Friday, November 23, 2007

SB 572 Meets The Alternative

In many quarters, including editorial boards, the notion that there is any alternative to SB 572 and its regional sales tax increase is treated dismissively. There is an alternative, however, and that is HB 4161, which was introduced by Representative Saviano, is co-sponsored by seven Republican colleagues, and appears to supported by Governor Blagojevich. HB 4161 uses a portion of the sales tax collected on gasoline sold in the six-county area that makes up the jurisdiction of the Regional Transportation Authority to fund public transit operations at the Chicago Transit Authority, Metra and Pace. At first glance, HB 4161 appears to contain many if not most of the so-called reforms of the RTA that are contained in SB 572.

The best description of HB 4161 I've seen is this letter to the editor in today's edition of the Lake County News-Sun from Representative Sandy Cole, reprinted in full below in the interest of giving a full hearing to an alternative to SB 572:

Equitable funding for mass transit

November 23, 2007

As a chief co-sponsor of House Bill 4161 (Regional Transportation Support Fund), I would like to take this opportunity to clarify an erroneous assumption made by your Nov. 20 editorial about the proposed redirection of the state sales tax on gasoline to mass transit ("Political dallying").

New construction for Lake County roads would not be impacted, as was concluded. There is a gross misconception by both the media and the public that the gasoline sales tax and the motor fuel tax are one and the same. They are not. As with all appropriation legislation, the devil is in the details.

In Illinois, gasoline and diesel are subject to a sales tax at a rate of 6.25 percent. The state retains 5 percent of the collected revenues and the remaining 1.25 percent is disbursed to local governments. The state's portion of sales tax revenue is generally deposited into the General Revenue Fund and used toward general government expenses.

HB4161 would redirect the state's portion (5 percent) of the tax revenues to a proposed Regional Transportation Support Fund. According to the Illinois Department of Revenue, that portion will be approximately $385 million in 2008. The difference left in the General Revenue Fund by this redirection of funds would be bolstered by other new revenue sources, such as additional gaming positions at existing casinos or closing corporate loopholes.

In addition, the state imposes a Motor Fuel Tax (19 cents per gallon of gasoline, 21.5 cents per gallon of diesel). This is a tax for state roads and the proceeds go toward road building projects, including those in Lake County.

In 2006, the state collected about $1.4 billion in Motor Fuel Tax revenues. All Motor Fuel Tax revenue is deposited in the Motor Fuel Tax Fund and is distributed per a formula set in state statute.

Combined with modest fare increases, the provisions of HB4161 offer the same level of funding as Senate Bill 572 without tax increases. HB4161 has proposed fare increases (10 percent in 2008 to generate $73 million and another 5 percent in 2009 to generate $50 million) that are both minimal and reasonable.

Between 2001 and 2006, the price of gasoline has increased 68 percent, but CTA cash fares have only increased 15 percent. It is fair to expect riders to pay for increased fares, just like motorists have to pay more for gasoline.

SB572 did not include a fare increase because it relied on tax increases. HB4161 is based on the premise that those who use the service should help pay for it. Of course, they cannot be expected to pay all of the costs of maintaining the mass transit system, but transit riders should pay a fair share.

Without a doubt, I support increased mass transit funding and believe that the gas sales tax proposal is a more responsible alternative for resolving the mass transit funding crisis than raising taxes on families and seniors. Raising taxes should always be our last priority, not our first.

99 comments:

Carfree Chicago said...

This argument makes absolutely no sense: "Between 2001 and 2006, the price of gasoline has increased 68 percent, but CTA cash fares have only increased 15 percent. It is fair to expect riders to pay for increased fares, just like motorists have to pay more for gasoline."

Why should transit riders be punished for using an efficient form of transportation not affected as much by the shifts in the price of gasoline? Trains don't run on gasoline. It justs sounds like pure whining -- we have to pay more so you should too! A better argument would be to compare fares with bus operations, which would be affected by oil prices, or with inflation. Still, those arguments would also fall short of a holistic view of transportation. If you claim transit riders must pay their fair share, then we must also make a thorough review of whether drivers are also paying their fair share. If we had truly equitable transportation funding, transit would out-compete.

That said, I think connecting the sales tax on gasoline with transit would be good policy, though I do not believe there is sound reason for a fare increase.

