New Approach to RTA Governance: Some Numbers

In a previous post I outlined a new approach to RTA governance. Under that approach, each of the three areas that make up the six-county RTA region--the five collar counties, suburban Cook County, and the City of Chicago--would have a nearly equal voice on the RTA board. Each collar county would have a representative on the board. Suburban Cook County and Chicago would each have four representatives on the RTA Board. The CTA Chairman no longer would sit on the Board. The Governor would choose the RTA Chairman, giving the State of Illinois a direct stake in--and hence a sense of responsibility for--effective management of the region's public transit system, which serves roughly two-thirds of the State's population.

The exact number of Board members from each area is not that important. The proposal would work just as well, for example, if there were five representatives from each area or fewer. This is because voting power would be allocated among the three areas based on each area's contribution of RTA tax revenue and fare revenue. This approach rewards more voting power to those areas that provide more support of the region's public transit system while guaranteeing that every area has a roughly equal voice on the Board.

To determine how this system would work in practice, I used the following from the RTA's 2007 Budget Book: (i) 2005 RTA tax collections and (i) 2005 operating revenue from each of the service boards. I then allocated the service board operating revenue to the three areas using the "Percentage Distribution of Boardings by Residence of Each Jurisdiction" data contained in the Auditor General's Report (pg. 325 of 450).

There are some obvious methodological issues with this approach. For example, fare revenue rather than total revenue might be a better measure of the local effort to support the region's public transit system through fares. Likewise, because of Metra's commendable distance-based fares, the collar county riders pay a higher percentage of Metra's fare revenue than is indicated from their share of Metra boardings. These things likely have a limited effect on the ultimate distribution of voting power and could be fixed by folks with access to more data and much more skill than I can bring to the table.

The current distribution of voting power among the three regions is as follows (the vote of the RTA Chairman is being ignored for purposes of this exercise):

Chicago: 41.7%
Suburban Cook: 33.3%
Collar Counties: 25%

Under the current RTA taxing system, with the collar counties paying at a 0.25% rate and Cook County paying at a 1.0% rate, the distribution of voting power would be calculated as follows:

Chicago: $214,134 (tax) + $535,298 (fares) = $749,432: 41.3%
Suburban Cook: $373,317 (tax) + $304,585 (fares) = $677,902: 37.4%
Collar counties: $112,944 (tax) + $273,284 (fares) = $386,228: 21.3%

The allocation of voting power based on the contribution each region makes to supporting the public transit system is dynamic on purpose. When an area increases its relative share of tax revenue or fares paid by its residents, that area is rewarded with more voting power on the RTA Board. For example, if the RTA tax rate in the collar counties was increased to match the 1.0% Cook County rate, then the voting power of the collar counties on the RTA Board would go up by almost 60%, from 21.3% of the voting power to 33.7% of the voting power.

Chicago: $214,134 (tax) + $535,298 (fares) = $749,432: 34.8%
Suburban Cook: $373,317 (tax) + $304,585 (fares) = $677,902: 31.5%
Collar counties: $451,776 (tax) + $273,284 (fares) + $725,060: 33.7%

Likewise, if a service board raised its fare revenue through a fare increase or increased ridership, the allocation of voting power to the areas where that service board's riders live would increase, all else being equal.

The proposed governance structure has a built-in incentive for local governments to increase both the use of public transit and the financial support of the transit system in their area. As discussed in the earlier post, the RTA Act should be amended to allow counties to increase their RTA tax rate or to impose other revenue measures that provide financial support for the region's public transit system.

Similarly, service boards might be less hesitant to rase fares and more aggressive in putting out service designed to attract maximum ridership and revenue--all good things--if they and the local governments in their service area knew that such good actions would yield more voting power on the RTA Board.

In contrast, the current population-based allocation of voting power on the RTA Board does not provide an incentive for any area to increase RTA tax collections, transit ridership or fare revenue. Nor does it reward areas whose residents must pay fare increases, which makes it even harder for service boards to push through fare increases to cover their increased costs.

What's not to like about a system that gives each area a substantial voice on the RTA Board, but allocates voting power based on each area's tangible support for the region's public transit system?