Thursday, August 9, 2007

The Budget Bill And The Prospects For SB 572

A State operating budget (HB 3860) has been approved by the Illinois House and sent to the Senate. HB 3860 has the following appropriations for public transit in this region (pgs. 662-663 of 1395):

$37,318,100 -- Reduced fare reimbursement
$54,251,555 -- Paratransit
$193,000,000 -- Public Transportation Fund
$40,000,000 -- SCIP bonds
$95,300,000 -- Additional Financial Assistance

These amounts are identical to the amounts in the Governor's proposed budget and almost identical to the amounts in the one-month temporary budget adopted in late June.

The budget does not include any authorization for an RTA sales tax increase. Nor does it authorize the City of Chicago to increase its real estate transfer tax to provide a source of operating funds for the CTA. Note: Does anyone know if the General Assembly must authorize Chicago to increase its real estate transfer tax or can the City exercise its home rule powers and do it on its own?

The received wisdom is that the Senate will approve the budget sometime tonight. The Governor has signaled his disapproval of the budget and may veto the bill:

Blagojevich's office criticized the legislation even before the voting started, citing the lack of help for the CTA and contending the budget is a billion dollars out of balance. Blagojevich spokeswoman Rebecca Rausch said the budget "has a lot of problems," including a failure to address the governor's desire to expand health care and commit to a multibillion construction program.

Note that this statement mentions help for the CTA only. The Governor to my knowledge has never embraced a larger transit funding package that includes Pace and Metra.

SB 572, the RTA funding and "reform" package put together by Representative Hamos after literally years of painstaking preparation continues to be dead in the water. If the Governor opposes SB 572 (a) because it relies on an increase in sales taxes and, perhaps, (b) because it funds more than just the CTA, what are the bill's chances once an operating budget has been approved?

The hope of the proponents of SB 572 was that the bill had a chance of garnering a veto-proof majority if it was tucked into a massive budget bill that had something--e.g., funded member initiatives--for everyone. If Representative Hamos and the SB 572 supporters were not successful in hitching SB 572 to the HB 3860 wagon, how successful can they be with SB 572 on a standalone basis? What downstate politician, after all, every lost an election because he/she voted against more money for Chicago-area transit agencies? Some suburban legislators are likely to continue their opposition to SB 572. Metra, after all, is the service board least in need of a bailout so why would they jeopardize their re-election prospects by voting for what their opponents will characterize as a "CTA bailout" at the suburbs' expense.

Maybe the Senate will tack on a transit bailout package to HB 3860 before sending it back to the House. This seems rather unlikely given the rush to approve the budget before State government starts to shut down.

It is important to remember that HB 3860 is only an operating budget. A capital budget is yet to come. The process of putting together a capital budget may provide one last window of opportunity for the Moving Beyond Congestion proponents to push for more operating subsidies to stave off the fare hikes and service cuts that Pace and the CTA are poised to implement.

It seems impossible, however, for a Chicago casino that is reported to be the source of new money to be up and running soon enough to generate sufficient new operating subsidies for the service boards by the end of this year to stave off "doomsday." Maybe the State could come through with more cash in the short term until a casino is in operation. More likely, the RTA and the service boards would be on their own unless and until new operating dollars start coming in the door from a casino or some other source.

The key question is whether a casino would generate enough money to support both a major state capital program and several hundred million dollars in new annual operating subsidies for public transit. When the legislature realizes that there are too many mouths feeding from the casino trough (including the RTA and the service boards seeking capital funding) to also fund new operating subsidies for public transit, SB 572's regional sales tax increase and Chicago-only real estate transfer tax may start looking better.

In this scenario, SB 572 might be a face-saving way for politicians in early September to "save" the service boards in the nick of time from difficult restructurings and fare increases. But as noted above, the prospects for SB 572 on a standalone basis do not seem bright given gubernatorial opposition and the need to garner a veto-proof majority. Moreover, passage of a casino-based capital construction bill is far from assured.

How many folks think the City of Chicago would risk losing a Chicago casino in an effort to extract more operating subsidies from the State for the CTA?

It is only 9:30 p.m. Who knows what will happen between now and morning.


Anonymous said...

It will work with bridge borrowing by the RTA.

Anonymous said...

Good summary of the issues but a few things not quite right. It was always the plan that SB 572 would be standalone legislation. Weeks ago it was thought the bill would be called on its own. But of course it will only pass in the context of a larger deal. If that deal happens it will include capital and transit operating, basically a trade between Republicans and Chicago dems. Whether the operating comes from the casino or from sales tax remains to be seem. And finally, Madigan is fully behind and intends to get 572 passed. He is a cunning, strategic man who usually gets what he wants.

It's not over yet.

Anonymous said...

It will all come to pass except, sadly, the most important--the reform portion of the language will be filtered out. Politics as usual, Chicago Style.

HomeRule said...

"Note: Does anyone know if the General Assembly must authorize Chicago to increase its real estate transfer tax or can the City exercise its home rule powers and do it on its own?"

GA's authorization is unnecessary, but Home Rule munis can only a real estate transfer tax with a referendum. SB 572 allows a brief 6 month window of exception but it only applies to Chicago.