Trick Bag: The Limits on the RTA's Power to Generate New Revenue

Given Greg Hinz's recent pessimistic assessment of the prospects for the State to step up with a new $225 million operating subsidy on top of the State's existing financial support for public transit in the six-county Chicago region, the reader will surely ask "why can't the RTA use its powers to raise revenue in the region?" It turns out that the RTA's power to impose new taxes has been crippled legislatively.

Sections 4.03 and 4.03.1 of the RTA Act set out the RTA's power to impose various kinds of taxes. There are two key bundles of taxes. Sections 4.03(b) - 4.03(d) consist of a gas tax and a tax on for-profit parking spaces. These taxes are imposed uniformly throughout the region.

The second bundle of taxes are regional sales taxes, found at sections 4.03(e) - 4.03(g) of the RTA Act. These taxes are imposed in a non-uniform manner. Cook County residents pay at a rate of 1 percent. Collar county (Lake, McHenry, Kane, DuPage, Will) residents pay at a rate of 0.25 percent.

During its early years, the RTA apparently imposed a gas tax. A gas tax makes sense because it send drivers a price incentive to use public transit, which is being funded by the tax. The gas tax apparently proved unpopular, especially in the suburbs, where people felt they weren't getting their money's worth of transit. The revenue stream was not steady from this tax either. Consequently, the RTA board abolished the gas tax and replaced it with the current sales tax.

So why doesn't the RTA raise the sales tax? It cannot, because the current sales tax rates are capped by statute. So why doesn't the RTA reimpose the gas tax and throw in the parking space tax to boot? It cannot do that either due to 4.03(p) of the RTA Act, which provides that the RTA cannot impose the gas/parking space taxes at the same time that it imposes the sales tax.

Nor can the RTA even decide to revoke the sales tax and go back to the gas tax. Section 4.03(p) goes on to provide that once the RTA has imposed the sales tax it cannot reimpose the gas tax (and parking space tax) unless the sales tax "becomes ineffective by means other than a [RTA] Board ordinance." In other words, only if a court strikes down the sales tax or the General Assembly revokes it can the RTA move back to a gas tax.

Now we know why the RTA is in Springfield hat in hand.