Illinois has a $43 billion transportation deficit
Years of declining investment have left Illinois’ roads, rails and bridges in poor shape. We must invest $43 billion to rebuild and improve our state’s transportation network. Doing nothing will actually cost us more: From damaged vehicles to lost time, our crumbling infrastructure is taking money out of our pockets and slowing down our state’s economy.
The Metropolitan Planning Council (MPC) consulted experts around the state to determine that meeting Illinois’ transportation deficit requires an investment of $43 billion over 10 years, or an average of $4.3 billion each year for 10 years. That’s less than we’re already wasting on extra repairs to vehicles as a result of poor road conditions, time lost to congestion and delays, and loss of jobs and investment to neighboring states. Rebuilding our infrastructure will cost less than continuing to suffer.
A regular investment of $4.3 billion each year for the next 10 years will fill the gap so we can make the fixes we need today, plus allow for sensible expansion to accommodate tomorrow. Any less is insufficient to meet the maintenance backlog. Waiting will only increase our costs and put us further behind our neighboring states, who are already taking action to invest more in infrastructure. We must act in 2017.
We're in this mess because we've invested less and less
Since it was last raised in 1991, the purchasing power of the state’s fixed per-gallon gas tax has declined by more than 40 percent—reducing the average Illinoisan’s contribution from the equivalent of $160 to under $100 per year (in 2013 dollars). In turn, transportation spending has fallen by 40 percent, from 13 percent of state spending in 1991 to eight percent in 2014. Meanwhile, the portion of our roads in good condition has fallen from the standard of 90 percent to only 79 percent in 2015. Without action, this will decline to 62 percent by 2021. Transit systems in Northeastern Illinois have also fallen behind dramatically. RTA estimates that only about 67 percent of the region’s transit network is in a state of good repair. At existing levels of funding, the share of buses trains and infrastructure in a state of good repair will decrease to 63 % by 2035 (Bridge The Gap: Capital Investment Needs of the RTA Region, February 2017). The bottom line is that if we keep investing at the same rate, conditions are going to get worse each year.
In the past we’ve relied on large but infrequent capital bills to patch together funding. We are still paying off bonds for the last two capital bills. We cannot afford to do this again. The resulting boom-and-bust cycle was unpredictable and ultimately inefficient. To allow us to return our infrastructure to good condition and accommodate growth, we need a substantial, regular, reliable source of additional revenue.
We need sustainable, reliable funding
To start catching up on our maintenance backlog and adequately plan for the future, Illinois needs a sustainable, reliable revenue source that can raise an additional $2.7 billion in revenue each year (on top of existing federal and state sources). Of this $2.7 billion, about half can be used for pay-as-you-go spending, with the other half to support $25 billion in bonds over the 10 years, meeting the $43 billion need. (After the first ten years, the continued revenue will fully support the repayment of the bonds over their 25 year life. We assume a five percent interest rate.)
This is equivalent to a $0.30/gal increase in state motor fuel taxes and a 50 percent increase in vehicle registration fees. The tax and fees should be indexed to the consumer price index to keep pace with inflation. To acknowledge the effect of these increases on lower- and middle-income Illinoisans, the state earned income tax credit should double to 20 percent of the federal amount.
In the long term, MPC recognizes the need to shift toward a user fee that is not tied to fuel purchases. We must begin exploring a vehicle miles traveled (VMT) fee today so that we can have full implementation by 2025.
We must prioritize projects to invest smartly
Effectively distributing an additional $43 billion investment requires diligent planning and prioritization. Luckily, we already have statewide, regional and local plans that identify bridges to rebuild, roads to repave, and transit lines to upgrade. In terms of maintenance, we know what we need to fix. We simply need the money to do it.
To ensure we receive the maximum return on investments in major, transformative projects, state funding should prioritize infrastructure that meets performance-based criteria. When decision makers are more accountable and the decision-making process is more transparent, taxpayers know where their dollars are being invested and are more likely to support new revenue sources.
In Illinois, transportation spending is not tied by law to statewide goals or performance measures, nor are agencies required to coordinate to achieve the highest return on an investment. MPC is a strong advocate for a statewide, data-based approach that prioritizes the most effective, accountable and transparent investments. Simultaneously, we are advocating for new revenue options to allow Illinois to invest in transportation improvements that commuters and businesses desperately need.
A step in the right direction was Illinois announcement of its new performance-based approach for capacity investments in May 2017; the criteria are shown below:
Applying a merit-based process for prioritizing transportation projects in Illinois will provide:
- Accountability: Given Illinois’ fiscal state, it is critical to reap the highest value for every taxpayer dollar spent. Merit-based budgeting would achieve this by requiring all projects that vie for capital funding to be weighed against criteria based on statewide goals.
