The Illinois General Assembly passed a $1.5 billion bill early Friday morning that provides both the governance reforms sought by lawmakers and the funding to avert
The bill creates a stronger and more integrated governing board to replace the Regional Transportation Authority; this board will manage any outstanding RTA debt. The bill also funds the three Chicago-area transit service boards with additional revenue from a sales tax increase in the RTA region as well as redirected monies from the motor fuel tax and the road fund.
CTA Acting President Nora Leerhsen said in an emailed statement the revenue streams in the bill will leave CTA fully funded.
"This funding means that there will be no layoffs or service cuts. With these funds, we will expand our bus and rail service, invest in new technologies and implement new strategies to support our riders and employees," Leerhsen said. "CTA is excited for the bright future that lays ahead and we extend our deepest appreciation to everyone who's worked so hard to support public transit in the Chicago region."
"An increase in funding, like that included in this legislation, that addresses the forecasted budget gaps of the Chicago Transit Authority and the other regional transit providers is a positive credit development," Matthew Butler, vice president and senior credit officer at Moody's Ratings, said in an email.
S&P Global Ratings is still evaluating the impacts of the bill on the CTA and the Regional Transportation Authority, Scott Shad, associate director at the agency, said in an email.
"We view the additional funding for the CTA from SB 2111 favorably and are tracking the potential financial implications, including its ability to close the CTA's forecast budget deficit indicated in its fiscal 2026 baseline operating budget," he said.
Moody's rates the CTA's revenue-backed bonds A2 and its tax-backed bonds A1. The outlook is negative. It rates the RTA Aa3 with a stable outlook.
S&P rates CTA A-plus with a negative outlook. It rates the RTA AA with a stable outlook.
Fitch Ratings rates the CTA BBB with a stable outlook. It rates the RTA's general obligation bonds AA-plus with a stable outlook.
Under the legislation, the Northern Illinois Transit Authority (NITA) will replace the Regional Transportation Authority, an umbrella agency with limited control over the service boards of the Chicago Transit Authority, Pace suburban bus service and Metra commuter rail service.
"I think the changes made to governance — a lot of them — are really very, very good and absolutely go in the right direction," said Paula Worthington, senior policy advisor at the Civic Federation, a Chicago-based nonprofit fiscal watchdog group.
Worthington pointed to the meaningful representation from all relevant stakeholder groups; the increased state power over directors of the regional entity; and the supermajority voting requirements.
"What that should, in principle, do is incentivize more regional thinking and decision-making for the board as a whole, instead of what we sometimes struggled with, a little more parochial interests," she said.
Justin Marlowe, research professor at the University of Chicago's Harris School of Public Policy and director of the Center for Municipal Finance, said, in many ways, the final result reflected "pretty clearly" what was detailed in the PART report.
"Some of the funding sources that the PART report talked about are not happening, but (there is) the basic idea that there should be some willingness among legislators to look at funding sources that we already have, as politically invaluable as they might be, in exchange for a shift in governance," Marlowe said.
For funding solutions, the NITA Act calls for diverting revenues from the state sales tax on motor fuel, shifting them from the road fund into public transit. That would generate an estimated $860 million per year, 85% of which would go to Chicago-area transit and 15% of which would go to downstate transit systems.
The bill lets the RTA raise the sales tax in Cook County and the collar counties by 0.25%, generating an estimated $478 million per year.
It also funnels $200 million of the interest earned on the state's road fund balance to public transit, and raises tolls by 45 cents for passenger vehicles and by 30% for commercial vehicles driving on the Illinois Tollway system, starting in 2027. The $1 billion in revenue from those increases would go toward tollway capital projects.
"The revenue proposals in the bill as it was passed are a lot more predictable and easier to administer than some of the other proposals that had been previously discussed," said Maurice Scholten, president of the Taxpayers' Federation of Illinois, which officially took no position on the bill in its final form.
In the weeks leading up to Friday's vote, lawmakers had eyed
"I don't think I can overstate the degree of improvement between the legislation that was initially proposed in that last week of the veto session and what was ultimately introduced and voted on and approved," Worthington said.
