Illinois voters will decide whether to amend the state constitution to establish a ‘lockbox’ for transportation-related revenues.

CHICAGO – Illinois voters will decide Nov. 8 whether to bar future diversions of transportation revenues to balance budgets or fund non-transportation related expenses.

The proposed constitutional amendment has created deep divisions, drawn warnings that it would hinder local government and state fiscal flexibility, and raised questions over its impact on future borrowing. Supporters say the lockbox is needed to protect against ongoing diversions of highway-related tax and fee collections that should be reserved for transportation infrastructure.

Backers call the proposal the Safe Roads Amendment. They include some planning groups and the Citizens to Protect Transportation Funding, a coalition of businesses and labor unions that stand to benefit from construction funding.

The coalition argues that $6.8 billion has been swept from the state's road fund between 2002 and 2015.

"They've milked it so much, they've put our economy and our safety at risk. Illinois' infrastructure is crumbling. Over 4,200 Illinois bridges and half of Illinois roads are in poor condition," says the coalition, which is running an advertising campaign.

"Aging infrastructure also puts a strain on the economy and makes it difficult for the state to retain and attract businesses. The longer we go without repairing our roads, the more it will cost to fix them in the future," its report says.

Attention on the funding issue is heightened by the lack of progress on a new state capital plan amid Illinois' operating budget gridlock that's left the state with a $5.4 billion budget gap, near record-bill backlog of $9.5 billion, and $113 billion of unfunded pension liabilities.

The measure won overwhelming bipartisan support in the legislature to make it to the Nov. 8 ballot. Republican Gov. Bruce Rauner has remained neutral, saying it has its positives and negatives.

The transportation measure is the sole statewide ballot question after questions on term limits, a millionaire's tax surcharge, and redistricting reforms fell by the wayside amid the gridlock between Rauner and the Democrat-controlled Legislature.

The 82-year-old Metropolitan Planning Council organization and the Illinois Chamber of Commerce support the amendment.

It would amend the state constitution to require read any money from taxes, fees or fares derived from road, air, transit or rail , including bond proceeds, to be spent on construction, reconstruction, maintenance, repair, and betterment of public highways, roads, streets, bridges, mass transit, intercity passenger rail, ports, airports, or other forms of transportation, and other statutory highway purposes.

To succeed, at least 60% of those voting on the question must endorse it or it must receive the support of the majority of those who vote in the election. Wisconsin approved a similar measure in 2014.

Opponents worry that the issue isn't as simple as laid out by the coalition because it could stymie local and state fiscal flexibility.

"Limiting access to transportation-related revenues such as motor fuel taxes and motorist user fees could put additional strain on the state's general operating resources, consisting mainly of income taxes and sales taxes, and similarly affect local governments," the Chicago Civic Federation wrote in a review of the subject.

The Chicago Metropolitan Agency for Planning, an influential group that manages regional land and transportation planning, in a review warned that the impact on state and local bonding programs that draw from transportation funds is unclear.

In addition to gambling, sales and liquor taxes, the state's 2009 infrastructure program that is winding down relied on higher vehicle registration fees.

"Bond proceeds support not only transportation projects, but other non-transportation capital projects. Given this commingling of funds, it would appear that the capital projects fund could not continue in its current form if the amendment were to pass," CMAP staff wrote in an analysis published earlier this month.

Proponents argue that the amendment won't alter existing programs, but CMAP warned that it's unknown how the proposed amendment would affect the state's finances, including the state's ability to access new financing or refinance existing bonds.

"To the extent that the state would have fewer revenue sources available to make bond payments due to the provisions of the proposed amendment, it may face higher financing costs, especially for general obligation bonds," it concluded.

On diversions, the coalition backing the amendment says the annual amount of diverted funds hit a high of $783 million in fiscal 2004 and held steady in the $600 million to $700 million range through fiscal 2009. It dropped to $357 million in 2010. It hit a low of $172 million in 2014 and rose to $527 million in fiscal 2015.

Critics of the proposal said the draws have been more modest.

The Civic Federation's review found that based on information from the General Assembly's Commission on Government Forecasting and Accountability that raids on the state's major transportation funds were limited. The major accounts include the road fund, construction fund, and motor fuel fund.

COGFA data showed only $520 million was swept from key transportation accounts between 2004 and 2015, including $350 million in fiscal 2015 that was part of a record $1.3 billion sweep of various state accounts to help erase a deficit when Rauner took office.

The discrepancy is due to the coalition's more expansive definition of what counts as a diversion.

It counted past funds that went to cover state police and secretary of state salaries before those expenses were shifted to the general fund as part of the 2009 Illinois Jobs Now infrastructure program. Other expenses for employees that worked to support transportation, like their health insurance, were also counted as diversions.

A 2013 report from the Illinois auditor general found that less than half of $25 billion that flowed to the state's road fund between fiscal 2003 and fiscal 2012 directly covered transportation funding. The report counted bond repayment and Illinois Department of Transportation worker salaries as non-direct expenses. Other reports have suggested that the non-direct spending still benefited transportation construction projects.

CMAP raised additional questions over the potential impact of the amendment due to what it calls "ambiguities" in the amendment's language.

"The proposed amendment does not explicitly define statewide and metropolitan planning as eligible activities, only referring directly to project-level engineering studies, which omits key steps in developing and implementing transportation improvements," CMAP wrote.

It would allow state and local agencies to use transportation user fees to provide local match to federal highway dollars, but it provides no corresponding language for federal transit dollars, the group warned. Bicycle and pedestrian transportation are also not mentioned as qualified expenses.

The full impact on local governments is unclear because the amendment would impose restrictions that could conflict with the state constitution's rules on home rule governments. Many local governments in the region raise revenues from the transportation system, including vehicle registration stickers and local option motor fuel taxes, that are not always directly reinvested in transportation improvements.

Chicago officials have expressed concerns over the lack of clarity.

"We are having ongoing discussions with legislators in Springfield on this ballot measure. The city is focused on ensuring that critical infrastructure decisions continue to be made locally," finance spokeswoman Molly Poppe said in a statement.

The amendment comes amid warnings from state transportation leaders that a six-year, $11.2 billion highway improvement plan won't be enough to stop an ongoing decline of infrastructure.

Funding in the six-year plan is $2.8 billion more than the 2015 version, but almost $13 billion less than the plan adopted in 2010. The state's gas tax has not been raised in 25 years and the state's $31 billion 2009 capital program is winding down.

The Metropolitan Planning Council estimated in April that there are $43 billion of additional transportation needs over the next 10 years to eliminate a maintenance backlog and restore highways and bridges to good condition.

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