Sunday, August 26, 2007

Finding A Path To Resolution

Disputes And Their Resolution

In my job I have some experience with dispute resolution. There are common characteristics to disputes. The parties tend to wear emotional blinders, convinced that their position is right and that the other side's position is unreasonable and irrational. They literally don't hear each other, talking past one another with argument after argument. Many times the conflict is complicated by status issues--one party will consider itself to be economically, socially and/or intellectually superior and not be shy about projecting their sense of entitlement. Not surprisingly, this patronizing attitude will rub the other party the wrong way and cause them to cling even more strongly to their position.

Yet, often it turns out that there is more common ground than what meets the eye. The challenge is finding a path for both parties to walk to get to that common ground and then build a settlement of the dispute on that ground. Many times this requires the parties to take bolds steps that would seem unthinkable to them when they entered the dispute resolution process. Seemingly intractable disputes do get worked out. This is the Midwest not the Mideast after all!

The Transit Funding Imbroglio

The current transit funding imbroglio strikes me as a textbook example of the kind of seemingly intractable dispute for which there is a common ground and creative solutions available to craft a resolution. That resolution will require everyone to get out of their comfort zones. But just as wars stimulate technological innovation, disputes such as this can sometime spark creative resolutions that exceed everyone's expectations.

The Moving Beyond Congestion group has worked hard and long putting together a transit funding and RTA governance package embodied in SB 572. That package has gotten the stamp of approval from the editorial boards. A coterie of advocacy groups and influential experts are speaking out in support of the bill. The Mayor of Chicago and the Chairman of the DuPage County Board, among other political figures, have spoken up in support. In other words, SB 572 has the stamp of approval from the local establishment.

Yet, as is the case is so many disputes, the proponents of SB 572 seem to have failed to listen and take into consideration important contrasting views. The Governor has been insistent that sales or individual income taxes will not go up on his watch. He has been equally insistent that the State tax structure is unfairly tilted in favor of the business community and against "working people." His spokesperson was recently quoted as saying that funding for transit should come from closing some of these corporate tax loopholes. Many may disagree with the Governor's position, but that position is neither irrational nor without precedent.

Even though they certainly knew that the Governor feels very passionately about no increases in sales taxes, the Moving Beyond Congestion effort has persisted in pushing for a significant sales tax increase in the region where two-thirds of the State's population lives. It is as if the proponents either failed to listen to the views of the Governor or just chose to dismiss the Governor's views as beneath serious consideration.

Using regional sales taxes to fund public transit is not, however, something mandated by a long lost Eleventh Commandment. Sales taxes for transit are criticized for two good reasons. First, sales taxes are regressive, which may explain why the Governor opposes sales tax increases. Second, sales taxes are not directed at the conduct--driving--that we want to switch over to transit use. Unlike alternatives such as gas taxes or tolls, sales taxes are too diffuse to incentivize people to take transit or reduce their driving.

Further, Governor signaled through a late and rejected amendment to the Chicago Metropolitan Agency for Planning (CMAP) bill (SB 1201) that the State should have a direct role in transportation and other kinds of infrastructure planning in this region. Yet, when the Moving Beyond Congestion proponents put together the RTA governance piece of SB 572 weeks later, they expanded the RTA Board but gave neither the Governor nor the State a role on that Board. This despite asking the State to increase its already substantial financial support for public transit in this region.

In short, we have a classic dispute. One side, apparently buoyed by a sense of entitlement, is pushing a transit funding and governance package that the other side has said is unacceptable.
The other side undoubtedly feels aggrieved and put upon by the first side's refusal to take its interests and priorities into account when putting together SB 572. This side likely views the current SB 572 publicly campaign as designed to shame and bludgeon the Governor to adopt policies starkly inconsistent with the Governor's clearly stated political agenda, and their backs get up. Add the fact that SB 572's most public advocate, Representative Hamos, is a House Democrat, a species not exactly in favor with the Governor's office at the moment if news reports are to be believed, and you have a difficult, rock-and-hard-place situation.

The Common Ground

What is striking is that both the proponents of SB 572 and the Governor have indicated that something must be done about the public transit situation in Northeastern Illinois. Sometimes the Governor has appeared to limit the scope of his remarks to the CTA, but he and his staff have signaled on other occasions that the Governor recognizes the need to do something about the challenges facing the RTA.

Such a shared goal is critical. Once the parties involved in a dispute like this recognize that they share roughly the same goal and will all pay a big price if they fail to resolve their differences, resolution is within reach. That not to say resolution is easy, just possible.

Outline Of A Transit Solution

The elements of a solution to an intractable dispute are often lying around in plain view. The parties locked in the dispute cannot see them for two reasons. One, they are too fixated on their grievances to be able to search for alternatives to their position. Second, often solutions require parties to step outside the box of what they think is possible. While such solutions may be impossible for either party to implement on their own, when brought together via a settlement they sometimes are able to surmount barriers each of them previously thought were insurmountable. Here is an outline of a path to resolution:

1. No sales tax: The Governor has made clear that he will veto a bill that contains a sales tax increase. Do the proponents of SB 572 really want to find out if they have the votes to override that veto, especially now that the House and Senate appear to be at odds in connection with the Governor's vetoes in the State operating budget?

The Governor has signaled that he would support transit funding that comes from closing corporate tax "loopholes." Here is one of his spokespersons quoted on public radio recently on the subject of transit funding:

Public transit boosters took months to hammer out a deal to provide money to keep trains and buses humming and please downstate lawmakers. The idea was to have the region itself pick up more of the tab. An Illinois Senate bill would hike sales taxes in six counties.

But Illinois Governor Rod Blagojevich won't have it. The Office of Management and Budget's Justin DeJong says the governor wants someone else to pay.

DeJONG: This comes back to the fact that there are many corporations in Illinois who pay little or no taxes to the state. Businesses clearly benefit from having a strong public transit system, and it's only right that they help to support the system.

There is not much ambiguity here. The sales tax increase won't fly but the Governor is willing to consider other tax measures to raise money for transit.

The Governor already has signed one bill that originated in the State Senate closing such loopholes. Might there be other "loopholes" that could be closed via a Senate-initiated bill that would provide some additional operating revenue for the public transit system?

Given (a) the Governor's emphasis in his budget address on closing corporate income tax loopholes and (b) the recent statement by a spokesperson that this is where the transit funding solution should come from, it behooves the supporters of increased transit funding to find some plausible corporate tax loopholes that could provide a funding source for transit. The SB 572 proponents may not agree with this approach, but it is the best way to find a politically viable partial solution to the transit funding problem.

2. Time for User Fees: The Governor is also no stranger to using increased user fees to raise revenue. This was a key feature of his early budgets. He also supported increased tolls on the Illinois tollways to help fund improvements on that system.

There are two user fees that come to mind. First, the Moving Beyond Congestion Final Report identified vehicle registration fees as a potentially rich source of operating revenue. (Pg. 91) A $10 increase in vehicle registration fees in the RTA region would generate $50 million annually. Given the congestion-related burden each new car places on the regional transportation system, is doubling the current $78 per vehicle charge that unthinkable? That step alone would raise almost $400 million in new money annually.

Another option is expanding tolling to more roads in the region, a pure user fee. Rather than highly unpopular (but effective) cordon tolling (e.g., tolling access into the Chicago Loop) toll collection would be dispersed throughout the six-county region. The idea would be that those who use the major roads and bridges in our region would pay a user fee. The existing I-PASS system could be expanded and used for toll collection.

Let's assume that there are 70 billion vehicle miles traveled in this region, and that half of these miles are traveled on interstates and principal arterial streets. If tolls were set to generate just 2 cents of revenue per vehicle mile on interstate and principal arterials--a rate well below that on any toll road--$700 million would be generated annually.

Tolling appears to make everyone crazy locally, which is why the region is taking years to study its feasibility. Pitched as a user fee designed to fund transit and pay for some highway improvements (e.g., HOT lanes open to express buses), tolling might fly. The Governor was persuaded once to raise tolls to improve a portion of the region's transportation system. Maybe this example predisposes him in favor of a similar user fee to fund improvements to other important parts of the system.

