Illinois should learn from past transit funding crises and achieve sustainable funding

Public transit operations in the Chicago region have been chronically underfunded-particularly at the state level. Today, state funding makes up only 17% of operating revenue in Chicago. In New York that share is 28%, in Boston it's 44%, and in Philadelphia it's 50%.

This underfunding has led to multiple periods of funding changes and reform since the RTA was established by referendum in 1974. Most recently, in 2008 the RTA, the three Service Boards (CTA, Metra, and Pace), and partners from across the region successfully lobbied the General Assembly for a quarter-percent increase in the RTA sales tax in Cook and the Collar Counties (DuPage, Lake, Kane, McHenry, and Will), which make up the RTA transit region. This new revenue was intended to shore up pensions and other finances that should have allowed the system to avoid major fare increases and planned service cuts. But ultimately, the funding sources are not resilient enough to support the bus and train service the region needs.

Now, like transit in other major metro areas, the regional transit system is facing a projected operating shortfall of more than $730 million annually starting in 2026 because of historic underfunding and the growth of remote and hybrid work post-pandemic.

Public transit is at a critical pivot point and how legislators respond will determine whether the system shrinks or expands in the future. Looking back on what occurred during the system's previous crises can help inform the region's advocacy for a sustainable solution in advance of the 2026 fiscal cliff.

Funding lessons

1. Timing matters to avoid cuts: In 2007 and early 2008, the region's transit system was thrown into turmoil as lawmakers delayed action on a budget shortfall of more than $226 million. Operators had to plan for severe service cuts and fare increases because the federal government requires agencies to announce cuts and fare hikes months in advance and hold public hearings to accept input. After months of inaction, Governor Rod Blagojevich called a special session to pass a funding package in January 2008, when CTA was days away from cutting 2,400 workers and 81 bus routes, and increasing fares.

Today, RTA and the Service Boards are advocating for the legislature to deliver new funding by the end of the 2025 legislative session next May. Delaying action past this point would lead to massive uncertainty, with agencies having to pivot from expanding service and hiring to planning for cuts and fare hikes.

2. New revenue sources should be sustainable and diverse: The new operating revenue secured in 2008 from the quarter-percent increase in the RTA sales tax was significant but did not resolve the issue of persistent underfunding. The funding agreement also did not diversify the system's operating funding sources, leaving service levels highly vulnerable to the economic recession that arrived later that year. Reforms did not include any adjustment to the farebox recovery ratio, which requires Chicago's system to fund at least 50% of its operating budget through rider fares, the highest requirement of any transit system in the country. The requirement limits agencies' ability to experiment with new and different types of service and deliver transit to the people who need it the most.

The pandemic again exposed that this funding model left the system overly reliant on fares and without enough funding to deliver the level of fast, frequent transit service riders deserve as the economy evolves.

In 2024 RTA and the Service Boards are advocating for new operations funding to be sustainable so that transit funding keeps up with inflation and is less vulnerable to broader economic trends like recessions. Revenue sources should be stable, durable, and expected to grow over time. A diversity of sources is key-no single revenue source can fully address the funding need on its own. The RTA sales tax and associated state match will remain critical sources, but over time they should be complemented with other revenue.

Recent research from the Urban Institute on transit fiscal cliffs across the country highlights how relying on just one major source of local revenue for operations can expose agencies to varying levels of funding as economies shift over time: "More stable, diversified funding, combined with thoughtful approaches to service, can allow agencies to surmount this fiscal cliff while enabling them to expand service into the future and better preparing them to face-or allowing them to avoid-future emergencies."

3. Funding sources can and should incentivize transit ridership, reduce emissions: One big difference from 2008 is today public transit enjoys broad, bipartisan support from lawmakers and the public, with growing recognition of transit's ability to reduce emissions and combat climate change by providing alternatives to driving. Unlike in the past, lawmakers across the region are not calling for service to be cut to save money. Instead, leaders are advocating for more resources to expand valuable service in their communities.

Legislators can leverage this support to explore revenue sources that incentivize transit use and reduce emissions.

Reform lessons

1. Advance opportunities to improve efficiency and accountability: In 2008, the legislature empowered the RTA to boost resources collected from the region and linked that funding to reforms designed to increase efficiency and accountability across the system. Today, The RTA is advocating for new funding to come with reforms that would establish a stronger RTA with more influence in areas such as service standards, fare policy, and capital project prioritization. These are areas featured in RTA's Transit is the Answer strategic plan and CMAP's Plan of Action for Regional Transit (PART), where the RTA' s regional perspective and budgetary role could add value for riders and taxpayers.

The coming negotiations provide opportunity for lawmakers to build on past reforms and grant RTA clear authority and mechanisms to enforce new responsibilities. The 2008 legislation lacked detail on implementation and enforcement, simply pointing to the development of the strategic plan every five years as the opportunity to evaluate progress on system goals.

2. Ensure governance reflects diversity of regional perspectives: In 2008 lawmakers added seats to the agency boards to reflect population growth and shifts, and ensure local leaders retain access to decision makers on transit planning and investment. This conversation is happening again in 2024 as City and county leaders and the Governor review their roles in investing in and shaping the system.

Join the Transit is the Answer Coalition

You can join the fight for sustainable transit funding and strategic reform by joining RTA's Transit is the Answer Coalition. The group of riders, advocates, and local leaders meets quarterly to discuss the system's most pressing issues and organize support for positive change.

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