One of the big takeaways from Mayor Megan Barry’s first State of Metro address Friday was her commitment to go before state lawmakers next year and produce a “funding mechanism” to pay for future transit projects in the region.
Though her address focused a lot on transit, her next budget doesn’t necessarily include a lot of transit dough. That budget calls for a $2 million increase to Nashville Metropolitan Transit Authority’s budget, boosting the transit agency’s operating budget to $42 million. While Metro has started to pour more money into MTA during recent years, the transit agency’s operating budget is still a small piece n Barry’s more than $2 billion budget.
When asked for specifics on potential funding mechanisms, Barry was scant on details, only saying that she and regional mayors in Middle Tennessee have discussed a bump in the gas tax to pay for transit. However, she said “we’re going to have to be bolder” than a merely looking at the gas-tax hike.
Among the hurdles for Barry and other local mayors: making the case for transit even as state transportation officials face a multibillion-dollar backlog of road-building projects and improvements — a backlog that currently costs as much as the boldest preliminary regional transit plan outlined by Nashville transit officials, which could run an estimated $5.5 billion price tag through 2040.
Barry’s approach gleans some wisdom from the failure of her predecessor’s Amp bus rapidtransit line along West End Avenue — which faltered in large part because lawmakers weren’t onboard with the project, most notably House Speaker Beth Harwell of Nashville, who argued the Amp project in her own district shouldn’t take precedent over the aforementioned backlog of
Since the demise of the Amp, transit advocates have repeatedly called for dedicated local funding to pay for projects. As MTA head Steve Bland and other regional planners said recently, that requires Nashville taxpayers to pick up the slack. If Nashville had a ready source of local transit funding in place, the city may not have needed the state to foot the bill for one-fifth of the Amp’s $175 million tab. At the very least, having local funding tidied up would have strengthened the city’s position in getting state buy-in. Such as it was, the Legislature seized the opportunity to throw a decisive blow against the Amp’s prospects.
In any event, Nashville ultimately needs the state’s assistance if it wants to address the transit issue, which has jumped to forefront as the region’s population gains trigger mounting traffic volumes on the city and region’s roadways. Advocates argue transit is needed if Nashville, the state’s largest economy, wants to continue its recent streak of success, where thousands of new jobs have dovetailed into a historic real estate boom. As we’ve reported, transit isn’t necessarily going to rid the region of its congestion or remove cars from the roads. It may, however, prevent Nashville from sliding into potentially crippling traffic gridlock.
State support may not immediately come in the form of huge multi-million checks. As TDOT’s John Schroer recently said, he considers the state transportation agency a partner for regional transit — but only as a secondary investor. Nashville and its neighboring counties need to take the lead, according to Schroer, TDOT’s chief.
All that said, here’s a look at the “funding mechanisms” that could be explored by Barry’s office. This certainly isn’t an exhaustive list. And if anybody has other ideas of what the mayor should consider in terms of funding, I’m open to hear from you.
A local gas tax in Greater Nashville for transit
The gas tax may be a good place to start. But let’s be realistic for a moment.
Even increasing the state’s gas tax to fund road building is a political hot potato — so who knows whether Republican lawmakers statewide will budge on a tax increase for transit. When TDOT and Gov. Bill Haslam went on an infrastructure roadshow throughout the state last year, additional funding for transportation projects rose to the forefront. TDOT currently faces an approximately $6 billion backlog of projects the state Legislature has already approved.
Haslam came back from his statewide tour last year with a new list of roadway needs, totaling some $5 billion more. The governor basically got as close as possible to proposing a gas-tax increase without pulling the trigger on one. As we’ve documented, Tennessee’s gas tax hasn’t changed in nearly two-and-a-half decades, which has put a pinch for the state’s transportation department. According to TDOT, each penny in the 21.4 cent gas tax is worth $31.3 million per year. Haslam’s decision to steer clear of a gas-tax hike may tell us something about how the governor operates. But it also suggests that he doesn’t see a groundswell of support for the measure within the Republican-controlled Legislature.
That’s bad news for Barry and her regional mayoral colleagues if they want to crack the funding nut. As local transit officials have told me: If it comes down to funding for roads versus transit, transit will lose. And at the moment, the governor hasn’t been willing to jump out and propose an increase in the gas tax to fund roads.
Even Schroer at TDOT has bluntly stated: “ The Legislature doesn’t like transit.”
This isn’t to say Barry and regional mayors shouldn’t consider the gas-tax route.
They could pursue a local gas-tax option — basically pitching a bill before the state Legislature that could allow local governments to raise the gas tax in their respective counties.
Republican-led Utah recently passed such a measure in a sweeping overhaul to its gas tax. In the process, the state allowed local governments in Utah to hold referendums on raising taxes on gas. Interestingly enough, residents in Salt Lake City — a city considered a leader in mass transit — voted down their local gas-tax referendum.
Increase sales taxes in Middle Tennessee
One of the arguments against increasing the gas tax: more fuel-efficient cars are eroding the buying power of its revenues. Certainly, inflation has also eaten away at how far gas-tax dollars go. Strictly raising the gas tax, in a sense, would basically be an attempt to play catch-up. It also remains to be seen whether new technologies — such as driverless cars — will turn traditional gas consumption for automobiles on its head.
Rather than go to the gas tax, the Nashville region could explore hikes to sales taxes for the region — devoting a portion of that sales tax bump to funding the city and regional transit agencies. I know what you’re thinking, though: 9.25 percent sales taxes in Davidson County are high enough.
But this approach is something Colorado has implemented. A little more than a decade ago, voters approved a ballot measure to raise nearly $5 billion through sales taxes to fund construction of a rail system. Counties in the Denver metro region have a 1 percent sales tax that goes directly into the Denver Regional Transportation District. The Denver region’s sales and use tax generated approximately $500 million last year, according to RTD figures. From this sales-tax source, Denver’s RTD issues revenue bonds to pay for its transit projects. In much the same way Metro is using hotel and tourism taxes to pay for the more than $600 million Music City Center, the Regional Transportation Authority of Middle Tennessee and Nashville MTA could leverage a sales tax like Denver’s to get the kind of up-front capital needed to build substantial transit projects. In January, when MTA unveiled its preliminary regional plans, MTA CEO Steve Bland acknowledged the city and region would likely need to incur debt to construct a transit system that includes light-rail and the like.
Bigger state funding for transit projects
Another option: Request the state to simply allocate more money for transit each year. Colorado has developed an annual funding pool that doles out $15 million in grants annually for transit projects. There are two baskets to Colorado’s program: $5 million for local transit grants and a $10 million statewide grant that go into regional and statewide projects. Additionally, local governments in Colorado need to provide a minimum 20 percent local match for the state grants. Since 2010, Colorado’s program has funded around 140 projects across the state.
The issue here, however, is the one tied with any transportation funding in the state: either more revenue is generated for transportation, or money for transit is diverted from other transportation projects. And in recent years, the governor hasn’t thrown his weight behind the former, while the Speaker of the House has argued against the latter.