SB 572 and its combination of an additional 0.25% Regional Transportation Authority sales tax and an increase in the real estate transfer tax in the City of Chicago appears to be dead. In a letter co-authored by House Speaker Michael Madigan and Representative Julie Hamos, the moving force behind SB 572, they indicated that they would support the approach contained in HB 4161, namely, a transfer of most of the sales tax revenue on fuel collected in the six-county RTA region from the State General Fund to transit.
The slightly revised version of HB 4161 that they will put forth will retain--as does HB 4161--the "reform components of Senate Bill 572, which include substantial pension and benefit concessions from transit unions and other requirements to protect the best interests of taxpayers and transit riders."
The fact sheet attached to the letter states that SB 572 would have raised $530 million of new money. HB 4161 and the Madigan/Hamos alternative plan will raise $440 million in new money. It is unclear if the difference is to be made up by a fare increase, which some support, or is money not absolutely needed by the Chicago Transit Authority, Metra and Pace in the first place to maintain current fares and service levels.
It is way too soon for transit supporters to break out the champagne, however. Representatives from both parties, primarily from Downstate, have held up action on a transit funding package because they want a capital program for highways and schools. If the Madigan/Hamos bill comes up for a vote on Wednesday, as scheduled, and there is no such capital program in place, then it is quite possible that the successor of SB 572 could be voted down, just as was SB 572 in early September.
I bet those grunts in the Department of Revenue and elsewhere who are responsible for protecting the State's fisc are tearing their hair out at this development. Under SB 572 the State would be putting up $150 million in new money. Under the HB 4161 approach the State will have to come up with $385 million in new money for transit.
Stay tuned.
Showing posts with label HB 4161. Show all posts
Showing posts with label HB 4161. Show all posts
Monday, November 26, 2007
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.
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.
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