- Transparency: A statewide, data-rich, outcomes-based approach to prioritizing infrastructure investments will make it clearer to Illinois taxpayers why their tax dollars are being funneled toward a specific project.
- Strong return on investment: Setting forth a process for prioritizing projects will ensure taxpayers receive the best return on their investment. Strategically investing precious tax dollars rather than spending them will improve quality of life, clean the air and generate much-needed economic development.
- A more level playing field: A more open and honest way of making capital investment decisions in Illinois means all communities’ projects would be measured against the same yardstick: The “have-nots” will have as good a chance to compete as the “have-lots.”
Now we just need funds to allow us to invest in new capacity projects – so we can apply this performance based process to determine which road, bridge, bus and rail investments will give us the best results for the money.
Investing more would actually cost us less
Cost per person
to invest +$43 billion
40 cents per day
$12.25 per month
$147 per year
The additional gas tax and the increase in vehicle registration fees described above would cost the average person $12.25 each month, or $147 each year. That’s 40 cents a day. The average Illinois household spends more than $10,000 a year on transportation. For a fraction more, we can have a system that works. Each month it’s the cost of one lunch, or a Netflix subscription.
Or, we can continue to waste $3.7 billion every year on extra car repairs from poor roads—that’s $450 per driver. Chicagoland commuters lose 111 hours every year sitting in traffic, according to the latest figures from TomTom. MPC has estimated the annual cost of traffic congestion at $7.3 billion. Train commuters lose a combined 800,000 hours every year to delays that could be prevented with simple fixes, including finishing the CREATE program. What’s the cost of that lost time? Certainly more than $12.25 each month.
Federal revenue options
The federal government plays an essential role in funding transportation capital investments in Illinois and in other states. The Chicago region's 5-year public transit capital plan, for example, is overwhelmingly reliant on grants from the federal government. The 2015 federal transportation authorization, however, did not increase funding for transportation significantly. Moreover, it relies on a transfer of general fund dollars rather than revenue from the motor fuel tax, which has not been increased at the federal level since 1993.
Tapping into new revenue sources is necessary to fund the federal contribution to transportation capital funding. The following options are reliable and sustainable:
- Increase the federal motor fuel tax and index it to inflationto ensure that this revenue source remains steady over time.
- Implement a vehicle miles traveled taxto account for the decreasing returns of a per-gallon motor fuel tax as vehicle efficiency increases.
- Allow tolling of existing roads.Federal law limits states' and regions' abilities to use congestion pricing—a powerful tool to manage vehicular traffic while improving transportation options—by failing to reauthorize several programs and by effectively prohibiting states from tolling existing Interstate lanes.
- Restore selection criteria to TIFIA. MAP-21 unfortunately eliminated one of the greatest strengths of a competitive loan fund known as the Transportation Infrastructure Finance and Innovation Act (TIFIA): project selection criteria. MPC supports reinstating these criteria to ensure TIFIA loans support only the most innovative nationally or regionally significant projects.
Illinois and regional revenue options
In addition to the revenue options MPC is proposing in response to Illinois' $43 billion state transportation infrastructure shortfall, several additional sources are available to fund transportation at the state and regional level. These sources would provide an essential augmentation of revenues to pay for road, bridge and transit maintenance and construction.
- Broaden the sales tax base to include services,which should be accompanied by a reduction in the overall rate. This would make Illinois more competitive with neighboring states, which have a broader sales tax base but a lower rate.
- Implement additional Transit Facility Improvement Areas,a type of financing district along transit corridors. Increases in property tax revenues that result from transportation investments are used to fund the infrastructure. State and City legislation enabling this mechanism was approved in 2016 and it was used for Phase I of the CTA Red_Purple Line Modernization. However it is limited to use on four specific projects. Broadening the eligibility would enable wider use on transit projects.
- Expand variable-priced parking in neighborhoods throughout the region so that parking supply is more closely matched to demand. Variable-priced parking reduces congestion by allowing people to find parking spaces more easily and encouraging them to try other modes of transportation, such as walking, biking and transit. In 2016 the City began implementing surge pricing for 1,100 spaces around Wrigley Field during ballgames and concerts. This strategy should be expanded in areas and at times when parking demand high to balance supply and demand, and to generate revenue for improvements to the transportation system.
- Expand the use of congestion pricing on the existing system, in order to ensure congestion-free travel options are available along the region's major highways. New lanes on I-55, the Stevenson Expressway, could be the region's first step in this direction. The 16 miles of SmartRoad on the Jane Addams Memorial Tollway (I-90) have been set up with gantries so that the infrastructure is ready to implement congestion pricing on certain lanes when needed.
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