In addition, TFIC recommends:

1. A new distribution formula for downstate highway dollars based upon lane miles, bridges and traffic to ensure each IDOT highway district is assured equitable funding based on rational criteria

 

2. Impose new performance standards to ensure all IDOT highway districts have road and bridge conditions within 5 percent of statewide average

 

3. Restore integrity to the road fund by reducing diversions to a level no greater than the allocations that existed in 2001 ($360 millions, primarily for state police and Secretary of State)

 

4. New revenues must be allocated for both “pay as you go” projects and “multi-year bond” projects, based upon the life cycle of the projects

 

5. New legislation must maintain the integrity of the road fund by clearly stating new revenues are dedicated and secured to pay for the expanded program

6. IDOT must be authorized to hire 600 new engineers and technicians over the next three years to properly manage the expanded program (IDOT has 1100 fewer employees than in 2003)

 

7. IDOT must establish a specific list of funded projects to ensure oversight and accountability over the life of the five year program

 

The Transportation for Illinois Coalition recommends a five-year transportation construction program increase that total $14.6 billion. The revenue necessary to service a multi-year bond program of this magnitude is estimated at approximately $870 million a year depending upon market rates and length of the repayment schedules, plus a one-time revenue influx from gambling receipts. This program requires an increase in gambling receipts and a modest increase in some highway user fees.

 

 

Despite the obvious need, the simple fact is our politicians won’t acknowledge the “T” word. Many are unwilling to vote to raise taxes or fees any time, let alone in an election year.

 

Yet it is illogical to think a new multi-billion dollar construction program can occur without new revenues to pay for it.

 

No one wants to pay more taxes, but building and maintaining the state’s infrastructure requires periodic revenue increases because growth in user fee revenue does not keep pace with construction costs.

 

Inflation in the construction industry has grown more than 19 percent since 2003, while growth in user fee revenue to support highway construction historically averages less than two percent and has been less than one percent in each of the last two fiscal years. As long as the road fund depends on taxes and fees that generate minimal revenue growth from year to year, it is inevitable that there must be periodic increases to keep the transportation systems in good repair. Raising taxes for infrastructure funding once or twice every decade should not be unexpected, but it has become almost impossible to achieve in today’s political climate.

I wonder what is so vastly different about today’s elected officials that keeps them from demonstrating the kind of vision and courage exemplified by President Eisenhower when he launched construction of the nation’s  Interstate Highway System.

 

I would argue there should be a clear distinction between the need for elected officials to restrain run-away spending in operating budgets and the need for them to support tax increases for infrastructure investments where results are tangible and long-lived. Yet, elected officials routinely avoid both tasks with equal trepidation.

Multi-year construction programs require bonds be sold and dedicated revenue sources committed to ensure repayment of bond obligations. Legislators know the state’s current revenues are committed to existing operating expenses. There is no latitude to issue a new bond program without a new revenue stream to finance it.

 

Presently, the only politically acceptable revenue generator that could support a new bond issuance appears to be expanded gambling. Gambling is an option most politicians see as a big dollar generator from voluntary contributors. Two approaches are being discussed.

 

The minimalist approach is to authorize additional gaming positions at existing riverboat casinos and to auction the one unused casino license and promptly press it into operation. While it may be doable, this approach will not, by itself, generate enough new money to finance transportations needs, let alone handle an all-inclusive capital program sought by the Governor and Senate Democrats.

 

The expansionist approach would also authorize new riverboats, a land-based casino in Chicago, and allow casino type gambling to occur at horseracing tracks.

 

Passing gambling legislation has been problematic in the past. Despite wishful thinking by those who think a gambling vote is easier than a tax vote, there is no guarantee a large, complicated collaboration among very disparate interests can be achieved. Related issues like a reconstituted state gaming board, locations for new boats, casino ownership opportunities for minorities, and a federal indictment of the Governor’s chief fundraiser for gambling-related transgressions have become factors. It all suggests a burdensome program with social, moral and ethical aspects that increasingly make the measure suspect and unmanageable.

