New sales tax revenue will help mass transit, but there's still a long way to go

The Taxpayers' Federation of Illinois and the Regional Transportation Authority agree that a change to Illinois’ sales tax law will net the RTA an additional $150 million this year and another $225 million next year. That money will drastically reduce the impact of the looming $770 million "fiscal cliff," which begins in January.

The extra revenue was a result of the state expanding its sales tax to include more online purchases.

In an internal RTA document, the transit agency mulls spending $44 million of that additional money this year on Americans with Disabilities Act paratransit operations and appears to leave the door open to even more spending expansions.

Several months ago, the RTA claimed that its paratransit costs contributed $239 million to the looming $770 million deficity because the state only kicked in $10 million to the federally required program that provides heavily subsidized rides to people with disabilities who cannot use fixed-line transit. The RTA has been receiving a huge amount of federal dollars since the pandemic, but that money runs out at the end of this year.

The RTA believes spending the $44 million is justified because paratransit is supposed to receive a set portion of sales tax revenues.

"In 2025, the paratransit expenses are over-budget and it is the fiduciary responsibility of the RTA and the Service Boards to address that gap with available funding this year," said RTA spokesperson Rob Nash.

However, the internal document also seemed to leave the door open a bit to using that new money for other purposes.

"A subsequent vote by the Board would be needed to direct those funds to ADA paratransit funding or other budget amendments via an appropriations ordinance."

Asked about further spending, Nash said the sales tax expansion "is contributing to positive budget variance or operating reserves at each operating agency after covering their monthly operating expenses."

Either way, some key legislators involved in the mass transit reform talks don’t want the RTA to spend that unexpected $150 million now, preferring the agency wait until final legislation is approved and when the money can be used to alleviate deficit costs.

"We need everyone at the table offering and working on solutions to avoid the fiscal cliff that threatens transit services people rely on, and increasing spending right now does not advance that goal," said Rep. Eva-Dina Delgado, D-Chicago, one of two House Democratic transit negotiators.

"Just like Springfield has a duty to fix the bigger problem, the RTA has an obligation to treat this moment with discipline. It’s crisis cash, not extra spending money,” said the other House Democratic negotiator, Rep. Kam Buckner, D-Chicago.

One of the biggest obstacles to solving this transit problem is coming up with the money. The new sales tax revenue will help, but there’s still a long way to go.

And some major players are stepping up to complicate matters.

The Illinois Realtors Association has dumped an unprecedented $300,000 into a special campaign committee that is running an online "consumer awareness campaign" slamming some Democratic legislators ahead of the fall veto session.

The online ads are targeting five state senators and 21 House members, a spokesperson for the statewide group said. The Senate passed-bill was declared "dead on arrival" in the House by Speaker Emanuel "Chris" Welch, but House members are bearing the brunt of the attacks, likely because the bill is now in their chamber.

An ad whacking Sen. Laura Ellman, D-Naperville, is particularly harsh. Ellman voted for the Senate’s mass transit reform/funding bill at the end of the spring session. That bill included a suburban real estate transfer tax which was expected to raise millions to fund mass transit programs.

The online spot features a Photoshopped image of Mayor Brandon Johnson and Ellman standing in a commuter train as hundred-dollar bills float in the air around them.

"Sen. Ellman voted to raise your property transfer taxes to bail out Brandon Johnson’s failing CTA," the ad tells readers. "Tell her to stop this crazy plan."

The click-through link leads to this message: "In the final hours of voting in Springfield, Illinois Senators passed a 600% Property Transfer Tax on families, targeting ONLY the suburbs. The intended recipient of these new taxes? Mayor Brandon Johnson's Chicago Transit Authority."

"The proposed real estate transfer tax increase ignores the glaring reality of the state’s housing economy,” said Illinois Realtors CEO Jeff Baker via news release. "This would add thousands of dollars of closing costs to every residential and commercial transaction in the Chicagoland area, slowing our real estate economy even more."

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.