Monday, October 8, 2007

New Funding Sources--Quick Ideas

Representative Hamos has issued a challenge to identify public transit funding sources other than an increase in the regional sales tax that the Governor has pledged to veto. Many of the comments thus far have been of the crackpot "tax the Machine" variety. Here's a few quick ideas before I attend to the chores.

Real Estate Transfer Tax: The Governor's opposition to SB 572 seems focused more on the proposed sale tax increase than on the imposition of a real estate transfer tax in the City of Chicago. The proposed real estate transfer tax covering all of the City of Chicago thus remains. The tax is extended to the collar counties in a limited fashion, applying only to real estate located within one mile of a CTA or Metra train line that is in operation or identified as a project in the FTA's New Starts program (e.g., STAR Line). Such a tax recognizes that public transit rail investments increase property values in the surrounding area and captures a small portion of that increase. Yield: $150 million.

Parking Lot Tax: For reasons that will be covered in a later post, a tax on parking spaces might make good sense. The RTA estimates that a $100/year tax on unpaid commercial parking spaces alone would raise $100 million. There may be better approaches as well. Such a tax promotes more efficient use of parking spaces, which has positive environmental benefits (parking lots have terrible environmental consequences and are empty most of the time). Such a tax encourages employers to provide "Commuter Choice" tax benefits to employees--allowing employees to buy transit using pre-tax dollars at a substantial saving and allowing employers to reduce their investment in parking spaces. Yield: $100 million.

Vehicle Registration Fee: Cars in the six-county region impose a cost that they generally don't elsewhere in the State, namely, they add to congestion that is adversely affecting the region's--and hence the State's--economy. Thus, vehicles in the six county region pay a higher registration fee. According to the RTA, a mere $10 increase raises $50 million. Let's add a $30 fee and raise $150 million. It is a condition of registration that each car in the six-county region have an I-PASS (see below). Yield: $150 million.

Bridge Program: The Illinois State Tollway would be directed to install I-PASS toll collection points on bridges on state highways and the interstates (to the extent allowed by federal law) over major rivers (e.g., Fox, Des Plaines, Chicago). After deducting its fully loaded costs the Tollway would turn the money over to the RTA. The net proceeds would be distributed as follows: (a) one-third goes to a fund dedicated for the repair, rehabilitation and replacement of highway bridges; (b) one-third goes for transit; and (c) one-third goes to the municipality or municipalities in which the bridge is located for local highway or transit (e.g., demand response service) purposes. Local governments could toll other bridges in their jurisdiction if (a) the RTA approved of the toll rate as consistent with regional bridge toll rates and (b) the proceeds were shared as described above.

The bridge program provides a framework for congestion pricing and a steadily increasing revenue stream as more cars over more bridges get tolled. Raising money for bridge repairs is a relatively easy sell these days, after the Minneapolis bridge collapse. The fact that the locals would get a cut of the bridge tolls would help make the program more palatable in the trenches. Yield: Substantial. Potentially several hundred million dollars each year.

These four approaches to raising money are much more closely tied to transportation than a sales tax increase. The real estate transfer tax captures a portion of the value generated by transit investment and service. The parking lot tax passes on to property owners and ultimately drivers the externalities associated with parking lots and, by extension, driving (e.g., runoff from parking lots). The same holds true with an increase in the vehicle registration fee. The bridge tolling program allows the region to develop an infrastructure for congestion pricing, possibly the most effective tool of traffic management, as well as fund key infrastructure, transit, and locally-run transportation programs.


Anonymous said...

Ok, let's focus on crackpot "FEED the Machine" varieties instead. But let's just feed it good so transit can meet its political obligations, keep the machine satiated...and then maybe there's enough left over to tend to transit needs too. Sort of symbiotic but mostly parasitic. No?

Nick said...

So the parking tax idea is starting to go mainstream. Cool. I've been pushing it anywhere I can (though I won't claim to have invented it).

Employers have more power to make transit work than anybody else--let's give them an incentive to do it!

Anonymous said...

Parking Tax will tax the areas that have no transit to pay for transit they won't get. Loop Dee Doo...a brilliant idea...gonna fly real good.

Anonymous said...

1) Cut Block 37 and all the little Block 37s before cutting routes.

2) Cut all the consulting contracts not directly essential to service provision.

3) Review all property leases.

4) Solve the pension issue through a special 1 time bond issuance.

5) Roll-back service to 2004 coverage.

6) Modest fare increase.

7) Functionally overhaul tricks.

Anonymous said...

I hate to be a broken record, but the funding sources are not the core problem. The core problem is the attitude that public transit is some kind of luxury or charity, while automobile infrastructure is just an obvious civic responsibility.

Take the property trnsfer tax, for example: Tell me if I've missed something, but I've found no evidence that residents in Skokie are paying extra taxes because the Edens has vastly inflated their property values and tax base. Same goes for places like Oak Brook and Naperville, which only exist because of the public money poured into roads. Is Schaumburg taxing its residents extra for the special little spur designed to funnel traffic into Woodfield and the rest of the shopping hell? Not that I've heard of.

So why is it that Chicagoans are supposed to pay more because the L supposedly increases their property value? Seriously. Why are "our" legislators letting this bullshit continue year after year?

Anonymous said...

Since the debate now is what tax (not even how much), what taxes are you willing to pay to help who you characterize to be the victim here, the RTA? It would seem like those who benefit directly (the riders) or secondarily (business districts served by transit) have a greater stake, and should be expected to contribute. Why should TIF funds in the Loop district be spent only in Daley's discretion? Or, are you one of those who believed, like Frank Kruesi, that the primary responsibility for paying increased taxes for the CTA lies in McHenry County?

PJS said...

Take a look at our testimony and revenue options fact sheet. A simple compilation of ideas that have been around for awhile but none-the-less solid options.

But understand, the intent is to prove that SB 572 remains the most viable and probable option out there.

Tom Bamonte said...


Here is the message you get when you use the link: "The article that you have requested is no longer available."

An early victim of the doomsday scenario?