Fiscal Cliff (and taxes and related stuff)

[Busjack]

Tribune column: to the effect that the fiscal cliff is not quite as bad, because the state extended the sales tax on out-of-state purchases to include local sales taxes, including those for the RTA. No wonder "your chief financial officer" reports that sales tax receipts exceed budget. 

Update: Rich Miller column with more elaboration.

[Busjack]

Fran Spielman column: "Mass transit bailout a sure thing during Springfield fall veto session, [Kam Buckner] says." He's throwing in a surcharge for major entertainment events, basically saying that if you take CTA to Lollapalooza, you may as well pay for it.

[Busjack]

Evanston Now says Pace told the RTA that it has enough unspent Covid funds that it won't have to cut bus service in 2026. Apparently not so with CTA.

[Sam92]

https://www.cbsnews.com/chicago/news/cta-warning-24-hour-service-eliminated-budget-shortfall-springfield-funding/

A first hint at what CTA is considering IF the cuts happen. No owl service and service would be 6a-9p. Also I gotta find the link to this but partially related.... CTA is being told the acting president has 14 days to come up with a plan to deter crime and fare evasion or funding will be withheld so we might see some bumping heads slightly. 

[Sam92]

https://www.google.com/amp/s/www.cbsnews.com/amp/chicago/news/transportation-secretary-sean-duffy-cta-funding-safety/

The story about the threat to withhold funds....

[Busjack]

1 hour ago, Sam92 said:

https://www.google.com/amp/s/www.cbsnews.com/amp/chicago/news/transportation-secretary-sean-duffy-cta-funding-safety/

The story about the threat to withhold funds....

This isn't the fiscal cliff, but this administration's basic approach to governing through threats in unofficial media that it usually can't enforce. But a lot of the local fiscal cliff talk, including this is going to be another Philadelphia, appears to be crying "Wolf."

• For the first time in over 20 years (back to when Pace sued RTA and the only holding was that it was not suing itself), RTA is actually exercising some fiscal control, including telling Pace to charge $3.25 or $3.50 for RAP and TAP, raising fares generally by 25 cents, and moving other funds around, as reflected in Wednesday's Board video. There was some yap about "suburban" should be loaning the money, which is nonsensical in light of pending consolidation bills (which I will discuss in that topic).
• Also, at that meeting, it was said that Pace won't have to cut in 2026, essentially because it used Covid money instead of local money in 2025, and the local money is still there.
• At least the local Evanston media said about the same for Metra, saying that the fiscal cliff is put off until at least 4th Q 2026, 
• We haven't heard from CTA. but rarely do.

[jajuan]

Chicago Sun Times news story relaying that CTA, Metra and Pace report they pushed needing to do any potential service cuts back to at least the second half of 2026. There's further confirmation of @Busjack's mention of Evanston Now's reporting of Pace telling RTA it won't have to do any cuts in 2026. It mentions that Metra also says it can hold off until 2027 on any service cuts. CTA is saying summer 2026 for them. The story also says the RTA reports the other three service boards have been able to bring the combined fiscal cliff deficit for next year down to $202 million from the previous $770 million. It says they managed it through a combination of expected revenue from implementing an across the board 10% fare increase at all three services on February 1st, new revenues from a recent online sales tax, and administrative cuts to name a few moves made. They say that the deficit for 2027 will still be close to the same that was originally thought for next year and $888 million for 2028. There's mention at the end that state Rep Dina Delgado blasted RTA over the latest numbers. On the one hand I understand she may have some frustrations from the standpoint that opportunists may pounce on it to say the transit boards were crying wolf over the severity of the fiscal emergency. But overall it still feels like saber rattling since it appears that the service boards actually did what the politicians always squawk about and found some budgetary efficiencies. Unfortunately they won't be enough to soften the blow as much beyond next year given COVID money was still a part of the equation in some way for next year's moves and won't last beyond next year. That's at the heart of the current problem and always has been since the beginning of transit agencies nationwide first publicly reporting the issue. 

[Busjack]

2 hours ago, jajuan said:

it appears that the service boards actually did what the politicians always squawk about and found some budgetary efficiencies.

At least from the Pace board videos and news reports, it's more like the RTA doing its job for the first time in 23 years, by requiring the 10% fare increase, RAP and TAP users required to pay the full paratransit fare, and shifting funds. Only so-called efficiency is Pace saying it spent COVID money instead of local money, and thus has the 2025 tax money for 2026. The mail-order tax collections also hadn't been figured into the $770 M. But I don't think there is any efficiency in Pace paying Jarrett Walker for 150% concepts insteading of dealing with such issues as that it doesn't pay to have 3 routes to Northbrook Court.

2 hours ago, jajuan said:

transit agencies nationwide first publicly reporting the issue.

I wonder how "nationwide" it is. The Phiily stories had Philly, Pittsburgh, Chicago, and BART. (This isn't exhaustive.)

 

 MTA fares are going up from $2.90 to $3.00 for basic fares, with increases fron 4.5% to 10% on other services, so the proposed CTA/Pace fares are less than that.

3 hours ago, jajuan said:

opportunists may pounce on it to say the transit boards were crying wolf over the severity of the fiscal emergency.

