Thursday, June 28, 2007

Jim Reilly Goes "PTFffffffffff"

It has to be frustrating as all get out to be Jim Reilly, the RTA's Chairman. Your staff puts together a glossy, comprehensive funding plan that makes a credible case for public transit. You hold together a somewhat dysfunctional family of service boards. You build a regional consensus for increases in transit funding coupled with enhancements to your agency's powers. The editorial boards line up in your favor. You help broker an unprecedented five-year labor agreement at the CTA that removes the biggest regional stumbling block to your plan.

And then, week after week, you go down to Springfield to talk sense to members of the General Assembly and the Governor. Your reasonable arguments and pleas to avoid service cuts and fare hikes don't yield the action you want and think you deserve. The Governor says he will veto the regional tax hikes that the House has passed. The Governor's alternative, which appears to amount to looking for spare change in the back of the couch, fails to provide the stable funding increase you want. The other leaders seem content to stand pat on a limited increase in funding for public transit.

With the demise of the gross receipts tax plan there is no plan on the table that will generate the kind of revenue necessary to fund transit increases along with increases for education and health care that are higher priorities for some or all of the Springfield leaders. No one seems to get along. And no one wants to hear how much public transit needs new money.

At today's RTA Board meeting, where the RTA adopted the "doomsday" budgets of the service boards, Reilly let his frustration show. According to this article in Crains, Reilly stated:

“What’s keeping things from happening is a deadlock between the governor and the (top four legislative) leaders,” James Reilly said. “That deadlock may continue” for another four years, he said.

Mr. Reilly seemed almost certain that, barring action this year, movement next year would be nearly impossible.

“It would require a miracle for the Legislature to take action in an election year,” he said. Mr. Reilly spoke during an RTA board meeting and a subsequent news conference.

It is rarely a good thing when the leader of a legislative initiative publicly expresses such pessimism, which only starts a spiral of diminished expectations. His remarks also could be viewed as a pointed criticism of the very deadlocked people he needs to come through for transit when the current budget situation is finally addressed.

Perhaps, after months of putting a postive spin on the political deadlock in Springfield, Reilly believed that he might inspire the public to start pressuring "Springfield" if he was so pessimistic. I'm not so sure that was the right call, especially since yesterday's CTA labor deal gave him a great opportunity to proclaim a new day and try to create a self-fulfilling prophecy that the RTA and the service boards have done all that they can and are truly deserving. Or maybe he was just tired and emotionally exhausted.

Perhaps more significant than Reilly's new tone was an amendment to the fiscal note to House Amendment No. 2 to Senate Bill 572, which authorizes increases in the RTA sales tax rates and a new real estate transfer tax in the City of Chicago, both to provide more funding for the RTA and the service boards. The fiscal note and amended fiscal notes are as follows:

Original Fiscal Note, House Amendment No. 2 (Dept. of Revenue)

SB 572 (S-AM 2) would increase revenues by approximately $348 to $447 million per year. The Retailers' Occupation Tax rate increases would generate approximately $348 million per year and the Real Estate Transfer Tax would generate up to approximately $99 million per year.

Revised Fiscal Note, House Amendment No. 2 (Dept. of Revenue)

SB 572 (S-AM 2) would reduce moneys in the General Revenue Fund by approximately $131.4 million per year. Additionally, Senate Amendment 2 would increase local revenues by approximately $451 million per year. The local Retailers' Occupation Tax rate increases would generate approximately $352 million per year in local sales tax revenues and the Real Estate Transfer Tax would generate approximately $99 million per year.

Note what changed between the first and second fiscal note is the conclusion that the SB 572 "would reduce moneys in the General Revenue Fund by approximately $131.4 million per year." This extra drain on the General Revenue Fund presumably is the Public Transportation Fund match of the increased amount raised in the six-county region through new and RTA increased taxes.

The Governor opposes the increase in the RTA taxes because of his opposition to new sales and income taxes. His Revenue Department may oppose the SB 572 funding package for a more practical reason, namely, because of its impact on a General Revenue Fund that is already stretched to the limit and beyond. With no new revenue source on the horizon and unfunded priorities (e.g., healthcare, education) ahead of public transit why would they want to accept an additional $131.4 million hit on the General Revenue Fund? They also may view continued opposition to the SB 572 transit funding package as giving the Governor bargaining leverage with those legislators who favor the package.

