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“No on Question 1″ by John Edward

John Edward teaches economics at Bentley and UMass Lowell. He’s a frequent contributor of columns on economic issues.

Question 1: A YES VOTE would eliminate the requirement that the state’s gas tax be adjusted annually based on the Consumer Price Index.

Proponents of question 1 observe that under current law the gas tax will automatically increase with inflation. They claim this will happen without a vote in the legislature.

The legislature did vote. The legislature took action to improve the state’s ability to maintain our vital transportation infrastructure. The legislature properly identified an on-going need to fix and maintain roads and bridges. They acted accordingly.

The legislature was pro-active. This is a good thing. Too often our elected leaders are reactive. Often they react too late.

Indeed, that is the case here. Prior to increasing the gas tax by 3 cents per gallon, it had been 21 cents per gallon since 1991. In the past two decades, the purchasing power of gas tax revenue has decreased by a third, auto fuel efficiency has improved by a third, and the cost of maintaining roads and bridges has increased by well over a third.

Proponents of question 1 refer to the gas tax as the “forever tax” because it will increase with inflation. Have they never heard of the sales tax?

When prices go up we pay more in sales taxes. When incomes go up we pay more in income taxes. Current law automatically adjusts personal exemptions, standard deductions, and many other tax provisions for inflation.

When prices and incomes go up, paying for government services is more expensive. Accounting for that is good government. Basing the adjustment on the widely used Consumer Price Index (CPI) is reasonable.

Actually, using the CPI will result in a reduction in gas tax revenue in real terms. According to an MIT study, over the last forty years the cost of paving asphalt has increased by 50 percent more than the rate of inflation. In addition, automakers will continue to make cars more fuel-efficient.

Proponents of question 1 claim the gas tax will just continue to grow. It will, but most likely by very small amounts. Lately the CPI has been increasing at a rate of 2 percent per year. At the current rate of inflation, it would take two years for the gas tax to increase by one cent. After one year of adjusting for inflation, someone driving a Honda Fit 10,000 miles a year will have to pay an extra $1.25 over a full year.

According to a study out of New Hampshire, the average car owner pays $323 dollars a year in repair costs due to bad roads. The gas tax is a classic example of a benefits-received tax. Gas tax dollars go to improving the roads we rely on.

Even after the most recent increase in the gas tax, Massachusetts is right in the middle of the pack among states in taxing auto fuel. Maine, Vermont, Connecticut, and Rhode Island have higher gas taxes. At the current inflation rate, it will take almost half a century for our gas tax to catch up with California’s.

Proponents of question 1 are making the absurd claim of taxation without representation. We have representation. We elected our representatives. They passed the legislation. They passed legislation that reflects reality, anticipates change, and demonstrates leadership.

In 2004 the state created the Massachusetts Transportation Finance Commission. Their report, published in 2007, was, in their own words “dire” as they concluded: “The Massachusetts transportation system is in deep financial trouble because we have not faced up to the reality of how much it costs to preserve the system.”

This past May the Governor signed a Transportation Bond Bill. It authorized borrowing of $12.7 billion over 5 years. As observed by the Finance Commission, the reliability of revenue used to pay off the debt influences our bond rating. Without a gas tax indexed for inflation the revenue is less reliable. If rating agencies lower our bond rating the state will end up paying a lot more for bridge and road repair.

In the last few years the Massachusetts Department of Transportation has made significant progress in reducing the number of structurally deficient bridges. Yet, we still have well over 400 of them.

Proponents of question1 say, “The state has a spending problem, not a revenue problem.” The state can only use gas tax revenue for transportation. According to the Tax Foundation, Massachusetts revenue from the gas tax, tolls, and license fees pays for only 58 percent of roadwork costs.

No one can make a credible case that the Commonwealth of Massachusetts invests too much on our transportation infrastructure. Proponents of question 3 have a priorities problem. They are being penny-wise and dollar foolish.

Vote No on Question 1.

Coakley v. Baker – almost a yawn by Marjorie Arons-Barron

The entry below is being cross posted from Marjorie Arons-Barron’s own blog.

debate-photoTonight’s televised benign if mildly tense debate between Charlie Baker and Martha Coakley was clearly a draw, which may have been the defensive  objective of all concerned. Comfortably  moderated by WGBH talk show hosts Jim Braude and Margery Eagan, both candidates stuck to their well honed, but by now shop-worn messages, spoke calmly, and smiled wanly but just a little.  They articulated some  subtle policy differences, but it’s hard to walk away with any overwhelming sense of great differences between them. Both are decent people who care about children,  women,  the mentally ill,  the middle class…..well, you get the idea. The question remains as to whether what is said in the campaign will play out in office.

