The bill also includes a mix of revenue from new taxes and funds pulled from existing sources — moves the transit agencies have argued are needed to avoid a $771 million fiscal cliff when federal relief funds expire at year-end.
The two bills will be discussed in committee meetings today. Legislators are up against a May 31 deadline to approve a bill this spring, but some have discussed punting the issue until the fall.
Legislators, lobbyists, civic groups and labor unions have fiercely debated what revenue streams would be implemented to maintain service and make needed capital improvements, but it’s far from certain the ideas that made it into Villivalam’s bill will gain support without further tweaks.
State Rep. Eva-Dina Delgado, D-Chicago, released a House version of the transit overhaul yesterday that did not address the revenue issue. The two bills seek to create the governance and structural changes leaders say are needed to entice lawmakers to pony up over $1 billion in annual funding, but differ on several reforms.
“There is not a world of difference” between the House and Senate bills, Rep. Kam Buckner, D-Chicago, told Crain’s.
“The bills you see filed today will not be the bills that get voted on,” he said. “There are a lot of changes and additions that have to happen on both ends of the Capitol.”
Villivalam’s bill includes a 10% tax on rideshare trips originating from or ending in Chicago, Cook County and the five collar counties that make up the transit corridor. The city’s rideshare tax already hits all single-rider trips with a $1.13 fee and shared rides at a 53-cent clip, with additional surcharges based on the time and location of the trip.
A surcharge of up to 50 cents, capped at $1 per day, would be added to the rate motorists pay on the Illinois Tollway system within the metropolitan region in Villivalam’s version.
The bill would also extend an existing $1.50-per-$500 surcharge on property sales in Chicago dedicated to the CTA in Cook County and the collar counties.
Road Fund redo
Despite early opposition from trade unions, the proposal would dedicate the interest earned on monies in the state’s so-called Road Fund to transit capital spending. The fund captures transportation-related taxes in a lock box and currently allocates 80% of its spending to highway and road projects and 20% to transit.
The Senate bill seeks to address the concerns of suburban leaders who believe the new oversight organization sketched out in the House version tilted in favor of Chicago and Cook County by allowing the two entities to form a block that could thwart any major decision of the new NITA board.
Villivalam said today that his proposal "includes a number of funding mechanisms that I, as one of the business leaders I’ve spoken with, would describe as shared sacrifice."
Based on projections shared with lawmakers and staff in Springfield and reviewed by Crain’s, the tollway surcharge could produce at least $100 million a year. Road Fund interest could produce $200 million, and the extension of the real estate transfer tax could provide another $110 million. The rideshare tax would bring in roughly $170 million.
Villivalam didn’t specify how much money would be produced by these proposals but said "the funding mechanisms get us above the fiscal cliff amount.”
The Senate plan also would provide savings of about $46 million a year from various efficiencies, including changes in staffing.
Not included in the bill is a $1 tax on food and package delivery that had been discussed in recent weeks, projected to bring in $742 million. That measure has been opposed by retailers and restaurants.
The delivery tax “is still being discussed,” Buckner said.
‘Shit sandwiches’
The revenue package came together after a solution favored by the labor coalition pushing transit reform appears to have died on the vine.
The plan would have extended the state sales tax to services to not only fund transit, but provide funding to downstate transit systems, the state and local governments.
The overall state sales tax rate would have been lowered, from 6.25% to 6%, while leaving it unchanged in the RTA corridor, allowing the extra 0.25% to help fund regional transit.
There was initial hope the idea would gain a level of GOP support from collar county and downstate Republicans representing districts with mass transit, but that backing never materialized, says Marc Poulos, political director for the International Union of Operating Engineers Local 150.
Without the support for a sole new source of revenue dedicated to transit, what’s left is a “hodgepodge” of revenue tweaks and incremental taxes Poulos described as a “handful of shit sandwiches.”
“Springfield always starts out with really great policies and awesome policy papers and tons of working groups and committee hearings. Lots of experts that get together, and business and labor that are rowing in the same direction, and then we get to . . . the last week of session, and we’re like, ‘Well, none of that worked,’” he said. “That’s the Springfield way.”
Labor pushback
Labor has also pushed back against a tollway surcharge, arguing the authority’s bonds could be a riskier investment if legislation allows any revenue collected in the system to be diverted to transit. Poulos testified today in Springfield that a surcharge is "robbing Peter to pay Paul."
It may prove difficult to approve governance reforms pushed by labor if those same unions oppose the revenue backing the overhaul.
Buckner says the labor coalition is an “important part of this conversation.”
“Labor has been at the table,” he said. “It’s important to me that we not overly burden any one particular group, so I’m very keenly and acutely aware of their concerns, and that’s why we’re engaging in the conversation.”
Like the Delgado amendment, Villivalam’s bill would have a NITA board consisting of 20 members. The governor, mayor of Chicago, and Cook County board president would each make five appointments. The remaining five members would be selected by the county board presidents of DuPage, Kane, Lake, McHenry and Will counties.
The NITA board president would be selected by the body from among the five appointees of the governor. Villivalam said his proposal also requires Senate confirmation for board appointments made by the governor, as well as the chairs of the service boards and the chair of the NITA board.
Budgets and other votes would only be approved by the 20-member board by either a three-fourths supermajority or a three-fifths majority, as long as at least two appointees of each of the entities that make appointments to the board are among the 12 votes.
That would require broad buy-in on major decisions from appointees of the governor, mayor, county board president and collar county board presidents, but could make it difficult to reach a consensus to make sweeping changes to the three systems’ fares and capital spending priorities.
Mayor’s grip on CTA
The bill also proposes a six-member CTA board that dilutes the direct influence Chicago’s mayor has traditionally had over the agency. Instead of having a majority of the appointees, the mayor would have three, Cook County board president two and the governor would appoint one member.
Executive directors of CTA, Pace and Metra could be removed by a three-fifths vote of the NITA board.
Major decisions to add new lines or bus rapid transit corridors, major renovations to existing infrastructure, new bus and train orders and improvements that will be utilized across the service agencies would be ceded to the newly empowered NITA.
By 2030 the transit agencies would be required to have a “next-generation fare collection system” that allows for a mobile ticketing platform and a regional fare payment system.
The percentage of transit budgets required to be supported by fare box revenue would be lowered to 25% from 50%.
Both bills could potentially allow the newly empowered NITA agency to act as a real estate developer that could pursue projects “in the vicinity of public transportation stations and routes as deemed necessary to facilitate transit-supportive land uses, increase public transportation ridership, generate revenue and improve access to jobs and other opportunities” in the region.
The authority would be required to develop an inventory of all real estate owned by the transit agencies and “identify all property that could allow for transit-supportive development” without impeding operations.
A special fund to finance such projects would be created and Villivalam’s bill would fund it, in part, by depositing the revenue from the tollway surcharge.
