Friday, August 3, 2007

The Moving Target: Legislation Update & Scheduling

Pasted in below is what appears to be the outline of a comprehensive RTA funding/reform bill as it existed as of the middle of last week. Much of it will be familiar to those who are acquainted with Amendments #1 and #2 to SB 572.

The draft bill underlying this summary has been the subject of extensive debate and revisions since it was circulated. The Legislative Research Bureau is putting together another draft, which is likely to be in the range of 200 pages. This revised bill should be ready by Monday. A vote is planned on Tuesday even if the House Republicans have not climbed on board as a group in support of the bill .

Note the sweetners in this outline:

-- Metra and Pace get a bigger share of the new money raised from the collar counties.
-- There is a $20 million Suburban Community Mobility Fund, which presumably funds the extremely expensive (e.g., $25/ride) but extremely popular suburban vanpool services.
-- The Chairman of the Cook County Board gets to appoint one RTA and one Metra board member.
-- The increased draw on the State General Revenue Fund through the Public Transportaton Fund match is deferred until 2009.
-- The RTA does not take 15% off the top of the new tax money for its discretionary use.
-- $25.6 million to Downstate transit--no recovery ratio requirement and no funding source identified.
-- No change to the current statutory formula for allocating sales tax revenue.

I had to scratch around for this dated bill summary. I hope someone will be kind enough to send me a copy of the bill that emerges from LRB on Monday.

Send interesting materials to: moderator1stc@yahoo.com

Post your breaking news here.

* * *

MASS TRANSIT FUNDING AND REFORM: SB 572

Operating Revenues and Expenditures – A Regional Solution to a Regional Problem

To address the operating funding shortfall at Metra, CTA and Pace, and to provide additional funding for transportation needs in the Collar Counties (DuPage, Kane, Lake, McHenry, Will), the RTA Act is amended to authorize additional funds to be raised, primarily from the RTA region.

Operating revenue sources
• $280 million from 0.25% regional sales tax increase (imposed by RTA)

• $70 million* from traditional state-funded match of 25%
*Phased in, starting Jan. 1, 2009. GRF impact $0 in SFY’08, approx. $40m SFY’09

• $55 million continuation of State paratransit funding
Additional 5% match on all sales tax and on RETT; effective immediately
Revenue neutral for State in SFY ’08: replaces GRF appropriation of $54.3 million for ADA paratransit

Operating revenue allocation
• $100 million to Pace for ADA paratransit service for seniors and disabled in the region
Held in RTA trust fund; allocated to Pace only as needed for annual ADA paratransit costs. RTA annually assesses costs of providing services required by the ADA, and conducts triennial audits of paratransit costs.

• $20 million to Pace for a Suburban Community Mobility Fund (SCMF)

• $10 million for an RTA transit innovation, coordination and enhancement fund (ICE Fund)
Competitive selection process for projects in the region

• $275 million distributed among Metra, Pace and CTA for mainline operations:
o $144 to Metra and Pace (52%)
• $107.3 million to Metra (39%)
• $35.7 million to Pace (13%)
o $132 million to CTA (48%)

Notes:
• Annual funding for paratransit, SCMF and ICE increase or decrease consistent with tax collections.
• Allocation of existing RTA sales taxes is not changed.
• All new revenues are allocated, there is no 15% RTA discretionary portion.
• $200 million of new expenses would be exempted from the ratio to avoid the need to match each new dollar with a 50 cent fare increase. This exemption would be phased out over 10 years, thereby requiring gradual fare increase. Debt service on pension obligation bonds and security costs are also exempted from the farebox recovery ratio.

Additional Chicago Contribution to Pay for CTA Costs
• $100 million Real Estate Transfer Tax imposed in Chicago by Chicago City Council
Tax imposed at rate up to .3% ($1.50 per $500 valuation)

• $25 million* traditional State-funded match of 25% allocated to CTA
*Phased in, starting Jan. 1, 2009. GRF impact $0 in SFY’08, approx. $12.5m SFY’09.

Collar County Empowerment
• $121.3 million from additional 0.25% sales tax increase in the Collar Counties to produce for the Collar Counties to use at their discretion for local road and transit projects.
• Tax imposed by RTA ordinance, collected by Department of Revenue, and allocated directly to the counties based on point of sale.

Downstate Operating Funding
• To address operating shortfalls for downstate transit systems, $25.6 million is provided.

RTA Reforms for Coordination, Efficiency and Transparency

To achieve a better coordinated and more efficient regional transit system, and to implement the recommendations of the Illinois Auditor General, the RTA Act is amended to enhance the RTA’s responsibilities and accountability with respect to regional planning, fiscal oversight, and fare and service coordination.

