RTA Funding Proposal: Why The Ambiguity?

Trying to understand the RTA's tax and funding formulas puts one in mind of the Kremlinologists who tried to discern which Soviet leaders were ascendant and which were losing favor from grainy photographs of parades and other gatherings. The revised funding system set forth in Representative Hamos' House Amendment #2 adds some new wrinkles to an already complicated system.

We know from Representative Hamos and RTA press releases (here and here) how $452 million in new operating dollars would be raised in the six-county area and distributed:

New Funding Sources
-- Increase RTA sales tax by 0.25% through the six-county region ($280 million)
-- Impose a real estate transfer tax in Chicago ($42 million)
-- Apply the States 25% Public Transportation Fund match to these increases ($80.5 million)
-- Increase the PTF match rate from 25% to 30% ($54.3 million)

Distribution of New Funding
-- $322.5 million to the service boards
-- $100 million to paratransit
-- $30 million to the Innovation, Coordination and Enhancement Fund

Amendment #2 also has a standalone provision under which the collar counties would pay an additional 0.25% in sales tax. The revenue would be used by the counties for road or transit needs.

Internal Contradiction?

Amendment #2 seems intended to change the distribution formula the RTA uses when distributing RTA tax dollars and operating subsidies to the service boards. New section 4.03.3 of the RTA Act establishes a complicated distribution formula we will discuss in an upcoming post. Yet, the Amendment leaves intact the existing distribution formula set forth in section 4.01(d) of the Act. It is not immediately apparent how sections 4.01(d) and 4.03.3 can be reconciled and it is thus puzzling why the drafters left section 4.01(d) in place when the seeming intent of Amendment #2 is to implement another distribution formula.

For example, section 4.01(d) says that "after withholding 15% of the proceeds of any tax imposed by the [RTA]," the RTA will distribute the tax money to the service boards according to percentages that differ by region. Section 4.03.3 opens as follows:

After providing for payment of its obligations with respect to bonds and notes issued under the provisions of section 4.04 and obligations related to those bonds and notes, the [RTA] shall disburse the remaining proceeds from taxes it has imposed . . . as follows:

There follows a detailed list of how various RTA-imposed taxes are to be distributed. The distribution scheme includes a 15% cut for the RTA off the top, similar to the 15% cut off the top set out in section 4.01(d).

There is risk in having two sections in the same act address the same distribution process. The risk is that this duplication creates ambiguity that must be resolved by a court. A court might hold that section 4.03.3 supersedes section 4.01(d) or it might hold that 4.03.3 has no effect to the extent that section 4.01(d) already addresses the issue. The fate of the road/transit fund for the collar counties (new section 4.03.3(d)) would depend on which way the court ruled on this issue.

Courts generally resist striking down one of the two provisions in a statute that cover the same subject area. Courts do not like to hold, in essence, that the General Assembly goofed though poor drafting. Courts more likely would try to harmonize the sections. Who knows what might result from such a harmonization effort. For example, perhaps a court would hold that section 4.03.3 refers only to the distribution of RTA discretionary money after payment of RTA administrative and debt expenses. This is an awkward reading, but certainly not beyond the realm of possibility if a court is forced to harmonize the two sections.

It is unclear how a court could reconcile section 4.01(d), which does not appear to apply after the RTA has met its debt service obligations, with section 4.03.3(d), which appears to contemplate the distribution process kicking in after the RTA has put aside enough money to cover its debt service obligations.

Keeping both section 4.01(d) and 4.03.3 in the bill creates a level of uncertainty that a disgruntled service board might exploit to challenge the RTA's distribution of tax dollars. Why invite that challenge? Hopefully, an upcoming amendment will take care of the problem.