I don’t know if  the debate rules prevented the moderators ( or the Globe interlocutors ) from asking crisp follow-up questions.  Clearly missing was the feisty engagement Eagan and Braude often exhibit on their program– not letting a guest get away with non-responsive palaver.   The stupid question asking each candidate to say what movie stars should play them in a film was  only slightly better than Barbara Walters asking what trees they would be.

When the candidate answers were lame (e.g., responding to the moderators’ call to them to disavow PAC ads now airing over and over and over), they both were lame.

I wish they had asked questions the candidates couldn’t answer in their sleep. For example,  which governor, living or dead, would each chose as a role model and why?  To what extent are  Baker’s views of public service and work ethic  closer to  those of  Romney than those  of his hero Bill Weld?  Does Martha Coakley still believe that she was right to block the release of Fells Acre convict Gerald Amirault  after the Parole Board voted 5-0 to release him? Would Charlie  Baker have given the same advice?

Baker scored in chiding Coakley for blocking access to the ballot for the casino repeal referendum. But we still don’t what each would do as governor if the repeal fails or succeeds.  Coakley is slightly more compelling in her support of the sick leave referendum. Baker differs in what he considers the threshold for the size of companies to which it should apply. Both blew their answers to the inequities of the lottery.

Where there are legitimate questions about their ethical decisions, both are flawed. For Baker, it’s the pay-to-play investigation of a $10,000 contribution to the Garden State’s Republican Committee from Baker’s company.  General Catalyst then got a $15 million investment of New Jersey pension monies.  NJ  Governor Chris Christie, chairman of the Republican Governors Association, also funneled millions into Baker campaign advertising.  The NJ investigation results will not be made public until well after the election.  Yecch!

For Coakley, the issues are misuse of campaign funds (which she rectified)  and of advancing a lawsuit that would benefit one of her finance co-chairs who happens to run the  only program in the country to restructure loan foreclosures and earns a very high salary for doing it.  Coakley denied that any further disclosure of this seeming conflict of interest was in order. And, indeed, better context is provided on that somewhat overblown issue in Boston Magazine.

The candidates were asked which public misconceptions about them that they most regret. Baker said it’s the notion that he is more about (budget) numbers than about human beings.  Coakley says it’s the idea that she doesn’t have a sense of humor. They’re probably both right.

Coakley is trailing Baker in the money department, which is why she has brought high visibility players (Bill Clinton, Michele Obama, for example) to campaign for her. Baker has used Mitt Romney. Endorsements, however ringing, can go just so far. It’s all about the cash, and Baker has four or five times as much money in the campaign as does Coakley. That can translate into lots of last-minute advertising, and that could make a difference. Coakley and her minions may have a better get-out-the-vote ground game, and that too could make a difference.

Tonight’s debate will not.  With the candidates margin-of-error “tied” in the most recent polls (Boston Globe, for example,  has them each at 41 percent, with each of the three independent candidates drawing three percent or less), this debate did nothing to break the race open.  There are two weeks left to suffer through a barrage of ads that most of us have grown adept at tuning out. We’re left with two decent but hardly stellar candidates, and a steadily growing wish that the end comes quickly enough to put us out of our misery.

I welcome your comments in the section below.

Lowell History from International Institute

Arabic language class at International Institute of Lowell

Historians at UMass Lowell continue to mine the newly rediscovered archives of the International Institute of Lowell for stories and photographs that help tell the story of the organization and of the city of Lowell.  This photo shows at Arabic language class taught by Mrs. Victoria Estfam at the Institute.  Does anyone recognize any of the young women in this photo?

This ongoing historic research will be a focal point of the International Institute of Lowell’s American Dream Award Ceremony and Dinner which this year will honor Luis Pedroso, a former client of the International Institute.  This event will take place on Thursday, December 11 beginning at 530 pm at United Teen Equality Center at 34 Hurd Street in Lowell.  For more information about this event, go to the website of the International Institute of Lowell

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The light, last night

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