This is all rank speculation, but why would the Revenue Department go to such trouble to prepare the amendment showing that the SB 572 package will have a major hit on the General Revenue Fund?

Does this mean that Representative Hamos and the other proponents of the public transit funding package need to go back to the drawing board and consider a plan that does not require the State to chip in? Or maybe it will soon be "we'll take what we can get" time, where the RTA and the transit funding proponents embrace what the Governor proposes with the understanding that they will seek more from the legislative leaders and hope they can get veto-proof majorities behind that additional funding.

PTFffffffff!

31 comments:

Anonymous said...

"No one seems to get along." Well welcome to transit---problem is that if you try to be the SB's spokesman instead of their watchdog, you end up with a BIG credibility problem, glossies and politics notwithstanding.

jackonthebus said...

1. What evidence is there that Reilly had anything to do with the CTA labor agreement? All the press you cited says Huberman, with Daley taking credit.

2. What evidence is there that "Your [RTA?] staff put[] together a glossy, comprehensive funding plan that makes a credible case for public transit."
a. Even according to the news article on the Moving Beyond Congestion site, it was prepared by a consultant.
b. The report had an appendix of possible taxes, but the RTA did not make a recommendation about which to select until the last week of May, when the regular session was supposed to end. By then it knew the Gov's view on the sales tax and that the Gross Receipts Tax was dead.
c. It is questionable whether the plan made a credible case, in that it included all of the Service Boards' wish lists and ignored service duplication. The Auditor General's report, a couple of weeks later, changed the agenda. Reilly should have known that the AG's report was coming.
d. The only thing about which you were correct was that it was glossy.

Let's face it, Reilly was wrong if he assured all three service boards that the legislature would provide additional funding on the level mentioned in all three budgets. As the CTA's said: "The proposed budget assumes that a new funding source for transit will be identified in 2007 to meet the funding requirements of this budget." Pace was even more "over the top" in saying:

Combined total Pace service expenditures ... are balanced using total system revenues, existing RTA sales tax funding and new transit funds anticipated to be realized through the Region’s Moving Beyond Congestion initiative. While the Pace budget is balanced, the agency faces a severe cash flow problem due to the fact that $104.686 million ... is all new money, dependent upon approval by the Illinois General Assembly and if approved, will not be available to Pace until eight months of operations have already lapsed. Pace does not have sufficient resources to support operations during this period. The RTA will have to provide Pace with a sufficient amount of working cash to ensure that status quo operations can be maintained.

Therefore, instead of taking prudent steps earlier in the year, either to present a credible plan to the legislature or telling the service boards to start making cuts effective Jan. 1, 2007, RTA waited until the last minute on both counts. Now it (along with its allies at CTA and Pace in this regard) is trying to foment a crisis atmosphere.

3. "You build a regional consensus for increases in transit funding coupled with enhancements to your agency's powers." Where are all the "Partners for Transit" the RTA was mobilizing as part of the "Moving Beyond Congestion" program? Especially after the RTA threw some of them (such as the Gray Line Coalition) overboard by not incorporating their ideas into the "Strategic Plan?" You don't hear anything about the Partners for Transit anymore, and we are well past them having any effect on the legislators.

I sure don't feel sorry for Reilly--another incompetent bureaucrat, put in place by some compromise between Daley and those in the collar counties having appointment power, after Daley blocked other nominees.

Anonymous said...

The problem is the RTA's Strategic Plan did NOT present a credible case for transit. It is not based on any actual measurements of anything - physical condition of the existing plant, travel patterns,travel patterns, etc. It's just pure PR.

Anonymous said...

i have a very general question that you can probably help me answer. Which agencies or units of government are borrowing (issuing bonds) to pay for transit around Chicago? It looks like RTA does this, but do CTA, Pace and Metra do it too? And does the City of Chicago, state or maybe Cook County issue bonds specifically for transportation investment?

thanks for your help,
researcher unfamiliar with Illinois

Anonymous said...

moderator,
I am trying to forward you an email regarding the latest in proposed transit reforms (can be found on Rep. Hamos' website, but your email keeps coming back as undeliverable. Can you please send me your address?
send to amchenbsw1@yahoo.com

jackonthebus said...

Anonymous @ 2:48: I can't give you anything authoritative. However, the CTA does issue bonds in anticipation of federal grants, either for specific projects such as the Blue (now Pink) Line, or formula grants for new buses. RTA at first didn't want to allow this, but eventually did. CTA also has a number of equipment lease deals.

