Pair of Rhode Island senators pitch gas tax fix, rideshare fee to shore up RIPTA's finances

Yahoo

05-02-2025

A Rhode Island Public Transit Authority bus stops on Pocasset Avenue in Providence on Jan. 30, 2025. (Photo by Christopher Shea/Rhode Island Current)
As Rhode Island's statewide bus agency stares down a $32.6 million budget gap heading into the next fiscal year, two lawmakers are looking at ways to fill the gap without drawing from the state's general revenue fund.
A bill sponsored by Sen. Sam Zurier, a Providence Democrat, reforms how the state's gas tax is allocated to the Rhode Island Public Transit Authority (RIPTA), while another from Sen. Megan Kallman, a Pawtucket Democrat, would impose a new fee on rideshare services.
Zurier's bill would increase RIPTA's share of the state's annual gas tax revenue, which has never kept pace with inflation, he said.
When the General Assembly set the tax at 32.5 cents per gallon in 2015, the agency was allocated 9.75 cents per gallon — at the time a 30% share. But as the gas tax has since increased to 38 cents, RIPTA's share of the pot has since decreased by 4% to 26%, which Zurier said has cost the bus agency $5 million in annual revenue.
'The program they set up in 2015 was supposed to adjust for inflation,' Zurier said in an interview.
RIPTA's incoming deficit is the result of federal pandemic relief aid drying up. Last year, the General Assembly gave the statewide bus agency $15 million in unspent federal COVID funds to help plug its budget hole.
'But we know for a fact that money is not around this year,' Zurier said. 'And we know it would be difficult just to plug it with general revenues because we have a projected deficit.'
And no relief is coming from Gov. Dan McKee, at least until RIPTA submits a report on its operations to the governor, House speaker, and Senate president by March 1, as stipulated in the bus agency's fiscal 25 budget.
McKee's proposed fiscal 2026 budget allocates $126.6 million to RIPTA, despite $159.1 million in projected expenditures. RIPTA had a budget of $153.4 million for fiscal 2025.
The gas tax itself is based on the gallons of gas purchased in Rhode Island — a source that will become less stable as drivers shift to more fuel-efficient and electric vehicles.
'That's something that is a positive in terms of our environmental goals, but it has a practical downside when you rely on those gas tax proceeds to fund critical transportation infrastructure,' GrowSmart RI Deputy Director John Flaherty said in an interview.
RIPTA now gets about $40 million in annual gasoline tax revenues, based on its existing allocation of 9.75 cents per gallon. But that revenue is projected to drop over $1 million when fiscal year 2026 starts this July, according to projections from the Rhode Island Department of Revenue.
If RIPTA's share of the gas tax remains unchanged, revenues are expected to drop to $32.9 million by fiscal year 2030 even as projections show the Rhode Island Department of Transportation's (RIDOT) share of the gas tax increasing one cent every other year.
McKee's proposed budget leaves public transit advocates fuming over RIPTA's $32M deficit
RIDOT's share goes from 22.25 cents per gallon for fiscal years 2026 and 2027 and increases to 24.25 cents by fiscal 2030. State projections show RIDOT will receive $94 million in revenue for fiscal 2026 and drop to $86.6 million by fiscal 2030.
Another part of the gas tax problem, Flaherty said, is how the state calculates increases. The Department of Revenue adjusts the gas tax to account for inflation every two years, but only considers inflation from the previous year.
Zurier said he plans to correct that with a separate bill mandating the state consider both years.
The proposed changes are welcomed by RIPTA as it seeks to close its budget deficit.
'I would like to thank Senator Zurier for his support and look forward to collaborating with the governor and General Assembly to identify a sustainable financial plan for RIPTA that allows us to fulfill our mission,' RIPTA CEO Christopher Durand said in an emailed statement.
Zurier admits there is a slight wrinkle in his tax plan for RIPTA: McKee's budget proposal to charge electric vehicle owners higher with registration fees. The governor's proposal calls for using any revenue from EV registration to help support municipal road repairs, which until now have been funded using federal pandemic aid.
Zurier's gas tax allocation bill seeks to allocate 30% of those fees toward funding RIPTA — granted the registration fees are even approved by the legislature.
'It's a controversial measure and I'm not sure if it's going to make it into the final budget,' the senator said. 'And I still haven't developed my own position on that yet.'
Both of Zurier's bills, which were introduced on Jan. 23, were referred to the Senate Committee on Finance, where they have yet to be scheduled for an initial hearing. Companion legislation has not yet been filed in the House.
More help for RIPTA could come from a proposed tax on Uber and Lyft rides. Kallman's legislation would add a 75 cent fee to each fare collected by rideshare companies — half of which would go toward funding statewide transit.
The bill would also direct sales tax revenue already being collected from rideshare companies to a restricted receipt account to fund RIPTA.
'Whether it's reducing our greenhouse gas emissions, making Rhode Island more attractive to employers or increasing workforce participation, we cannot make progress without a healthy RIPTA,' Kallman said in a statement. 'RIPTA needs steady and diverse funding streams that will allow it to operate smoothly year-to-year and expand its services to meet the transit needs of Rhode Islanders.'
Kallman introduced the same legislation last year, where it was held for further study by the Senate Committee on Finance. The latest bill was filed Jan. 31 and was referred to the same committee, where it has yet to be scheduled for a hearing.
A similar rideshare surcharge was put in place in Massachusetts in 2016 as a way to fund local road maintenance — something the Save RIPTA coalition highlighted on X Tuesday in celebrating Kallman's bill.
'It's time to do this in RI,' the coalition posted.
Durand said he was grateful for Kallman's support of public transit.
SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX