Talking Transit: Minding the gap on financing - Metropolitan Planning Council

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Talking Transit: Minding the gap on financing

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Declining vehicle miles travelled have resulted in lower gas tax revenues for funding transportation investment.

Published monthly, MPC’s Talking Transit provides updates about transit-related activities around the world.

Get In the Loop on all the latest local, national and international transit headlines.

2014 is an important year for the future of the Chicago region’s infrastructure. MAP-21, the U.S. federal transportation funding bill, is expiring. The 2009 Illinois state capital bill is reaching the end of its life. And the metropolitan area’s roads, bridges and transit networks continue to fall into further disrepair.

The Metropolitan Planning Council (MPC) is working with local, state and federal policy leaders to advance new approaches for financing and investing in metropolitan Chicago’s transportation system. Last month’s Talking Transit explored infrastructure deterioration in Illinois; this month continues with a detailed look at current funding sources; and next month will provide a review of MPC’s policy priorities for 2014.

Did you know?

Over the past three years, revenue from Illinois’ motor fuels tax—the largest source of the state’s transportation funding—declined by 3 percent, even as the state’s population grew by half a percent. Changing demographics and a switch to more fuel efficient vehicles have weakened the state’s ability to invest in the highway and transit system it needs to guarantee a performing economy. And there are no plans on the books to increase the state motor fuel tax (MFT) rate, which has been stuck at 19 cents per gallon for decades, or the federal MFT, which has also remained stagnant since the early 1990sand whose share of the average person’s income has been cutbin two.

The Metropolitan Planning Council (MPC) is working in 2014 to develop consensus around new funding to offset the state’s mounting infrastructure deficit.

Limited revenues despite big needs

As described in last month’s Talking Transit, the State of Illinois faces a massive gap in its infrastructure investment. A 2013 study by the Transportation for Illinois Coalition shows that the state needs billions of dollars to ensure that its highways, local roads and public transportation networks are in good repair.

Yet funding is not keeping up. As stated above, state motor fuels tax revenues are declining, dropping from $1.314 billion in 2011 to $1.271 billion in 2014. Projections show that funding from the Illinois fuel tax will fall by more than 36 percent through 2040. Similarly, the federal transportation funding program, financed primarily through a national per-gallon fuel tax, is in a tenuous situation because of falling gas consumption nationwide. The Federal Highway Trust Fund, which also funds mass transit, has required $50 billion in general fund bailouts over the past five years. It will go bankrupt by August if Congress fails to pass a bill backing it with new funding.

As a result, the Chicago region will be $16.5 billion short over the next five years to fund repair costs, enhancements and expansions to the transit system as proposed by the Regional Transportation Authority's strategic plan.

Finally, though the State of Illinois committed to a major capital program in 2010 called Illinois Jobs Now!, the funding sources backing that program have not been coming through as expected. As documented by the Civic Federation, the $31 billion capital program was supposed to be funded by long-term debt supported by several new taxes and fees, including a video poker tax, the lottery fund, a portion of the sales tax, a liquor tax and new vehicle fees.

Yet annual revenues, which were supposed to rise to above $900 million, have amounted to less than $550 million in recent years, in part because of less-than-expected revenues from the lottery fund, sales tax and vehicle fees, but also because of the delayed implementation of the video poker tax in many municipalities around the state.

Illinois’ residents and leaders must work to develop new funding to cover the growing gap in transportation infrastructure funding. MPC is working with partners in the Chicago region, as well as Springfield and Washington, to identify new sources over the next year. MPC is also helping Chicago-area decision makers fnudamentally rethink how to invest in transportation infrastructure, deploy new financing tools such as value capture, public-private partnerships, availability payments and variable-priced tolls or parking to supplement traditional funding sources.

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For more than 80 years, the Metropolitan Planning Council (MPC) has made the Chicago region a better place to live and work by partnering with businesses, communities and governments to address the area's toughest planning and development challenges. MPC works to solve today's urgent problems while consistently thinking ahead to prepare the region for the needs of tomorrow. Read more about our work »

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