Why It Matters
Governor candidates in Massachusetts are proposing measures that would leave approximately $120 million in state revenue unfunded. The potential loss threatens transportation budgets at a time when federal funding streams face uncertainty.
What Happened
Republican nominee Mike Minogue and Democratic incumbent Maura Healey have both introduced plans to suspend the state gas tax, though their proposals differ in scope and duration. Minogue proposed suspending the levy when fuel prices exceed $4 per gallon and working toward its eventual elimination. Healey proposed a two-month suspension of the tax.
The current state gas tax is 24 cents per gallon. It serves as either the largest or second-largest source of state-generated transportation revenue, depending on the year. Other funding sources include vehicle sales tax and automobile registration and inspection fees. The Fair Share millionaires tax has also supported transportation needs over the last four years.
The Healey administration estimates that suspending the tax would result in a deliberate reduction in state revenue of roughly $120 million or more. Wholesalers pay the gas tax monthly and may stockpile gasoline during suspension periods, potentially causing losses that exceed the initial estimate. Economists note that drivers receive only 72 percent of the benefit from such suspensions, with the remainder going to suppliers.
By the Numbers
$120 million — Estimated revenue loss from gas tax suspension proposals
24 cents per gallon — Current state gas tax rate
$4 per gallon — Fuel price threshold for Minogue’s proposed suspension
Two months — Duration of Healey’s proposed suspension
$25 — Estimated savings for the average driver from a two-month suspension
72 percent — Share of suspension benefits that go to drivers, per economists
$97 million — State funding for regional transit authorities
Fiscal Impact on Transit
The projected $120 million shortfall carries significant implications for public transportation. The loss is comparable to nearly the entire annual Massachusetts Bay Transportation Authority (MBTA) budget for RIDE paratransit services. It also represents roughly half of the money collected in tolls on the Metro Highway System.
The state uses about $97 million to fund regional transit authorities. These systems rely on stable revenue streams to maintain operations. The gas tax does not cover the full costs of driving in Massachusetts, including public health costs associated with particulate emissions. Ambulances, EMTs, and firefighters also utilize roads maintained by these funds.
Zoom Out
The debate occurs against a backdrop of shifting federal funding dynamics. Federal dollars for infrastructure projects are being held back or clawed back by the Trump administration. This creates additional pressure on state transportation budgets that already rely heavily on gas tax collections.
Oliver Wendell Holmes Jr. wrote in 1927 that “taxes are what we pay for civilized society.” The current proposals challenge that premise by prioritizing short-term political gains over long-term revenue stability. Both parties are seeking to capitalize on high fuel prices, but the structural impact on state coffers remains a central concern.
What’s Next
The Healey administration has proposed using surplus millionaires tax revenue to offset the lost gas tax income. Voters will weigh these proposals as the election cycle progresses. The ultimate decision will determine whether Massachusetts maintains its current transportation funding model or shifts toward alternative revenue sources.