I take this as that the champions of the stus quo (such as Pace) will use this as an argument that there's no need to take up the reform legislation in the veto session, but just put it off until very late May 2026.

[jajuan]

On 10/4/2025 at 4:41 PM, Busjack said:

I wonder how "nationwide" it is. The Phiily stories had Philly, Pittsburgh, Chicago, and BART. (This isn't exhaustive.)

Philly might have been the agency outside of Illinois that we've spoken about most, but TA's in other cities and states have also been to varying degrees coming up against the issue of structural deficits fueled by COVID relief money coming to end. San Francisco's MUNI raised fares and instituted service reductions in its last few service updates because of its own fiscal challenges. Their last service reduction earlier this year was a cutback in local weekday bus service going into downtown San Francisco. The routes effected end just outside of the downtown area with customers being asked to use the associated Rapid route to get into downtown if one exists. MTA in NY is still facing a crunch, with the structural deficit there projected to hit $3 billion by 2028 if the funding structure remains the same. LA Metro reportedly faced a $400 million deficit for fiscal 2025 and has a projected one of $1 billion for 2026. King County Metro has a $150 million for its 2026-2027 funding period. Similar stories for the TAs of Houston and Dallas. Put in the perspective of the different TAs respective sizes that sounds like a nationwide issue. 

[Busjack]

1 hour ago, jajuan said:

Similar stories for the TAs of Houston and Dallas.

You're  mixing a lot of apples, oranges, and grapefruit. As noted above, DART's problem is not that COVID money is drying up, but that the suburbs introduced legislation to get the sales tax. NY raised fares, but the term "fiscal cliff" means sudden cutting of service, and NY is not threatening that Houston's problem reportedly is that activists are complaining that promised LRT hasn't been prioritized. 

According to ABC Bay Area, all of the Bay Area agencies are in trouble. But the LA stories are more about if the feds will kick in for the Olympics.

Anything about a 2028 deficit, including in Illinois, I categorize as speculation.

[jajuan]

Well we're now four days away from the start of the veto session. It appears a certainty that RTA will be no more and will get replaced by NITA in whatever final transit bill get passed. So what we'll finally get to see is as has been the case after the regular session ended in May is whether the legislature can get the funding side of the equation done in time this month to get a final bill proposed for a vote, passed by both chambers, and sent to the governor's desk and finally signed into law. 

[Busjack]

1 hour ago, jajuan said:

Well we're now four days away from the start of the veto session. It appears a certainty that RTA will be no more and will get replaced by NIT, (1_A in whatever final transit bill get passed. So what we'll finally get to see is as has been the case after the regular session ended in May is whether the legislature can get the funding side of the equation done in time this month to get a final bill proposed for a vote, passed by both chambers, and sent to the governor's desk and finally signed into law. 

If uou're asking for a prediction (1) I implied above that it won't be done this month because the pressure of a fiscal cliff on exactly  January 3, 2026 has been taken away, (2) while the legislators have said reform before funding, the alleviation of the funding crisis means the General Assembly can wait until after Jan. 1, 2026, when the supermajority requirement goes away, and (3) the legislature now has less pressure to buck the lobbying efforts of the current administrative bureaucracy.

I'm also not predicting which tax will be increased, because after the last-day revelation of the bill with funding, they'll have to overcome the opposition of some interest, including (1) the construction engineers to the toll surcharge, (2) the collar counties to the real estate transfer tax, which just equaluzes it with the one in Chicago, but is characterized as a bail-out of the CTA, (3) the collar counties also objecting to ending the rebate of .25 point of the existing RTA sales tax to them, (4) Doordash and similar  companies objecting to the delivery tax, etc.

[jajuan]

38 minutes ago, Busjack said:

If uou're asking for a prediction (1) I implied above that it won't be done this month because the pressure of a fiscal cliff on exactly  January 3, 2026 has been taken away, (2) while the legislators have said reform before funding, the alleviation of the funding crisis means the General Assembly can wait until after Jan. 1, 2026, when the supermajority requirement goes away, and (3) the legislature now has less pressure to buck the lobbying efforts of the current administrative bureaucracy.

I'm also not predicting which tax will be increased, because after the last-day revelation of the bill with funding, they'll have to overcome the opposition of some interest, including (1) the construction engineers to the toll surcharge, (2) the collar counties to the real estate transfer tax, which just equaluzes it with the one in Chicago, but is characterized as a bail-out of the CTA, (3) the collar counties also objecting to ending the rebate of .25 point of the existing RTA sales tax to them, (4) Doordash and similar  companies objecting to the delivery tax, etc.

Well I was more pondering than seeking a prediction whether the legislature would actually stick to the continued claim of the stated desire for handling the funding question this month now that higher urgency for doing lost a bit of steam. However I do agree with you that doing so this month became less likely in my own mind for the reasons you stated especially the fact that anything getting done in the veto session requiring a supermajority. They'll probably still throw ideas at each other to be on record for trying. But why push as hard under the smaller urgency when they've been given more wiggle room to get it together in the next regular session where as you noted the supermajority disappears?

[Busjack]

On 10/10/2025 at 8:43 PM, jajuan said:

Well I was more pondering than seeking a prediction whether the legislature would actually stick to the continued claim of the stated desire for handling the funding question this month

Tribune article on what may or may not happen.