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Anonymous said...

I agree that a better argument would indeed be to look at the entire cost of providing public transportation. If the cost hasn't increased since 2001, then I agree that the fares shouldn't go up. However, I don't think paying more for a service as the cost of providing it increases is considered punishment. If that were true, why wouldn't paying the current fare already be punishment? Anyway, my car is more efficient than my neighbor's, but I still expect to pay more to operate it as fuel and maintenance costs increase.

As for truly equitable transportation funding, don't forget that most transit rides are taken on buses using roadways supported by the same tax dollars benefiting drivers. In that sense, any roadway can be considered as either a public transportation facility or a potential public transportation facility. So, motor fuel taxes are already being expended on public transportation facilities in a way that is rarely acknowledged. I agree that all sides are very selective when costs and benefits begin to be tallied, and equitable has 1001 different definitions depending on who's arguing.

Anonymous said...

"It is fair to expect riders to pay for increased fares, just like motorists have to pay more for gasoline." This arguement is bolony. The gas tax has not been raised in over 15 years.

Anonymous said...

are the fare increases cited by Rep. Cole (10 percent in 2008 and another 5 percent in 2009) actually contained in HB 4161 or just her caucus's proposal?

Anonymous said...

comparing a bus/train fare to the price of gas is completely spurious. gasoline is not a publicly subsidized good; it is a commodity priced by the marketplace. it makes as much sense for Rep. Cole to compare the bus fare to the cost of a gallon of milk.

fares should be set, pure and simple, based on the policymaking goals of maximizing transit ridership and maximizing operating revenue.

Anonymous said...

"The gas tax has not been raised in over 15 years."

However, the sales tax, embedded in the pump price, is a percentage, and thus its effect on the pump price has probably tripled over the past five years. Where do you think Rep. Cole gets $385 million of that money to give to the RTA?

Maybe 6 or so years ago, when gas prices were approaching the "then horrendous" $1.90 a gallon, the state rebated the sales tax on gasoline. However, when prices receded, but then rose over $2.00 a gallon, Gov. Blagojevich said he couldn't because "the children needed the money." Apparently they don't anymore.

If carfree chicago got what he or she wants, there would be no one buying gasoline, and thus no one paying the sales tax on gasoline to help either the children or transit. Hence, while saying "I think connecting the sales tax on gasoline with transit would be good policy," carfree can't be in favor of this proposal, because it is only a short-term fix. It is no different than the county raising the cigarette tax to $2 a pack (saying that either it gets more money or the health benefits of people quitting would more than offset the revenue lost), and now finding that it can't go back there to fill the even greater current gap in its budget.

The other thing that is endemic in this state is using one tax to fund something else. For instance, when license plate fees went up from $48 to $78 to fund Illinois First (which was not just roads, but also schools and transit), Jesse White said it was not his fault. Then when asked what was funding the new license plates, he said an increase in auto title fees, not the plates themselves. You have a similar situation here where the sales tax on gasoline is being taken away from the roads or "children" and being given to transit, and then a nebulous casino proposal would make those relying on the sales tax whole. Just a shell game.

Anonymous said...

WLS's Bill Cameron said at 4:00 p.m. that Madigan is backing off the sales tax and would accept the gas sales tax swap.

Rich said...

Rep. Cole may be a chief co-sponsor, but there is no fare hike mandated in HB 4161, despite her letter to editor. Some critics have said CTA riders need to pay more. But apparently lawmakers are too chicken to take the heat for imposing fare hikes.

Lee Hart said...

The sales tax on the gasoline goes into the state's General Revenue Fund - not the "Children's General Revenue Fund" or the "Road Construction General Revenue Fund." As with any business, there is always a "general ledger" account for monies that are not budgeted for a specific purpose or project. The state already has specific funds set up for the schools (i.e. the children). And as was stated in Rep. Cole's letter, there is a Motor Fuel Tax Fund that is used for state road construction. Re-directing money that is ALREADY being collected from taxpayers makes a helluva lot more sense to me than raising sales taxes. So many critics say the state should learn to work with the money it has "just like the rest of us." Well...here is an alternative that does just that. Kudos to the House Republicans sponsoring this bill!

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