TNC Fees Could Raise Over $100 Million Annually For MBTA, Municipalities, & More
Published January 13, 2021
Fees on ride-hailing trips proposed in the new transportation bond bill could raise over $100 million annually for the MBTA, other regional transit authorities, municipalities, and the Commonwealth Transportation Fund.
The Legislature recently passed H.5248, An Act authorizing and accelerating transportation investment, a $16.5 billion, five-year transportation bond bill. In addition to many important project authorizations, the bill includes several policy items that will help build a more robust, reliable, and affordable transportation system. One part of the bill increases fees on ride-hailing trips taken with transportation network companies (TNCs) such as Uber and Lyft. MAPC strongly urges the Governor to sign these new TNC fees into law to encourage shared rides, reduce traffic and greenhouse gas emissions, and put Massachusetts on par with other states’ TNC fees.
Today, there is a $0.20 cent fee on all TNC rides in the Commonwealth, with revenue split between the city or town where rides initiated, the state’s transportation fund, and a fund to help the taxi/livery industry.
The bond bill proposes different fees for shared rides ($0.40) and solo rides ($1.20) and creates two new fees. In addition to a $1.00 fee on luxury rides in higher-end vehicles, the bill proposes a public transit assessment ($0.20) that would apply to trips that both start and end within the 14 municipalities that comprise the core MBTA service area.
Cities and towns have been putting their current TNC dollars to creative use, investing in transportation projects ranging from dedicated bus lanes to bicycles and helmets for municipal staff. The new fee structure will increase the amount of money cities and towns receive so they can continue to make local transportation improvements.
These fees will also offer some financial support to the MBTA, though it is clear that we still need significant new revenue for the T in order to address longstanding capital and operating deficits. But enacting this new fee structure is an important first step and will align Massachusetts’ regulations with other TNC fees across the country.
How Much Money Could This New TNC Fee Structure Raise?
Using 2019 TNC trip data provided to the Department of Public Utilities and information gathered through MAPC’s Fare Choices report, we have estimated the revenue this new fee structure could generate in the table below.
Since ridership is down during the pandemic, we’ve estimated two revenue scenarios: one with current levels of TNC ridership (about 50% of 2019 levels)1 and one with a return to 2019 levels of TNC use.
In 2019, there were 91.1 million TNC trips. The $0.20 fee on every trip generated $18.2 million in revenue:
- $9.1 million went to cities and towns
- $4.6 million went to the Commonwealth Transportation Fund
- $4.6 million went to the MassDevelopment taxi/livery fund
As we show in the table below, the revenue for each of the new fees is distributed differently to three buckets: cities and towns, the Commonwealth Transportation Fund, and transit agencies.
If pandemic-levels of TNC use continue, under this new structure, municipalities would receive an additional $3.9 million in new revenue, for a total of nearly $13 million.
The Commonwealth Transportation Fund would also see a significant increase in revenue. In pandemic conditions, this new structure could generate up to $25.4 million in revenue for the CTF, up $20.8 million from 2019.
The MBTA could receive between $12.5 million and $25 million if the Transit Authority Fund and Public Transit Access Fee revenue are combined.
TNC Revenue Generation and Distribution Under Proposed Fee Structure
Click + to see how funds are allocated.
(5% of all rides)
Based on these estimates, below is approximately how much revenue could be allocated to cities and towns, the Commonwealth Transportation Fund, MassDevelopment, and transit agencies annually.
|Funding Distribution by Recipient||50% of 2019 Levels||100% of 2019 Levels|
|Municipality of Ride Origin||$13 million
|Commonwealth Transportation Fund||$25.4 million
|Massachusetts Development Finance Agency4||$6 million
|Regional Transit Authorities||$5.9 million
|Total Revenue||$56.2 million
Adopting this new TNC fee structure would raise much-needed revenue for local and statewide transportation investments, promote more sustainable travel, and alleviate congestion we know will rebound as the Commonwealth reopens. We applaud the Legislature for including this provision, as well as the TNC data sharing requirements, in the bond bill, and urge the Governor to quickly sign the bill.
1 Current estimates of TNC use is based on Lyft’s Q3 2020 Earnings Report.
2 MAPC’s Fare Choices report: https://www.mapc.org/farechoices
3 From Department of Public Utilities’ 2019 Data Report: https://tnc.sites.digital.mass.gov
4 The first $6 million allocated to the Commonwealth Transportation Fund annually will go to the Massachusetts Development Finance Agency.