RTA Signs Off on Tax Hike

The Regional Transportation Authority board on Monday approved a sales tax increase for the Chicago area that will generate $400 million in additional operating aid for transit systems and funds for other suburban projects. The action followed the Illinois General Assembly’s recent approval of the plan.

“Today is a great day for the region and for the millions of people who depend on our transit system,” board chairman Jim Reilly said in a statement. “Not only have we instituted a new funding plan that will fund the day-to-day operations of the system, but we have also instituted an important series of reforms that will make the system more efficient and effective.”

The transit bailout package includes provisions that give the RTA greater financial and management oversight of its service agencies — the Chicago Transit Authority, Metra commuter rail, and Pace suburban bus service. It also requires long-term financial forecasts and allows the CTA to issue up to $2 billion of debt to restructure its pension-related liabilities. Unions also will contribute more to pension costs.

The sales tax will go up by 0.25% in Cook County and by 0.5% in the other five “collar counties” around Chicago. All totaled, the new tax in Cook and half of the new tax in the other counties will generate $280 million for the RTA, and the other quarter increase will generate $121 million for suburban projects.

State matching funds are expected to generate an additional $70 million. The bailout package also gives Chicago the ability to raise its tax on real estate transactions. The City Council is expected to approve that increase as soon as next week, generating an additional $100 million for transit. Officials had warned of deep service reductions and increased fares if no new revenue source was found to help shore up annual operating deficits.

Transit officials now will push for the state to adopt a capital program that includes new bonding authorization. The RTA has nearly exhausted all of its existing borrowing capacity authorized under previous capital programs.

“The new operations funding will help us address some regular maintenance, but it will do nothing to address our capital needs,” said RTA executive director Steve Schlickman. State lawmakers are considering a $24 billion capital program that relies on about $10 billion of new borrowing but have yet to agree on how far to expand gaming to raise new revenue to pay off the bonds.

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