3. The State joins the RTA Board. The RTA governance package should be amended to give the State of Illinois some active role on the new, improved RTA Board. Perhaps the Governor gets to pick the RTA Chairman with the advice and consent of the State Senate. Maybe the Governor and the 4 legislative leaders appoint the members of a reconstituted RTA Board. Maybe the Govenor and the legislative leaders each get to appoint one member to the Board. There are many possibilities.

The key is that the State and, specifically, the Governor, gets some substantial role on the RTA Board. It is frankly embarassing how the proponents of SB 572 constantly refer to the crucially important role of public transit to the State's economy and environment, how they want to substantially increase the State's financial support for transit, and yet they freeze out the State from any role on the governing board the public transit system.

Getting To A Transit Solution

Anyone who has gotten this far is probably sputtering. "Tolling, impossible." "I can't advocate for higher corporate taxes, there goes my funding base." "The Governor is completely unreasonable." "What don't the RTA and the House Democrats understand about the statement 'no new sales taxes'"? On and on.

Parties in disputes always go through the sputtering stage. It generally comes after they have a shared recognition of some common ground, when they first turn their attention to how to get to resolution. This is a good point to remind the various parties involved in this dispute of the consequences of continued deadlock and inaction.

In this case, further inaction means the shrinkage and deterioration of the region's public transit system. These developments, so contrary to the heavy investment in public transit in most other "world class" cities, will undercut Chicago's efforts to attract the Olympics. A diminished public transit system will be a roadblock in the City of Chicago's attempts to "green" the city. Congestion will increase in some corridors, as will air pollution. As the transportation system becomes less efficient the region becomes less competitive economically and less attractive from a quality of life perspective. Someone will be held responsible if the transit funding/governance package fails and that someone may be just about everyone in Springfield and in the city halls and county boards in this region.

Getting to agreement means recognizing the merit in the other side's position, understanding that both sides share some common ground, and being flexible, creative and brave when building solutions on that ground. It looks to me like the elements for a resolution of this matter lie around us. That solution might be vastly different from what anyone involved ever expected or thought possible. But better such a solution than continued impasse as a valuable public asset deteriorates around us.


Anonymous said...

Ok, nice recap of all the positions advanced by posters on this blog--- you forgot the one about the °before more Money for Transit how about more Transit for Money° but you did a fair job of shussing along the Real Estate Interest obligations vis a vis their substantial gains and hideaous denials. But now it is time to take names and kick ass. A there are a few.

1) Jimmy Reiley-- where is the consensus Jimmy?

2) Steve Schlickman-- Hey Steve lose the toga and the laurels you were born on 3d base-- you did not hit a triple.

3) Julie Hamos-- this is not the Circulator and Jim Edgar is gone.

4) Bob Schilerstrom-- find a legitimate way to fund your pet project without using transit as a trojan horse.

5) Julian Desposito-- Julian, get some real players-- to impress Da Mare-- next time, or give it up now.

Who would have thunk it-- that the public interests are through an absurdly ironic twist in the hands of Rod Blagojevich.

Irrelevant? Eat those words Go Guv Go. It is just the same old crew, slightly reshuffled

Anonymous said...

Wow, anonymous 8:13......but I do like your "more money for transit, but more transit for more money". The Service Boards not have necessarily stated what they would do with the $400+ in new revenues.

CTA reduced their operating deficit by $25M and paratransit is funded at $55M; so the true operating deficit is not $226M but $151M. So what do they plan to do this new monies? Increase service? More buses, and if so - can they outline this by subregions?, Etc.

I think the moderator made a great point, by stating that the consultants, the RTA and all those involved with SB572 did not come up with an alternative to the sales tax increase to bail out the Service Boards; despite repeated notices from the Governor's office that he would veto a sales tax increase.

Here we are in the 11th hour, without an alternative funding plan.


Anonymous said...

Didn't someone recently criticize the level of snark and contempt lurking on this board?

Anonymous said...

