A proposed overhaul to reform and provide needed funding for regional transit appears to have fallen short during the General Assembly’s spring session, postponing the conversation and nudging transit agencies to the edge of a $771 million fiscal cliff.
The setback came despite Senate Democrats approving the package in a 32 to 22 vote without GOP support with less than 20 minutes before midnight, a constitutional deadline to approve the bill with a simple majority.
At the time, the House was debating the state’s $55.2 billion budget, which was approved with less than 10 minutes before the deadline. That left the House little wiggle room to call the transit bill, but the chamber had already realized the votes weren’t there even if they had more time.
Opposition to a $1.50 tax on deliveries drove the final nail in the coffin, but pushback to the legislation began before the tax on food and package delivery was dropped into the bill six hours earlier.
By 10:45 pm, it was clear the votes were there in the Senate, but uncertain in the House and it was unlikely House Speaker Emanuel “Chris” Welch would allow the Senate bill to be called with the revenue attached, according to sources familiar with the negotiations.
That left lead Senate sponsor, Sen. Ram Villivalam, D–Chicago, the option of calling the bill, hitting the brakes or trying to secure the governance reform without funding.
The bill was approved. But less than 20 minutes later, May 31 became June 1 and the vote threshold required for approval shot up from a simple majority to a 60% supermajority.
With the House still in session after 1 a.m., it is possible the body seeks to approve a transit governance reform bill without the revenue attached.
Federal funding for the Chicago Transit Authority, Metra and Pace relies on expires at the end of the year and the agencies have warned drastic cuts are coming without new funding.
The agencies will likely hold hearings this summer going over the proposed cuts to service and staff if the funding is not approved later this year.
Villivalam told reporters earlier in the day groceries and medicine were exempted from the delivery charge, but the language in the bill caused concern if those items were paired with purchases that were not exempted, the delivery charge would apply.
Under questioning from Sen. Don DeWitte, R–St. Charles, Villivalam confirmed a delivery with both eligible and exempted items, the tax would be charged.
Senate Democrats approved the bill after being scolded by Republicans they were approving a “bailout of Chicago” from taxpayers across the state.
"Tell me one good reason why a single mother ordering diapers for delivery should be paying the same tax as someone ordering an expensive purse to be delivered," said Sen. John Curran. "This is as regressive as it gets. There’s nothing progressive about this tax. It’s going to hit everyone statewide.”
After months of negotiations, Villivalam suggested earlier in the day there were also costs to not bailing out the systems.
"The million and a half people that rely on public transit every day to get to their job, their school, their doctor, they cannot afford a 40% cut to service,” he said. “"We have 17,000 workers that work in public transit. If we don’t act today, 3000 of them will receive layoff notices into the summer and over the fall. That’s not acceptable. Working class families know that this is a responsible package of reforms and funding.”
The long-awaited proposal to overhaul the Regional Transportation Authority, giving the organization a new name and more control over the Chicago Transit Authority, Metra and Pace, met stiff resistance almost as soon as it was unveiled, with labor, suburban leaders and the transit agencies crying foul over the revenue package.
Facing the almost impossible task of getting a reform package backed by labor approved with labor staunchly opposed to the revenue streams, lawmakers dropped an up to $1 per day Tollway surcharge that would have brought in between $285 to $350 million.
Also dropped was a proposal to divert a 0.25% sliver of sales tax that counties get for public safety or transportation solely to public transit. Suburban counties had argued the diversion would blow holes in their budgets.
The $1.50 delivery fee is being sold as an “environmental impact fee” by supporters. The growth in deliveries has led to an accelerated “deterioration of surface transportation system infrastructure, according to the amendment.
The fee would rise annually to keep pace with inflation. The revenue from the fee would be split, with 20% flowing to downstate transit systems and 80% going to the Chicagoland region. There is also an exemption meant for small businesses with total sales in the previous year of less than $500,000.
The transit agencies have warned without funding to overcome a $771 million fiscal cliff, deep cuts to service would have to be made. Those cuts would come in their 2026 budgets and hearings would need to be held ahead of time.
After the amendment was unveiled, labor and environmental leaders shared in a press release the same full-throated endorsement they’ve made in the corridor of the Capitol building all day.
"Public transportation is not a luxury," said Tim Drea, president of the Illinois AFL-CIO. "Without action today, pink slips will go out and service cuts will follow, jeopardizing access and the ability to get to and from work, healthcare, childcare and so much more."
"The legislature must pass these reforms and pair them with a $1.5 billion investment in transit by midnight tonight to get people to and from work, school and doctor’s appointments safely, quickly and cost-effectively,” said Amy Rynell, of the Illinois Clean Jobs coalition.
Those negotiating the transit bills had balked at placing the delivery fee in the initial bill amid an onslaught of calls from the Illinois Restaurant Association and Illinois Retail Merchants Association warning the tax would be passed onto consumers, raise prices and lead to a decline in sales, according to sources with those discussions that unfolded earlier this week.
Those associations, along with a coalition of business groups including the both the Illinois and Chicago chambers of commerce, issued a press release saying the tax would “disproportionately impact communities that rely on delivery services to receive vital items.”
“It will be the highest delivery fee in the nation, and potentially stacked on top of the highest rideshare fees in the nation,” Alec Laird, senior Vice President of Government Relations for IRMA, told Crain’s.
Gov. JB Pritzker did away with a previous 1% grocery tax that went back to local municipalities across the state.
"If the goal of the General Assembly was to provide relief by repealing the grocery tax, I’m not so sure what the goal is by implementing a delivery tax, pulling money from the other pocket that is higher than that repeal,” Laird said.
“At a certain point it affects the behavior,” Maurice Scholten, president of the Taxpayers’ Federation of Illinois, told reporters at a morning press conference. “It’s a regressive tax. If I buy something for $20, I pay $1 or $1.50, whatever it ends up being. If I buy an order for $1,000 it’s the same amount.”
The amended package retained a 10% tax on all rideshare trips hailed from or arriving in Chicago, Cook County and the collar counties, anticipated to bring in $150 million.
There had been considerably less pushback to the structure and governance reforms in both the House and Senate transit bills.
Both would create a 20 member NITA board, with the governor, mayor of Chicago, Cook County board president having five appointments with the remaining five being appointed by the board presidents of DuPage, Kane, Lake, McHenry and Will counties.
The legislation gives the new regional authority the power the RTA lacks because it would eliminate the 75% supermajority of votes required to make changes binding on the individual transit agencies. The requirement allows city and suburban factions to effectively handcuff the RTA, giving the agency more responsibility than authority.
The new proposal would allow either a 75% supermajority or a 60% majority, so long as at least two appointees from each appointing group approve the measure.
If an amendment is filed today, it’s expected to alleviate the concerns expressed by the RTA in public, and Chicago officials behind the scenes, that the Red Line Extension would be put in jeopardy due to a provision barring the CTA from issuing new debt other than to refinance.
That was not the intent of the bill and was addressed in the amendment.
An exemption was made to allow the CTA to issue bonds related to the Red Line Extension and the under-construction Red and Purple Modernization on the North Side. The exemption expires in 2032, according to the amendment.
If costs go higher than the current $5.75 billion project, as outlined with an agreement with the federal Department of Transportation, the new NITA board would have to approve any bonds to cover those expenses.