 

Even if new casinos are approved the cash will not reach the treasury any time soon.  Considerable time is required to build facilities and bring them into operation. The delay in operation will affect the cycle time for getting new public works projects underway. 

 

Traditionally, major capital programs in Illinois have been championed by Governors willing to accept the political heat that comes with asking for tax increases imposed primarily on highway users. State and local officeholders expect Governors to exhibit leadership on behalf of the whole state while providing political cover many legislators deem necessary to support user fee increases, even as they seek projects for their constituents.

 

Governor Blagojevich has not been willing to assume that role.

 

His solution for road and bridge needs has been to propose bonding programs without conceding the need for new revenues to service the debt. His earlier plans would have further eroded existing road funds for short-term construction gains while ignoring future consequences. These shortsighted proposals have not passed.

Despite previously rejecting expanded gambling the Governor has now embraced this option as a politically acceptable method for raising revenue without imposing general taxes to finance a capital program.

 

 

Unfortunately, finding revenue to finance a statewide bonding program isn’t the only transportation challenge. The three public transportation services operating in the Chicago metropolitan area are without sufficient funds to complete this fiscal year without new revenue, service reductions, employee layoffs, or some combination of the three.

 

Reliable public transportation service for over a million daily commuters is being jeopardized by political inaction. Two agency deadlines that would have implemented spending restraints have been staved off, but a third, January 20, is rapidly approaching.

 

The Governor has rescued the RTA by accelerating cash flow and exercising inter-fund transfers, but these actions have merely delayed reckoning day because the shortfall remains. 

 

The governor’s current proposal for resolving the transit authorities budget problems would provide a $385 million subsidy to the CTA from the state’s general funds. It might fix the CTA’s operating budget problem, but it would simultaneously put another big hole in a state budget already out of balance. Legislators know merely transferring funds from one pocket to another does not fix the revenue hole. The Governor has not suggested a source for backfilling the funds nor indicated where he would cut current spending to compensate for the lost revenue.

 

Responsible legislators want assurances that any capital program also results in long-term financial stability for transit agency operations. Others see the RTA’s operating budget issues as a regional responsibility to be provided for by local taxes, increased fare box receipts and service reductions. Legislation to increase the local sales tax in the RTA region and implement an increase in the real estate transfer tax in Chicago to provide operating funds has supporters, but the Governor has shown recalcitrant opposition to giving the RTA authority to raise the sales tax rate.

 

Downstate legislators are suspect of a unilateral solution that only solves the immediate crisis of keeping current CTA operations intact without also approving a statewide capital plan that provides funding for their districts’ needs. The demand by several downstate and suburban legislators that a statewide capital program be linked to any resolution for Chicago transit operating funds suggests that everything gets addressed or nothing happens.

 

We need statesmen who will acknowledge a transportation program isn’t about the next election, but rather the next generation. Championing an infrastructure program requires leaders who understand infrastructure legislation demands a 20-year vision. It also requires honesty about the magnitude of the undertaking and willingness to ask people to sacrifice today for tomorrow’s needs. It is fundamentally the same leap of faith we undertake when we choose to plant a tree our children and grandchildren will appreciate. 

 

Taxpayers understand we cannot afford to ignore basic up-keep on our homes or fail to reinvest in the buildings and equipment of our businesses. Elected officials have a responsibility to serve as the stewards of the public’s assets. It is not in the public’s interest to allow extended neglect and deterioration, unnecessarily increasing the costs of replacement, repair and maintenance of the public’s investment. Failure to reinvest in the state’s transportation networks in a timely manner not only increases the taxpayer’s costs but jeopardizes job creation and our economy.

 

While our state’s elected officials would like to continue to postpone and ignore the need to raise taxes and fees to invest in our state’s future, that is exactly what the citizens of this state must do to finance a major

construction program.

 

Whether or not expansion of gambling is approved, the most efficient and reliable source for transportation program funding remains traditional user fees. Expanded gambling will put money in the treasury, but many public finance observers question the viability of ever-increasing reliance on so called sin taxes as the basis for financing government. Where debt issuance for transportation construction is concerned it is appropriate to associate the bond repayment to a dedicated fund and include an increase in user fees in the mix.