The state had Illinois FIRST for transportation, roads, and schools, but the proceeds were exhausted. No new "capital program" has passed to date.

It is very unlikely that Chicago or Cook County do anything for transit in this regard. The City's contribution is limited to renovating subway stations it owns.

Anonymous said...

thanks, jackonthebus. very helpful.

Moderator said...

Section 4.04 of the RTA Act, 70 ILCS 3615/4.04, gives the RTA the power to issue bonds. Section 12 of the Metropolitan Transit Authority Act, 70 ILCS 3605/12, gives the CTA the power to issue bonds.

Metra and Pace lack the statutory authorization to issue bonds. Metra has sought that authority.

Several years ago, when the CTA issued bonds backed by federal grants for the Blue Line reconstruction, the RTA vigorously resisted. Here is a Sun-Times article:

RTA's budget stalls in spat over CTA bonds
Chicago Sun-Times, Dec 15, 2001 by Gary Wisby
Passage of the RTA's budget was tripped up Friday by a money- borrowing dispute between the regional agency and the CTA.

Nine votes are needed to pass the budget. But because CTA Chairwoman Valerie Jarrett and three other RTA board members voted no, only eight votes for passage were available.

The CTA wants to borrow about $300 million to complete construction of the Blue Line. "We want to bring more money to the region sooner," Jarrett said.

But with a bond rating of AA, best of any transit agency in the country, the RTA says it can offer a better deal. "We offered the CTA the sweetest deal in town," RTA Chairman Thomas McCracken said.

It wasn't clear Friday how much it would cost either transit agency to borrow the money. CTA has set aside $92 million for debt service.

"If it's not cost-prohibitive, we [at the CTA] should do it," Jarrett said. "This would free up the RTA to issue bonds that could be used for other purposes. All we are saying is, let's wait."

McCracken wasn't in the mood for that. "We want you to build the Blue Line as fast as you can. We've got to get going. . . . Let's move."

Jarrett favored passing the operating part of the budget now and the capital portion later, but McCracken's forces voted that suggestion down.

State law requires the budget be approved by Jan. 8. To pass it by then, "we're going to have to decouple" the operating and capital portions, Jarrett said.

But McCracken retorted, "You don't kill a budget because you disagree with one item."

Moderator said...

Anonymous June 29, 2007 4:52:00 PM CST:

Thanks for trying to get me Rep. Hamos' governance proposal. I got it from another source and discuss it in today's post.

Moderator said...

Jackonthebus--

1. Reilly has stated publicly that he has been involved in negotiations with the CTA unions.

2. I agree that on the capital side the Moving Beyond Congestion report was an unfortunate collection of service board wish lists. Even though a consultant was involved, I'm sure RTA staff had a major role to play in preparing the report. IMO it was reasonable for the RTA to present a menu of new revenue options. Why get people upset unnecessarily by emphasizing one option when it turns out those who cast the votes and sign the bills might prefer another option.

3. I agree with you that the RTA dropped the ball by letting the service boards proceed with budgets that were unbalanced and had a large plugged number for some sort of new State revenue. Had the RTA done this it is possible that the Auditor General could have independently affirmed that the "doomsday" cuts are necessary if the State of Illinois does not step up with new revenue.

If the RTA failed to uphold its central legal responsibility in this instance why should we expect it to do any better with the new powers that it will receive if Representative Hamos' bill becomes law?

Moderator said...

The revised fiscal note was meant to provide the 'true fiscal impact' of SB572, and nothing more.

The Dept of Revenue initially only considered two aspects of the amendment - the sales tax increase and real estate transfer tax; not the PTF match or the 5% increase from 25% to 30% in PTF to help fund paratransit in the region.

Please keep in mind that the state needed to generate a fiscal note since the $452 that the RTA has touted the past few months was a bit off on the real estate transfer estimates. RTA stated the real estate transfer tax increase would generate $42 million; but the Dept of Revenue estimates the increase in tax would generate $99.7 million annually.

Moderator said...

Oops. Somehow shows as moderate and not the correct commentator.

metal.medusa@gmail.com said...

once more.

Anonymous said...

Does anybody know what Jim Reilly's role was during the first re-org of the RTA?

Moderator said...

Here's a link to a history of the original iteration of the RTA:

http://www.rtachicago.com/cms200sample/uploadedFiles/History%20of%20the%20RTA%20by%20Joe%20Tecson.pdf

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