All were operating under the assumption that the governor was irrelvant, but recent events make him less so. For a handful of reasons, I think the ticket to this bill lies with Emil Jones and Tom Cross. I wonder what will come to pass.

Anonymous said...

snark and contempt? transit is about to be slammed back to the dark ages because of some huge miscalculations and machinations and we should worry about snark?

play it straight with the public and the legislature and it might work out

but we should be more concerned with conceipt and deceipt

Dave said...

Nice summary, moderator, but it seems to me the time for such "consensus hunting" is just about past. This is a political problem, not a transportation one. No one -- not Blago, not Hamos, not Madigan, not Jones -- are doing much more than posing and posturing while metro Chicago transportation burns.

We need to get rid of every one of them, and every other incumbent. They are miserable failures who are destroying our state -- it's that simple.

It's not up to transit advocates to come up with a tax plan -- that what our so-called leaders were hired to do. I'm a lifelong Democrat, but the party's takeover of Illinois has turned from celebration to disaster.

We waste our time looking for ways to placate these useless children. We should be acting politically to put every one of them out of work.

Justin said...

Excellent summary of the story so far. Shorten this up, and you've got a good op-ed piece.

You point to tolls as a promising direction for transit - right on. I'd add that one big benefit of tolls is that because they stem from the demand for driving, the revenues would be stable and growing (see p.7) faster than most tax bases, especially in suburban areas. This could keep transit on sound fiscal footing for decades to come.

If the funding portion of SB572 were modified substantially to fund transit through highway tolls and higher corporate taxes, Blagojevich might actually be able to reduce the RTA sales tax a bit. This might give him what he wants (no new taxes) and then some (bragging rights). This might also give SB572 supporters what they want: adequate, and dynamic revenues for transit. How's that for common ground?

I agree that businesses, especially those benefiting from transit in the loop, should bear more of the burden of transit. But companies could simply pass some or all of the burden onto workers through the payroll. It's unclear, but my point is, the ultimate incidence is often difficult to trace.

The acceptability of tolling, however, is extremely tough. It reminds me of a Seinfeld line about parking, quoted by Don Shoup: My father didn’t pay for parking, my mother, my brother, nobody. It’s like going to a prostitute. Why should I pay when, if I apply myself, maybe I can get it for free?"

Anonymous said...

Another great benefit of tolls and congestion pricing is that they help reconnect drivers with the cost of driving. So it's a disincentive to drive paired with an incentive (better funding) to ride transit -- if our goal really is to get people to drive less without sacrificing our mobility, then this makes a lot of sense.

Justin said...

Some pretty interesting modeling work is taking place at Resources for the Future about this potentially big synergy ("virtues of the virtuous circle," as they say).

Anonymous said...


How about helping transit riders reconnect with the cost of transit which is very heavily subsidized with public money. In our region, riders pay for 50% of the operating cost of the system at best, and NONE of the capital cost.

Anonymous said...

According to Chicago Tonight, 8/28/07, the Governor's view of dispute resolution (according to his attorney) is suing Madigan, and the counterpoint is that the state representative said to sue if Blagojevich unconstitutionally diverts vetoed funds without an appropriation. Whether the courts have jurisdiction over the House's internal procedures is questionable, under the doctrine of separation of powers.

Since we are dealing with juveniles running state government, let's try juvenile home procedures, instead of mucking up the courts or hoping that they will negotiate in an adult manner.

Mayor Daley says SB572 is the only game in town. If you want something else, one must accept the Sept. 17 shutdowns while utopia is negotiated. But, we may have them anyway, just like in 1981. The RTA should have proposed something in time so that there would have been a legitimate chance of passing it by May 31, 2007, not 2009. Also, maybe separate bills should have been proposed on such matters as the CTA Pension Fund, the "reforms," reapportionment, and taxes, instead of a "comprehensive solution" that pleases no one. Then the tax package, which the Governor's spokewoman says he opposes, could have been separately negotiated, once other real reforms were in place.

Anonymous said...

For conflict resolution, maybe all of them can go on the Steve Wilkos Show.