Chicago transit talks with state lawmakers remain on track

The Chicago Transit Authority’s CFO said he’s encouraged by “positive momentum” from talks with Illinois lawmakers to boost state funding for the agency’s operating budget ahead of a looming fiscal cliff.

“All the conversations we’ve had to date with state legislators have been very positive,” said CTA CFO Jeremy Fine, speaking Tuesday at an “Innovations in Infrastructure” conference hosted by the University of Chicago and Bond Dealers of America.

“We’ve had multiple conversations with the House and the Senate, and they’re very understanding of the need; understanding that historically we’ve been underfunded and that we’re a critical asset to the community and need to be funded accordingly.”

“If you would have asked me a couple years ago, I would have been very happily surprised at how receptive the state Legislature is for the need for additional operating funding,” he said. “Now is the time for additional operating funding and I think the stars are aligning right now.”

Like most big urban transit agencies, the CTA is facing steep budget shortfalls as stimulus aid runs out in 2026 and ridership remains weak amid work-from-home trends.

Nationally, ridership levels are at about 75% to 80% of pre-pandemic numbers, said Paula Worthington, senior lecturer at the U. of C.’s Harris School of Public Policy, who spoke with Fine on the panel “Recovery and Sustainability of Mass Transit including Subway, Rail, and Airports.”

Fare increases remain unpopular actions for all transit agencies, Worthington said, while tapping traditional road funds is gaining ground but a “politically challenging idea,” she said. Many agencies like the CTA are looking to boost local and state fiscal support, especially for operations, but it can be a heavy lift. 

“None of the options look great,” Worthington said, especially for fare-dependent legacy systems. 

The CTA’s future annual budget gaps are projected to total $400 million, or more than 20% of the 2023 budget, Fine said. The Illinois Regional Transportation Authority, which oversees the CTA, Metra commuter rail, and Pace suburban bus service, has warned of a collective $730 million budget hole by 2026.

Federal stimulus aid makes up 21% of the CTA’s 2023 operating budget, totaling $390 million, according to Fine. Another 31% comes from sales tax, 22% from the public transportation fund – which is state aid – while fares account for another 17%.

Rebounding ridership from last year has driven an 8.5% increase in fare and pass revenue in 2023, and sales tax and public transportation fund revenues have grown 28% compared to 2019, Fine said.

The RTA, which has been working with state lawmakers on a fiscal fix, in February adopted its long-term strategic blueprint, “Transit is the Answer,” that lays out fiscal, equity, and climate goals. 

Under Public Act 102-1028, a coalition led by the Chicago Metropolitan Agency for Planning in a project called the Plan of Action for Regional Transit, or PART, is tasked with developing recommendations for state lawmakers by Jan. 1.

Potential revenue streams include an increase in the existing RTA sales tax levied in Cook County and neighboring counties, an increase in the state motor fuel tax, implementation of congestion pricing on highways into Chicago, and expanding the RTA sales tax to services that are now exempt.

Fine said CTA is watching the CMAP recommendations closely.

“We’re really looking at seeing what the CMAP report will provide with regard to funding, governance and the system,” he said. “We continue to meet with the Illinois legislators and continue to have a very positive reception. And we’re meeting with the Illinois delegation of the federal Congressional leaders to underscore the need we have not just on capital but operating,” he said.

President Joe Biden’s fiscal 2023 budget recommends that large urban transit systems like the CTA be allowed to use federal formula capital grants for operations during 2023. Congress would need to approve the policy change.

On the local side, Chicago has been a “tremendous supporter,” in particular with the creation of the transit TIF – which Fine called “transformative” – and money from the ground transportation tax.

“We believe the new mayor and City Council will be very strong supporters of transit, we’ve heard that directly and particularly on the capital side, but opportunities may be available on the operating side as well.”

In April, at a Civic Federation event on public transit, state Sen. Ram Villivalam, D-Chicago, head of the state’s Senate Transportation Committee, expressed confidence lawmakers would act to help.

“We know this cliff is coming,” Villivalam said. “There is an absolute appetite by the Illinois General Assembly to provide assistance with regards to this cliff,” he said. “I think the message is we want to help, we know we need to help,” but are also asking “what structural reforms are we looking at implementing? What innovation can we pursue?”