Adoption of Strategic Plan
• Requires RTA Board to adopt (by 10 votes) a comprehensive, long-term Strategic Plan for regional transit, to be reviewed and updated periodically (§2.01a(a)).
• The Plan will establish (i) goals and objectives, e.g., ridership increases, service and fare coordination, job access for low-income communities, (ii) standards, measurements and reporting requirements related to achieving the goals, and (iii) criteria for evaluating which capital projects are included in the Five-Year Capital Program (§2.01a(b, c, d)).
• The Plan also will include a 10-year assessment of the transit system’s financial condition (§2.01a(f).
• RTA is authorized to adopt sub-regional or corridor plans (§2.01a(h)).
• RTA must coordinate with the Chicago Metropolitan Agency for Planning in developing the Strategic Plan and capital program (§2.01a(g)).

Capital program
• Capital projects can only be in the Five-Year Capital Program if they meet the criteria in the Strategic Plan and can be funded within amounts determined by the RTA to be available during that period (§2.01b, §2.01a(c)).
• RTA is required to do “alternatives analysis” for any newly-proposed transit expansion projects with construction costs of over $25 million where potentially more than one Service Board could be the provider of the proposed service (§2.01a(i)).

Annual budgets
• Annual Service Board budgets and two-year financial plans to be consistent with Strategic Plan as a condition for approval by RTA (determination made by 10 votes) (§4.11(b)(2)(vii)).
• Service Board budgets must include additional details, including long-term obligations such as pension and employee benefit expenses (§4.01(a), §4.11(d).
• Allows RTA to adopt (by 10 votes) required formats, financial practices and assumptions that Service Boards must use in preparing annual budgets and capital programs. Provides that if the Executive Director certifies that a Service Board has not submitted its budget in the required form, etc., and such certification is accepted by the Board (10 votes) the Service Board is limited to the previous year’s operating funding levels (§4.01(f), §4.11(b)(1), §4.11(d)).
• RTA is required to withhold up to 25% of sales tax revenues allocated by formula (in addition to current withholding of discretionary funds) until a Service Board budget is approved by the RTA (§4.11(b)(4)).

Auditing and Access to Information
• The Service Boards are required to comply in a timely manner with requests for information from the RTA (§4.01(g)).
• The RTA is required to audit the Service Boards no less than every five years; such audits may include management, performance, financial and infrastructure condition audits (§2.01(b)).
• RTA is required to audit ADA paratransit costs every three years (§2.01d).

Coordinated Sales and Marketing: The RTA is required to develop and adopt (with 10 votes) a coordinated sales, marketing, advertising and public information program for all transit in the region. Service Boards’ programs must be consistent with the regional program (§2.05(c)).

Coordination of Fares and Service: At the request of a Service Board, and with the authorization by the RTA Board (7 votes), the RTA Executive Director is given power to mediate and, if mediation is unsuccessful, recommend to the RTA Board decisions in disputes between Service Boards regarding fare coordination, transfers, service coordination, and duplication of service; such decision is binding if approved by the RTA Board (7 votes) (§2.12b).

Innovation, Coordination and Enhancement Fund: A new fund is created to award grants to Service Boards, transportation agencies, and local governments, for short-term, lower-cost projects and service enhancements (§2.01c, §4.11(a)).

CTA Pension and Retiree Health Care Reform
To stabilize the long-term financial health of the CTA pension and retiree health care system, the funding for pensions and retiree health care are separated, employee and employer contributions are increased, benefits are adjusted, governance is strengthened, bonds are issued, and ongoing financial oversight by the Auditor General is established.
The proposal is endorsed by the RTA, CTA, ATU, CFL, AFL-CIO, Mayor Daley, Civic Federation, Commercial Club, Taxpayers Federation, IRMA, IMA and State Chamber.

Pension Reform
• CTA contribution increases from 6% of payroll to 12%; employee contribution increases from 3% to 6%. CTA gets “credit” for debt service up to 6% of their contribution.
• $1 billion in pension obligation bond proceeds deposited into pension fund to bring it to approximately 72% funded. Debt service paid from CTA’s share of new operating funds.
• Pension fund must stay above 60% funded through 2038, and reach 90% funded by 2059. If additional contributions are needed to comply with this requirement, they are made 2/3 by CTA, 1/3 by employees.
• Governance reforms by elimination of ‘bloc” voting (each member would vote independently); 11 member Board of Trustees established: five union, five CTA, and expert member selected by RTA Board.
• Benefits changes for employees hired on or after January 1, 2008:
o Reduced pensions available at 55 years of age and 10 years of service (currently 3 years).
o Full pension available at 64 years of age (currently 55) and 25 years of service.
o CTA executive pension eliminated.

