite companies….I think you get the picture. We need to find ways to treat all of these companies the same way, tax them equitable, and still leave incentives for expansion of broadband services.
Much has been made of the federal stimulus package that, as of my posting, still has not been finalized. I have mixed feelings over the stim bill. We are running up deficits with each package that need to be paid back. We are expecting these packages to do far more than they are able to do. We cannot solve the world wide fiscal crisis with these packages. Still, it is important that we find ways to pump money into our economy and these bills need to maximize their impact and not just be expected to replace state revenues.

I will write a longer post based on an op-ed piece I am working on, but let me briefly point to some rules I believe we need if we are to pass such bills to stimulate our economy.

First, we can’t expect government to replace the role of private enterprise. There is not enough money to do so no matter how much we run up our deficits. Government has to be smart as to how this is spent and we shouldn’t become partners in banks or businesses as we have to let the marketplace recover with market incentives.
Second, we have to stop government policy that contracts the number of banks we have in this country. We need many smaller local institutions rather than a lesser number of larger institutions. If we contract the number of banks until there are a handful of large banks, we only make the problems bigger if there is a downturn. We were far better off with local banks making local decisions.

Third, that being said, we cannot let the market run wild, but need rules in place to stop what has been happening in the market for the last decade or so. The stock market has been irresponsible. They have made the investments made in the market more important than the underlying businesses that they are supposed to be financing. Investments are split up and sold again and again with little regard for the fact that money in and of itself only has the worth of the underlying assets. Of course the market has collapsed. A dollar is only worth a dollar no matter how much you try to squeeze out of it by selling on the margins. We need a strong watchdog to make sure that this doesn’t happen again or we are just resetting the market to make the same mistakes again.

Four, that means we need to recreate our economy in order to regain its market value. When I was young, a sheet of steel, for example, was sent to Detroit and a car was built from it. The creation of something from that sheet of steel added value and that was where the jobs were created. We need to recreate our economy in order to reflect those things we can do here. That means that we need to invest in the types of things we need now such as new technologies. Perhaps we no longer manufacture to the extent we used to, but in green technologies, life sciences, nanotech as well as others, we are leading the world in technologies and we need to capitalize on these opportunities. We also need to look at production here and realize that it may be more expensive, but we are far more productive than most of our competitors. In other words, it costs more to make a widget, but you can make more per hour and they are of better quality.

Fifth, we need to reclaim our place in the world economy. That is something that has been lost with the conflicts in Iraq and Afghanistan. We need a much more thoughtful policy regarding how we trade and we need to establish ties with different countries in order to maximize our position. In other words, let’s start trading with others rather than competing with them. That helps our bottom line and takes away a disincentive to stay in the US to manufacture and grow.

Six, we need to create a new infrastructure in order to rebuild our economy. We need a recommitment to our transportation infrastructure. We need to learn from the rest of the world and make a real effort to build a rational working rail system for goods and people. We need to rebuild our crumbling infrastructure in the US. And that leads to the real challenge.

Seven, we need a real commitment from the American people for hard work to make thing work.

I just visited my daughter in Washington by rail. The train on the way back was late and I missed my connection. Two escalators were not working in various train stations and a sign on the DC metro warned that the elevator at the medical center was broke. Here in Massachusetts, we need to spend $19 billion just stay where we are regarding roads and bridges. That is not a good place to be. We are a country in need of a national commitment in order to fix our crumbling infrastructure. Too many people think that the American dream means cheap gas, lots of credit, and free utilities. We need a national commitment in order to rebuild our country into the economic power that we think it is. That means no more blue states and red states. It means we must be honest with the American people about what we need to do. It means no more misdirection as to the real problems. It means we all roll up our sleeves and realize that the only way to get back to a thriving economy is with hard work.