Senate Budget Raises Fees on Uber/Lyft, But It’s No Lifeline for the T

The Massachusetts State House in downtown Boston.
The Massachusetts State House in downtown Boston.

The Massachusetts Senate has unanimously passed a $46 billion budget for the current fiscal year, but while the final legislation includes an amendment that will raise fees on Uber, Lyft, and other app-based ride-hailing companies, those additional funds are unlikely to help the MBTA, which faces a severe deficit and is planning a dramatic suite of service cuts in the new year.

The House budget bill and the Senate budget both essentially flat-fund the T’s budget for 2021, with $1.1 billion for the T from dedicated sales tax revenue, plus $127 million in operating assistance – the same amounts that were appropriated in the adopted 2020 budget, which was prepared before the pandemic.

Because the T’s fare revenue has plummeted over the past year, funding the T at pre-pandemic levels will leave the agency with a huge budget deficit – a deficit that would need to be filled, in part, with drastic budget and service cuts.

The House rejected amendments that would have raised new revenues for the T to avoid service cuts. The House did pass a major transportation revenue bill earlier this year, which would have raised gas taxes and corporate taxes to help fund statewide transportation improvements. But the pandemic shut down the legislature before the Senate could consider the proposal, and the bill appears to be dead.

However, one idea from that bill has survived and was inserted as an amendment into the Senate budget bill. Amendment #53, sponsored by Senate Transportation Committee Chair Joseph Boncore, would levy higher fees on app-based ride-hailing companies like Uber and Lyft. While the state currently levies 20 cents per ride on those companies, the new Senate bill would tax rides at a rate of 7 percent, or 3 percent for rides with more than one passenger.

To incentivize reductions in traffic and pollution, the bill would levy an additional 3 percent surcharge during peak commuting hours, and single-occupant rides in zero-emission vehicles would be subject to the lower 3 percent rate. A quarter of the fees would be distributed to the municipality where each ride originated, and the remainder would go into the Commonwealth Transportation Fund, which funds highways and transit across the state.

A calculator from the Metropolitan Area Planning Council estimates that, at 2019 traffic levels, the new fee structure could generate about $56 million in additional revenue for the Commonwealth’s transportation agencies.

However, along with all other forms of travel, there’s been a large reduction in Uber and Lyft activity during the pandemic, so the new rates are unlikely to have much impact in the short term.

They should, however, help mitigate traffic and pollution from these companies as the region’s economy comes back to life.

The Senate’s proposed fee structure – and the rest of the Senate budget – will need assent from the House and the Governor before they can come into effect. However, legislators in the House have already voted for higher Uber and Lyft fees (in the March transportation revenue bill, would have raised rates to a flat $1.20 per single-occupant ride), and the Governor has also endorsed the idea.

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