Retiree Healthcare Reform
• An independent healthcare trust is established to manage retiree benefits seeded with $450 million in bond proceeds. No later than January 1, 2009, the Trust is solely responsible for providing retiree health care benefits.
• Contributions by active employees would be at least 3% of compensation on a pre-tax basis (currently they contribute nothing) bringing total pension and health care contribution to at least 9%.
• Retirees and their dependents would contribute up to 45% of the cost of coverage (currently retirees contribute nothing and dependents pay approximately 2% of the costs of coverage).
• Governance reforms by elimination of ‘bloc” voting (each member would vote independently); 7 member Board of Trustees: three union, three CTA, and expert member selected by RTA Board. Trustees can adjust contributions and/or benefits as needed financially.
• Retiree benefits would be no greater than 90% in network, 70% out of network (currently benefits include 100% indemnity coverage option).

Oversight by Auditor General
• Auditor General certifies financials prior to issuance of bonds.
• Auditor General annually submits financial report to General Assembly.

Wages
• Five-year contract with wage increases between 3 and 3.5 percent.


Governance Reforms

The following reforms are made to the Boards of the RTA and Metra, in part to implement the recommendations of the Illinois Auditor General. No changes are made to the CTA or Pace Boards.

RTA

Current
RTA Board: 13 members (5 Chicago – 4 Cook – 3 collar counties)

4 by Mayor
1 Chairman of CTA
4 by suburban members of Cook County Board
1 by Chairman of DuPage County Board.
2 jointly by Chairman of Boards of Lake, McHenry, Kane and Will
Board Chair appointed by 9 members of Board

Proposed
RTA Board: 13 members (4 Chicago - 4 Cook - 4 collar counties); supermajority vote requirement changed from 9 to 10

4 by Mayor
3 by suburban members of Cook County Board
1 by President of Cook County Board.(from Suburban Cook County)
1 by Chairman of DuPage Board
1 by Chairman of Lake County Board
1 by Chairman of Will County Board
1 jointly by Chairmen of Boards of McHenry and Kane
Board Chair appointed by 10 members of Board

Metra

Current
Metra Board: 7 members

1 by Mayor
3 by suburban members of Cook County Board
1 by Chairman of DuPage County Board
2 jointly by Chairmen of Boards of Lake, McHenry, Kane and Will
Chairman appointed from among the members, with 5 votes

Proposed
Metra Board: 8 members
1 by Mayor
2 by suburban members of Cook County Board.
1 by President of Cook County Board (from Suburban Cook County)
1 by Chairman of DuPage County Board
1 by Chairman of Lake County Board
1 by Chairman of Will County Board
1 jointly by Chairmen of Boards of McHenry and Kane
Chairman appointed from among the members, with 5 votes

11 comments:

jackonthebus said...

The suburban mobility fund is probably for community based projects, not vanpool. As reported by the Tribune, vanpool makes money for Pace. The 2007 Pace Suburban Service Budget has the Vanpool Incentive Program with a recovery ratio of 112.1%, the Coroprate Shuttle Program at 194.4%, and the AdaVANtage program at 88%. Even the Dial-a-Ride projects with municipalities recover 64%.


It appears that the prerequisites, such as 7 votes to invoke section 2.12b, are still there, making it ineffective.

Also, I wouldn't call reapportionment "governance reform" (at least this version), given the RTA's inability to govern, as previously documented on this blog. Any assurance that Stroger's appointees will at least be from the suburbs?

Anonymous said...

Look it, while everyone's going to sigh a big sigh of relief that transit's been saved, it's worth, at least for posterity, to point out what is worthless, and to KEEP asking questions. It looks like to me the headline should be: "City Residents to Subsidize Suburban Transit Expansion; CTA saved to live another day":

- "$10 million for an RTA transit innovation, coordination and enhancement fund (ICE Fund)." Seriously, what on earth is this? Sounds like: keep RTA employees and consultants happy fund. There needs to be a guarantee this goes into service, not studies.

-$20 million to Pace for a Suburban Community Mobility Fund (SCMF). Ditto. What is this?

- In Operating allocations, while it looks like CTA gets $200m+ (right?), they do have to pay for the interest on the pension debt, it looks like enough to fend off service cuts and fare increases. Still, doesn't it seem like Pace and Metra are getting a big hunk a money out of this, relative to what they offer the region?

"RTA Reforms for Coordination, Efficiency and Transparency" Look, a lot of this sounds great, but doesn't it sound like a lot of statutory requirements on the RTA to basically hire a lot of consultants to study-this and study-that? Granted, the RTA will now be busy (imagine that), but doing what? Lots of talk about a "strategic plan." So what?

