Want to urge state legislators to properly fund Chicago-area transit during their spring 2025 session, so as to prevent drastic service cuts in 2026? The Active Transportation Alliance recommends going to the webpage "Support the Clean and Equitable Transportation Act!" to send letters to your state reps.
Chicagoland's looming $770 million total transit budget gap – caused by still-low ridership and federal COVID stimulus funds projected to run out in 2026 – is a taxing issue for Illinois decision-makers and straphangers.
And a new report, encouraging Land of Lincoln legislators to expand state sales taxes to include more consumer services, offers a route forward for reliable public transportation funding. But a Springfield tax policy guru warns that while such a move might be helpful for generating revenue for transit in the longterm, the new cash wouldn't arrive soon enough to prevent draconian service cuts.
The study, titled "Modernizing Illinois' Sales Tax: A pathway to a sustainable future," was produced by the Civic Federation, the Chicago Metropolitan Agency for Planning, the Center for Tax and Budget Accountability, and the Illinois Economic Policy Institute. The authors released it on March 19. "Our organizations represent a broad range of government and tax policy viewpoints – from business and education to transportation and land use to fiscal accountability," they wrote. "We don’t always agree, but we are united on this: the time has come for Illinois to modernize its sales tax."
The accounting whiz I referred to earlier is Maurice Scholten, a tax attorney by trade and president of the Taxpayers’ Federation of Illinois lobbying group. Based in Horseshoe Sandwich Land, he's spent the last 15 years influencing state and local tax policy. While his organization didn't cosign the report, the authors asked him for input, so his fingerprints are on the final product.
The day "Modernizing Illinois' Sales Tax" dropped, the federation released its own press release. "We appreciate the research teams for their recommendations and share their belief that funding education, mass transit, and public pension systems are vital to economic growth," Scholten stated. "Expanding Illinois’ historically narrow sales tax base could be one part of a long-term solution, but it is important to remember new sales tax revenues would take a significant amount of time before they are available to address these critical services." Talk about a reality check!
That last sentence from Scholten's also popped up in a March 23 article on possible strategies to solve the Illinois transit funding crisis by Daily Herald's Marni Pyke. "The ["Modernizing Illinois"] coalition said the state’s sales tax is outdated and doesn’t reflect the surge in consumer spending on services," she noted. "Examples of service taxes could include haircuts, pool cleaning, carpet cleaning, appliance repair, landscaping and professional services such as architects or attorneys. The coalition, however, does not endorse taxes on professional services."
The theoretical tax new revenue is projected at $2 billion which could be used for transit, among other key state needs, Pyke reported.
When Streetsblog reached out to Taxpayer's Federation, they provided another statement from Scholten reiterating that widening Illinois' narrow tax base could be a piece of the puzzle for improving transit in the long run. "However, it is important for Illinois lawmakers to remember that new sales tax revenues would take a significant amount of time before they are available to address these critical services," the statement read. "To wit, we do not believe an expanded sales tax base would be available to receipt revenues until at least 2027 – after RTA and its service boards have gone over the fiscal cliff."
The federation also pointed us to Scholten's comments about broadening the tax base on WCIA's Capitol Connection program, on March 23, the day the Daily Herald piece came out. "Second is the amount of time it takes to implement this," Scholten said on the show. "This is a complicated change. It is not something that can happen overnight. There are service providers who don’t have to collect service tax currently are going to have to start collecting sales tax, and the Department of Revenue is going to have to administer and create new rules and all the infrastructure required for the service tax. So, it probably needs at least 18 months for everybody to adjust to this new reality."
When Scholten spoke directly with Streetsblog, he noted, "The sales tax is a crucial funding mechanism for the [Regional Transportation Authority, which oversees the CTA, Metra, and Pace]... Mass transit is vital to economic growth in Illinois. It's a crucial service. They need to have enough revenue to provide an adequate level of service."
The Daily Herald piece also talked about the possibility of implementing a vehicle miles traveled tax for collecting more revenue from electric and hybrid car drivers, which could be used to fund public transportation. This idea was brought up in Senate Bill 1938, dubbed "United We Move" and sponsored by State Senator Ram Villivalam (D-8th) and backed by an alliance of labor unions. Unlike the proposed Metropolitan Mobility Authority act, which would consolidate Chicagoland's four transit agencies, United We Move would keep them intact, but give the RTA more clout to make decisions about regional transit policy.
Scholten seems to take a dim view of rolling a VMT tax effort into the MMA act. "The Taxpayers’ Federation of Illinois has not taken a position on the vaguely drafted mileage-based tax," he stated. "But we have questions about how the 'pilot program' would be administered if the fee can vary 'based on the time of driving and type of public highway.'"
During an appearance on WGN-TV's Political Report last weekend, RTA Board Chair Kirk Dillard also appeared to think it's silly to talk about the VMT tax effort in the same breath with strategies to plug the budget hole. "The road-usage fee in that bill really has nothing to do with the transit cliff, and it's really offered as sort of a pilot program for a small number, like 1,000 cars."
The bottom line is, expanding the sales tax base and/or a VMT tax could be good strategies for funding public transportation in the distant future. But we can't count on them to keep Chicago-area buses and trains out of the financial chasm next year. State lawmakers need to decide on another solution before the current legislative session ends this may, or else we'll be facing a dreaded "transit death spiral" of service cuts, and plummeting ridership and revenue, next year.
Check out "Modernizing Illinois' Sales Tax: A pathway to a sustainable future" here.
Read the Daily Herald piece here.
Want to urge state legislators to properly fund Chicago-area transit during their spring 2025 session, so as to prevent drastic service cuts in 2026? The Active Transportation Alliance recommends going to the webpage "Support the Clean and Equitable Transportation Act!" to send letters to your state reps.
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