"Some of those other things that were left by the wayside … and then even going back further into the spring, there were some things — an expanded real estate transfer tax, for example — those are not necessarily crazy ideas for states or local governments to consider, but it's not a transit story, and it's not something that should be sort of considered solely in a transit context," she said.
But Worthington sounded a note of caution about two aspects of the legislation. One is the increase in the RTA local sales tax — "a stop gap measure, and I would love to have seen a provision that says we're going to let that happen for three years or five years, and then there's an absolute sunset clause and deadline," she said.
If there were such a deadline, when it were to arrive, she said, she would like to see lawmakers consider the prospect of expanding the sales tax base to include services.
Her other concern is the debate over whether transit agencies can raise fares in February. "I don't see that the legislation precludes fare hikes in February," she said, noting that average CTA fare collections are "weak and getting weaker." The transit agency hasn't raised fares since around 2018, and there has been a significant amount of inflation since then, Worthington noted.
Marlowe said the funding plan that passed is more "traditional" in that its revenue streams have a closer connection to transportation and to transit than some of the other solutions suggested.
"The combination of expanding existing, tried-and-true revenue sources, along with the governance reforms — which, in theory, at least, will increase the likelihood that the system can live within its means — that seems an overall more sustainable solution than maybe spending more," he said.
He added, "I think the thing no one expected was that labor (leaders) would ultimately go for any kind of diversion of the motor fuels tax resources away from road projects."
The Active Transportation Alliance, a Chicago-based nonprofit advocacy group for bicycling, walking and transit, said in a statement it is "thrilled" by the outcome.
ATA Executive Director Amy Rynell told The Bond Buyer the funding streams in this bill both avert the fiscal cliff and offer new resources that allow Chicago transit to build for the future.
"Getting agreement on revenue sources is the hardest part of all of this," she said in an email. "Where the leaders landed, investing in transit with funds that have historically been dedicated to roads, is a monumental shift towards sustainable transportation."
Rynell said the legislation included the necessary pieces to get to a regionally oriented system and will improve the transit experience for riders, including through integrated fares and apps, improved safety, faster buses, more accessibility for people with disabilities, more integrated service and more service overall.
In a statement, RTA called the bill's passage "a landmark moment for public transit in Illinois."
The agency added, "We are continuing to review the bill and will share more in the days ahead, including how this impacts the 2026 budget process."
"We look forward to working with lawmakers, our fellow transit agencies, and all stakeholders to meet the promise of this significant legislation and establish the world-class system that our constituents and riders need and deserve," Metra spokesman Michael Gillis said in an email.
Pace Chairman Rick Kwasneski said in an emailed statement that legislators recognized "the devastating impact" transit's fiscal cliff could have had on the regional economy.
"This legislation ensures that Pace can not only maintain service but also enhance it," Pace Executive Director Melinda Metzger said in a statement. "With this new investment, we are poised to deliver more service, increased frequency, expanded bus-on-shoulder operations, new bus rapid transit corridors and innovative solutions to meet growing demand."
Marlowe noted that Gov. JB Pritzker was a key player in getting the legislation across the finish line. Pritzker hailed the bill's passage
"Seeing the governor come in at the 11th hour and really drive the discussion and land the plane the way that he did is interesting," Marlowe said. "I think it's the thing that a lot of people have been hoping to see more of from this governor, and it really does raise the question of … pensions.
"You wonder ... if he can go in and convince labor to swallow a pretty bitter pill and still find a way to compromise … could there be a Nixon-in-China moment on pensions?" Marlowe added. "And clearly he has the clout to do it."
Worthington said it's hard to see a politically feasible scenario in which legislators get a second bite at the transit apple after this. Now, it's a matter of making the current legislation work, she said.
"Yeah, I'd love to see a little more … skin in the game from riders," she said. "And yes, I worry about the sales tax base. And not just in the transit context. I think that is a much bigger public finance question and our state has not really fully engaged on it to figure out what we want to do."
But "can this legislation really get the job done so that when we look back at this in five years' or 10 years' time, we really see something (different)?" she asked. "I think the answer is yes."