"RTA is required to do “alternatives analysis” for any newly-proposed transit expansion projects with construction costs of over $25 million where potentially more than one Service Board could be the provider of the proposed service (§2.01a(i))." There's a critical line: "where potentially more than one Service Board...." And who will determine that? So Metra will ONLY produce New Start ideas that fit the bill as Commuter Rail, and they then can do their own application. Ditto for CTA. Citizens must take note: this will not change ANYTHING!

"The RTA is required to develop and adopt (with 10 votes) a coordinated sales, marketing, advertising and public information program for all transit in the region. Service Boards’ programs must be consistent with the regional program (§2.05(c))." The devil's in the details on that one.

CTA Pensions: "CTA contribution increases from 6% of payroll to 12%; employee contribution increases from 3% to 6%. CTA gets “credit” for debt service up to 6% of their contribution." Add in the health-care contribution and that's a 6% pay-cut for CTA non-Union employees. Watch out for the brain-drain out of CTA. Huberman won't have anyone left. Heck, go get jobs at consulting firms, since they'll get all those contracts from the RTA.

CTA Pensions: "Debt service paid from CTA’s share of new operating funds." Does anyone know that annual cost of that?

CTA Pensions: "Reduced pensions available at 55 years of age and 10 years of service (currently 3 years)." There is no current pension available at CTA for only 3 years of service. It is today is 11 years of service, so I don't think this changes anything.

HealthyCity said...

Well, transit is at least not going to fall apart. I truly hope that Mayor Daley realizes that he's got to make this City and the CTA what it can be using its own resources and creativity and to start thinking outside the current political appartus. This looks like a huge cave-in, albeit probably necessary with the clock-ticking as it is, to suburban interests.

Is it me, or is the RTA now forced to do a whole bunch of little things, probably resulting in nothing but press releases and reports collecting dust?

Anonymous said...

Chicago currently pulls in well over $100M a year from gas taxes, parking fees, and city stickers. Parking fees, in particular, are well below market prices both downtown and in the neighborhoods: Wrigleyville residents pay nearly as much per year for permits as game attendees pay per game!

Anonymous said...

Looks like a complete FUBAR. If this is the result of the Auditor Generals work, he ought to be discharged w/o/h.

Its gonna take a real lot of talented, seasoned and outspoken Transit Planners to clean this up.

Get the call-up papers ready to coincide with the change in Command a/s/a/p.

jackonthebus said...

9:47, don't forget that CTA gets 100% of the $100 million real estate transfer tax, plus a 25% state match, for a total of $125 million, on top of its $132 million allocation of sales tax revenue, thereby resulting in a total of $257 million. Considering that is deficit for 2007 is supposedly $98 million, that should be more than enough for a while (although the longer it takes to pass the bill, the fewer taxes are immediately collected, and there are phase-ins).

I agree that the various funds are not well explained. While this was being sold as being locally generated tax revenue, significant state budget impacts are indicated with the 25% matches, downstate grants, etc. Also, probably very few checks to assure that the $450 million in new money from the .25% region wide sales tax and the Chicago real estate transfer tax won't be quickly exhausted, such as by the implementation of duplicative service proposals in the Moving Beyond Congestion "plan."

As far as the collar county additional .25% sales tax, which has been questioned by other comment posters here, a possible rationale (not being a legislator, I can't guarantee this) is that some collar counties (especially Lake) have been seeking that authority for years; maybe putting it in the transit bill avoids the need for a referendum to impose it. The RTA could come back to the counties and say that if you want more bus service, as has been indicated in Lake and DuPage plans, use that money to pay for it, but probably most will go into roads. However, this provision might have been needed to get the collar county legislators on board (if, in fact they are on board).

Anonymous said...

Let's see-- burn up $5+ million to a) subvert the electorate's last resort through referendum, b) collect taxes for unspecified highway projects in the hinterlands and c) ignore legacy CTA governance and management defects.

Better a simple bailout than this.

Shame on everyone.

Anonymous said...

Could you elaborate on the $5 million and subverting the referendum?

Anonymous said...

See previous posts and comments, but as best as I can tell by piecing it all together, $5 million is the purported full cost of MBC (all sources) and related lobbying and the purpose of the collar county 1/4 point is because they can't get a referendum passed by their voters so the RTA bill will stealth it for them and they will be on board with the so called reform deal. Anybody else?

Anonymous said...

Genial dispatch and this mail helped me alot in my college assignement. Say thank you you on your information.

Anonymous said...

Hi
Very nice and intrestingss story.