CHICAGO - The heavy political lifting to overhaul the governance and funding of the Chicago region's transit system now begins.
A state task force's recommendation to scrap the current structure faces resistance from the city, and any changes face a crowded state legislative plate that includes passage of a state budget, possible consideration of a new capital plan, and local government pension reforms. Many lawmakers also face re-election in November.
The Northeastern Illinois Public Task Force approved
Instead, the region's transit would be governed by a new, single super agency with an eye on more funding support. The recommendations come seven months after Gov. Pat Quinn formed the task force and asked members to examine how the system's management and oversight could be improved.
"To achieve a world class transit system the region needs, northeastern Illinois must change its perspective from the parochial to the regional," the report reads. "And that leads this task force to propose a new approach, an integrated, unified transit agency responsible not only for managing our transit assets, but also for improving mobility for all of us."
The goal of the plan is to improve oversight and ethical standards, ease the rivalries among the existing agencies, improve the system's efficiency and ability to adapt to technology and innovations, and improve funding for operations and investments in capital to expand the system.
The report now goes to Gov. Pat Quinn and lawmakers. State Transportation Department Secretary Ann Schneider, who chaired the group, stressed that the intention of the task force was to provide a framework from which legislation could crafted and considered on at least some of the proposals as soon as the current session.
The new agency would be created to set operational, funding, and planning policies and strategies. Three operating units would be established to manage day-to-day operations. It's a model similar to one used in New York and other cities examined by the task force.
"We are talking about turning around a big, big ship," task force co-chair George Ranney Jr. said.
The task force suggests, for example, that the new agency could be governed by a 21-member board, with five members each being selected by the governor, Chicago mayor, the Cook County Board president, and the county executives of the five "collar" counties surrounding Chicago. The governor would pick the 21st member who would serve as chairman.
The task force suggested that all board actions require a majority vote that includes at least two appointees of the city mayor, Cook County board president, collar counties, and governor.
Currently a total of 47 board members appointed by 21 elected officials serve on the four boards with the CTA, Metra, and Pace represented on the RTA board.
While the governance proposal is central to the plan, the task force also addressed finance issues, warning that the system remains underfunded. It recommends overhauling the financial planning process for transit and urges new revenues be sought to bolster funding for operations and capital.
"There needs to be a new funding framework," said task force member Carole Brown, a public finance banker at Barclays who previously served as CTA board chairwoman. Brown led the task force's working group on finances.
The system should identify new funding sources and earmark them for capital. The report lays out various options including a sales tax on motor fuels, a general sales tax on goods, a commercial parking tax surcharge, an additional vehicle registration fee levy, and a special property tax on non-residential parking.
The system should develop a public outreach to advocate for new funding, eliminate dis-incentives to expanding service based on farebox recovery ratios, allow private transit providers to compete for funds under some programs and encourage private sector partnerships, the report says.
The proposals include revising the current division of operating funds among service agencies and dividing new funds based on a competitive program based on transit goals. The division of capital funding formulas would also be altered to meet transit goals.
The system has previously reported a long-term $32 billion tab of needed work, and the RTA's five-year capital program calls for $4.6 billion in spending. Infrastructure needs and the lack of adequate funding are not just a central operating issue but are also a key credit challenge for the current system, with more than 70% of the system's rail cars in worn or marginal condition, Fitch Ratings said in a recent review.
The Metropolitan Planning Council endorsed the recommendations saying they would "restore confidence and improve decision-making.
"Further, MPC enthusiastically endorses increased funding for our region's public transportation system and new incentives to attract more residential and commercial development near transit stations across the region to increase transit ridership, a benefit to all," the council said in a statement, citing a $16.5 billion five year shortfall for transit needs.
The governance recommendations are considered the most controversial, given the competing transit needs of the city and the suburbs. Changes in how funds are divided to serve more passengers could benefit the city, but Chicago officials would be reluctant to relinquish their direct power on the CTA whose leadership is appointed by Mayor Rahm Emanuel. Suburbs would enjoy more say in the single agency, but would battle any loss of funding.
Emanuel's spokeswoman Sarah Hamilton and the CTA slammed the governance recommendation.
"The CTA is the only transit agency already fully and directly accountable to transit customers and taxpayers through the mayor and governor, which appoint the CTA's board - and gives residents of the Chicago area the responsible governance they expect from their public transit system," the CTA said.
"While we look forward to the final report, we are not interested in a solution that replaces one unaccountable bureaucracy with another at the expense of Chicago taxpayers having a say in their transit system," Hamilton said.
A spokeswoman for Senate President John Cullerton, D-Chicago, had no immediate comment saying the president needed to time to review the report.
The RTA was created in 1974 and restructured in 1983. In 2008, lawmakers approved reforms that broadened the RTA's oversight powers as part of a package that hiked the RTA's sales tax.
In addition to governance and finances, the report also offers recommendations on ethics reforms and system performance guidelines. An ethics scandal at Metra last year prompted Quinn to establish the task force. The former head of the agency charged he was ousted for refusing to make patronage hires and was given a lucrative severance package to resign.
Board appointments would face heightened scrutiny and current salaries for members would be eliminated under the recommendations.
Board members stressed that the document represented a "consensus" among panel members even though not all agreed on every recommendation.
The report outlines how the region trails its peers in both system ridership and expansion. Chicago has expanded its elevated light-rail system by less than 20 miles since 1975 while comparable systems will have expanded their systems by more than 90 miles between 1975 and 2020.
The report comes as the RTA leadership is shifting. RTA board chairman John Gates announced recently he would step down from the post at the end of his term in June after four years. He has spearheaded the agency's push for a $2 billion increase in its state approved bonding authority and pressed for expanded oversight of Chicago area transit agencies.
RTA chief executive officer Joseph Costello retired at the end of February from the agency, where he has worked for the last two decades first as fiscal chief and then as executive director.
The RTA has $2 billion of long-term debt outstanding and has exhausted most of its existing state approved bonding capacity. The RTA carries ratings in the low to mid double A category. It pledges its full faith and credit to its bonds and its allocation of regional sales tax collections and public transportation funds which come from a 30% state match of regional sales and pledged real estate transfer tax in Chicago. The RTA is the third largest transit system in the nation.
The RTA has also butted heads with the CTA over the city authority's moves to borrow on its own. The RTA can exercise some oversight over CTA bonding in that it must sign off on the service boards' budgets, which include funds for debt service. The CTA carries carries ratings in the high single A to double AA category on its $2.9 billion of sales tax bonds and a single A on its federal capital grant debt.
