Thursday, October 4, 2007

A Resumed Search For Transit Funding Alternatives

This blog urged weeks ago that the proponents of increased transit funding take the Governor's resistance to a sales tax increase seriously and look for other funding options. The House Mass Transit Committee is set to do just that. It has scheduled a public hearing next Tuesday, October 9th, at 10:00 a.m. at the Harold Washington Community College, 11th floor, at Lake and Wabash Streets in Chicago.

In an email to interested parties Representative Julie Hamos, the chair of the Committee, stated that "the subject matter of this hearing is the 'Need for Long-Term Operations and Capital Funding for State Mass Transit Systems'”.

Representative Hamos states that the Committee is looking for alternatives to an increase in the RTA sales tax:

We will welcome specific suggestions for revenues to replace the sales tax increase contained in SB 572 to fund RTA operations for the long-term. As you know, the Governor has taken a public position against the modest 1/4 of 1% sales tax increase in SB 572, which would be added in the 6-county RTA region to the existing regional sales tax that has been in place as the chief revenue base for transit operations for the last 24 years. Any suggestions for a sales tax alternative should meet the following requirements:
  • Must generate $280 million in the first year, beginning immediately, with some growth each year
  • Must be relatively stable, without great fluctuations from one year to the next
  • Must maintain regional balance – without one area of the region bearing disproportionate responsibility for producing the revenues
  • Should be generated from within the region – unless it is logical, practical and politically feasible to have downstate or statewide sources support RTA operations
  • Should not be subject to the unpredictable state budgeting or appropriations process
Note that one of Representative Hamos' prerequisites is that the funding source "must generate $280 million in the first year, beginning immediately, with some growth each year." It appears that "some growth" is a bit of an understatement. The RTA announced today that the CTA, Metra and Pace are facing a $408 million operating deficit in 2008. This deficit represents 20% of the combined operating budgets of the service boards and is double this year's deficit.

Representative Hamos' invitation to search for funding alternatives is a bit snippy. Note in this regard the statements that the Governor's "public position" is against a "modest" increase in the RTA regional sales tax "that has been in place . . . for the last 24 years." The failure of SB 572 to gain political traction no doubt is very frustrating. Nonetheless, let's take seriously her request for bona fide alternatives to a sales tax increase that is unpopular in some quarters. (Bake sales don't count.) Post your ideas here, send them to Representative Hamos at julie@juliehamos.org and show up at the hearing and testify.

12 comments:

Anonymous said...

Now that both Cook County and the City of Chicago are figuring out how to raise taxes for themselves, it gets quite frightening to think about how there probably isn't any money to go around for transit. Mayor Daley has already taken all the good ideas (increase pking meters, fees on SUVs, gas taxes) for the City's general funds. Anything for CTA? Doesn't look like it.

jackonthebus said...

I had mentioned in my letters to state legislators the inevitable "piling on" of taxes, and Cook County makes that more apparent.

Nonetheless, I also mentioned:
*A special taxing district in areas where property is primarily benefited by the existence of transit, especially the Loop, where the employers have the benefit of the CTA rapid transit and Metra hubs.
*If fighting congestion is a goal, greatly increased parking taxes. (P.S., if they could figure out a tax for free suburban lots, I wouldn't object; that should be offset by employer contributions to shuttle services).
*The real estate transfer tax could be applied throughout the region, and also apply to mortgage recording.
*The street furniture revenue (and anything similar resulting from the existence of the transit system) should be dedicated to transit, not the city.

I doubt that I have come up with $280 M. However, your note that the projected deficit is $408 M for next year, after being told that the 2007 deficit would be $220 M, indicates that something sure needs to be done on the expenditure side. Did Julie Hamos say anything about that (especially in light of frequent posts here that SB572 is ineffective as a reform measure)?

brian said...

Jack, the $408 m includes the CTA pension payments that kick next year per state law. It is not the result of above-inflationary expenditure growth.

jackonthebus said...

Brian, however, there wasn't any indication that either the pension bonds or the backing by the real estate transfer tax were in jeopardy. Maybe they should have been put in another bill instead of bundled in the SB572 mess.

Notwithstanding that, you still have the Auditor General's findings that the 2% growth in the sales tax can't keep up with the 6% annual growth in CTA expenses.

Also, since none of the service boards has published a budget yet, it is only speculation regarding of what the $408 M consists (and even if that is an accurate number).

jackonthebus said...

... or if it is based on current or doomsday service levels, or on the RTA using up its annual state allocation in October.

Brian said...

It assumes the gov's cash advance, but current service levels. The POBs can't be issued without a revenue stream, and the RETT may or may not be opposed by the governor and in any case would not be passed in a standalone bill without all the suburban capital and downstate goodies, and only a half solution for CTA.

But the fact of it is that state law requires CTA to pay into its pension plan to bring it to a fully funded level starting in state FY 09, midpoint of CTA FY 08. This increases the CTA budget hole by approximatley 100%.

Anonymous said...

Here's an idea-- think about it. How many mils would you have to levy on every cook and city of chicago democratic precinct captain and assistants to make up the $480 million? Might be able to fund cook county's under performing revenues too. It would be like a recision really, lets see average 9 per precinct so...50 wards...at 100 precincts each and how many townships?

Anonymous said...

Pages 84 and following of the Moving Beyond Congestion Final Report has a summary of potential taxes. Same for page 24 of the Paratransit Report on Julie Hamos's site. They don't need our suggestions or further hearings.

As she said in her press release of October 4, "As of today, we have 30 days to solve the funding crisis... ." Unless there is another bailout in the works, the clock is ticking (as it is for property tax relief, and other things the legislature should have resolved by May 31, 2007).

Anonymous said...

Does anyone know where CTA's new "Doomsday" date of November 4th is coming from? What's so significant about that date?

Anonymous said...

Huberman said that is when the Governor's advance of the fiscal year state subsidy runs out. Pace apparently concurs.

Davey said...

As the anonymous comment points out, this is not about a lack of ideas or funding possibilities -- we have tons of those floating around. It is about the abject failure of state government. Hamos is indulging in misdirection by soliciting wonkish twiddling with a broken system.

Here are the relevant fixes:

1. Impeach/recall Blagojevich, Jones, Madigan.

2. Obstruct all infrastructure funding statewide until Chicago/Cook's share reflects the proportion of funds its taxes contribute. We have the legislative muscle to bring every highway, bridge, and transportation project in Illinois to a grinding halt until Northeastern Illinois gets its fair share.

Diddling with "funding formulas" simply distracts from the basic changes we so desperately need in Springfield.

Anonymous said...

How bout a kickback tax on Machine Overhead? Sort of like a rolling Green-Out from agency to agency. 10% will do nicely.