 

The Congress and the President found it politically unacceptable to raise the gas tax when crafting the federal transportation bill two years ago. The result was a federal transportation program that was insufficient to meet the nation’s needs and a highway trust fund that will be depleted prior to the next reauthorization act due to inadequate revenue growth.

 

The Illinois General Assembly has not raised the gas tax since 1990 and is unlikely to do so now. But in an era where: 1) gas prices can fluctuate by 30 or 40 cents in a matter of days, 2) environmental concerns are growing, 3) reliance upon foreign oil is a major factor in the nation’s economy, balance of trade, international relations and military operations, 4) public transportation is of growing importance, and 5) costs can influence behavior change, it is hard to believe a motor fuel tax increase is somehow not a rational choice for raising new revenue for highway construction.

 

 

As President of the Illinois Chamber and as one who has been deeply immersed in transportation funding issues at both the federal and state level for more than six years, I am willing to emphatically state what our elected officials avoid acknowledging. If the people of Illinois are to be served with well maintained roads, safe highways and bridges, new roads and bridges where and when they are needed, added lanes and congestion relief, modern and well maintained buses, trains, and stations, new or expanded rail passenger service, and safe and upgraded airports, we must raise taxes and fees to pay for the improvements. I am convinced we must raise taxes and fees to pay for needed infrastructure investments in order to grow the Illinois economy.

 

The business leaders I speak with tend to be informed, rational and pragmatic individuals. Even those who operate large fleets of vehicles or are in the oil and gas business are willing to accept higher tax costs if they have confidence the expenses they are required to pay are dedicated to transportation improvement projects. Business owners and managers want safe and efficient roads and transit systems upon which they can rely to move commerce and satisfy their employees’ needs.

 

 

There are three key elements to the confidence equation that must be addressed. First, the Governor and legislators have broken faith with taxpaying highway users by ignoring the concept of dedicated trust funds and stealing cash from road funds to finance other government expenses. Support for tax and fee increases should be contingent upon restoration of the trust fund and committing the money to construction.

 

Second, whether he knows it or not, Ron Huberman, President of the Chicago Transportation Authority, has a huge task to educate and convince the public that the CTA is the cleanest, most efficient and cost effective public transit system it can be. Despite investments to improve facilities and union contract changes achieved last summer, there is little to no confidence in the fiscal affairs of this organization. As long as the CTA receives taxpayer support to supplement fare box receipts, the issue requires attention. In fairness, Huberman is a new leader and deserves time to address the confidence factor, but it is incumbent upon him, the CTA Board and the organization to do so.

 

Third, many members of the General Assembly, mayors, local officials and community leaders have no confidence that IDOT will actually deliver highway construction projects discussed or expected to be included in any new capital program approved by the legislature. IDOT Secretary Milton Sees and his organization must reestablish confidence in their multi-year program. In theory, no project that makes it to the list should remain on the books for more than five years. During the Blagojevich administration the five-year program became a seven-year program and now operates in a six-year time frame. However, simply being identified in the program is no longer a reliable indicator the work will be done in a timely manner, if at all. Some projects have languished in the multi-year highway program for more than ten years. Legislators who must approve revenue increases and appropriate public funds deserve the administration’s respect and must have confidence the capital projects designated in the appropriations process will be built.  

 

Finally, it must be acknowledged that, in addition to billions of dollars worth of transportation projects, the state has numerous other brick and mortar obligations to communities, universities, and state facilities, as well as economic development initiatives that have been neglected. Chamber members acknowledge such needs, but as advocates for economic growth, it is critical transportation funding not be short-changed by legislators who choose to place a higher priority on school and community projects. Chamber members need to be concerned about a possibility the legislature may finally pass a capital program but inadequately fund transportation. 

 

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Portions of this message have been taken from the Transportation for Illinois Coalition white paper, Rough Roads Ahead: Updated 2006 and other materials distributed to the members of the coalition. I am a founder and co-chairman of the Transportation for Illinois Coalition.