The region’s transportation system is facing significant challenges. Decades of underinvestment have created a significant backlog of projects to reach a state of good repair. Revenues underpinning the system no longer reflect current costs or ways of getting around. Federal and state revenues do not provide the support that they once did, and emerging federal policy indicates a growing reliance on state and local revenues. To maintain or improve the transportation system, the state and region must rethink current funding formulas and look for new revenues.
ON TO 2050 estimates that the cost of operating and maintaining the transportation system in its current condition -- retaining the current backlog -- will exceed the funds expected to be available under existing revenue sources. With that $24 billion gap through 2050, revenues under existing sources would not be sufficient to operate and maintain the transportation system, let alone enhance or expand it.
Northeastern Illinois needs to overcome various obstacles to ensure sufficient funding for transportation. Systemic shifts are leading to declining revenues, and structural problems make current revenue sources inadequate for maintaining and operating the system. For example, revenues generated from flat rates, such as the federal and state motor fuel taxes (MFTs), have lost significant purchasing power due to inflation. At the same time, average vehicle fuel economy has been rising and vehicle travel has been stagnant, resulting in less fuel consumption. These trends will almost certainly result in state MFT revenues dwindling in the upcoming years. Moreover, growth in motor vehicle registration revenue in Illinois has been mostly flat since the mid-2000s due to slowing population growth, even while registrations per resident have risen statewide.
Federal revenues relied on by roadway and transit agencies in the region have been stagnant, with revenues expected to grow slower than the cost of the system. These slower growing elements of the region’s transportation funding present real challenges to making necessary infrastructure improvements. The system could benefit from reliance on a modern user fee, such as one tied to vehicle miles travelled (VMT), which charges based on how far a car is driven. Drivers pay for what they use. Efforts to implement VMT fees are already taking shape in other states, and new technology is making it simpler to implement such fees; private sector per-mile prices are now widespread in the auto insurance market. Levied on a per-mile rather than per-gallon basis, VMT fees act as a direct user fee and also offer opportunities to integrate with other types of facility-level pricing. Eventually, VMT fees could vary on different types of facilities, at different times of day, and for different classes of vehicles.
Transit fares contribute more than 50 percent of transit operating revenues region-wide. In addition to fares, the transit system relies on a sales tax imposed by the Regional Transportation Authority. Structurally, sales taxes in Illinois are imposed on a narrow base, which includes tangible goods but few services. The sustainability of the sales tax base is precarious because consumption of services continues to rise faster than consumption of goods.
The region lacks a dedicated source of capital for its transit system, even as needs keep rising to maintain our aging system in its current state of repair. While improving the region’s infrastructure is a high priority, simply keeping the overall system of transit, roads, and bridges in its current condition will cost more than $200 billion over the 32-year planning period.
Changing demands and emerging needs call for new investments. Among many factors, the number of congested hours is increasing annually; freight traffic is on the rise due to changing supply chain patterns and increasing next-day deliveries; residents are demanding new bicycle and pedestrian infrastructure; and private operators are creating new options for seamless mobility across multiple modes. Failure to improve infrastructure has a negative impact on the region’s economy, which can only grow as fast as its transportation system will carry it. System enhancements are necessary so the region can continue to grow.
To surmount these challenges, we must continue to improve, modernize, enhance, and expand the system in a thoughtful manner. Because conditions would decline without additional revenues, the region must pursue new and enhanced sources and user fees that modernize and improve upon our existing funding structure. Leveraging sources like value capture or congestion pricing and other tolling opportunities can provide funding while contributing to larger goals such as transportation demand management and effectively matching the costs of the transportation system to those who benefit from its use. In fact, revenues generated from specific regionally significant transportation projects will be necessary to help fund those projects. The following table details the Draft ON TO 2050 Financial Plan for Transportation, including forecasted revenues, as well as funding allocations to planned investments on the system.
Forecasted transportation revenues and expenditure allocations, 2019-50, in billions (year of expenditure dollars)
Revenues |
|
Federal revenues |
$61.9 |
State revenues |
$166.8 |
Local revenues |
$233.0 |
Subtotal core revenues |
$461.7 |
Increase state MFT and replace with VMT |
$31.0 |
Expand the sales tax base to additional services |
$11.0 |
Federal cost of freight services fee |
$7.0 |
Regional revenue source |
$5.0 |
Local parking pricing expansion |
$2.0 |
Subtotal reasonably expected revenues |
$56.0 |
Total revenues |
$517.7 |
|
|
Expenditures |
|
Operate and administer roadway system |
$114.9 |
Operate and administer transit system |
$162.9 |
Maintain current roadway condition |
$126.8 |
Maintain current transit asset condition |
$81.1 |
Subtotal cost to administer, operate, and maintain in current condition |
$485.8 |
Improve system condition |
$9.5 |
Make system enhancements |
$17.6 |
Full cost of constrained regionally significant projects |
$72.7 |
Capital cost allocated as maintenance and reconstruction |
–$50.3 |
Offsetting revenues from tolling and value capture |
–$17.5 |
Subtotal constrained new capacity cost of regionally significant projects |
$4.8 |
Total expenditures |
$517.7 |
Note: Expenditures do not add up to the totals due to rounding.
The region has had some recent successes in identifying and implementing new revenue sources. New legislation for transit facility improvement areas (TFIAs)[1] allows the implementation of value capture for certain transit projects, which has been used to fund the CTA’s Red and Purple Line Modernization (RPM). Completion of the west leg of the Elgin-O’Hare Western Access project saw a formerly free expressway converted to a tolled facility. Securing the enactment of other revenue sources to fully fund the transportation system will require much more work and advocacy by CMAP and its partners.
The following describes strategies and associated actions to implement this recommendation.