Another band-aid

[Kevin]

Tribune reports that the governor is offering $27 million in grant money from the FTA. Carole Brown says that the CTA will accept if the FTA allows the funds to be used for operations.

Meanwhile, Julie Hamos is quoted in a report by WLS that the house will not vote on the sales tax bill today due to lack of votes. Her hope is that a capital bill can be completed quickly, which in turn would increase support for the transit bill.

I hate the thought of another short-term fix, but at least it's not another loan that will just dig CTA deeper in a hole.

[sw4400]

Tribune reports that the governor is offering $27 million in grant money from the FTA. Carole Brown says that the CTA will accept if the FTA allows the funds to be used for operations.

Meanwhile, Julie Hamos is quoted in a report by WLS that the house will not vote on the sales tax bill today due to lack of votes. Her hope is that a capital bill can be completed quickly, which in turn would increase support for the transit bill.

I hate the thought of another short-term fix, but at least it's not another loan that will just dig CTA deeper in a hole.

Kevin,

I may be wrong here, but I'm almost sure I heard on WBBM-780AM this morning that this 'short-term fix' is just a loan which could result in even worser cuts in the future.

[Kevin]

I may be wrong here, but I'm almost sure I heard on WBBM-780AM this morning that this 'short-term fix' is just a loan which could result in even worser cuts in the future.

According to Carole Brown in an earlier press conference (video in the Trib article), the money is unallocated FTA capital grant funds originally designated for the state and not CTA. This is not capital funding CTA already had or would have received under normal circumstances.

Before accepting the funds, the CTA needs to receive authorization from the FTA to use the capital dollars for operations.

[trainman8119]

Carole Brown can say the CTA will take the money all she wants. The question is will the RTA allow the CTA to take the money, should the FTA say it is okay. And even though this is state money, hasn't anybody learned yet about using capital money for operations ?????

[Busjack]

Some points of maybe questionable relevance:

• While the confrontational part of me looks forward to finally having the crisis, I realize that we shouldn't impose an undue hardship on the riders.
  
• It has taken a lot of mismanagement by both the transit authority boards and the state government to get to this point. As trainman frequently points out, there is nothing currently on the table to force better management practices, as the assumption is that if there is more money, fares don't go up and routes can't be cut (except maybe by Pace). There needs to be something to force better work efficiency, a review of productivity of route segments, an end to route duplication, etc. A shutdown would have some shock effect.
  
• It isn't clear, even with the later description of the source of the funds, which "Peter is being robbed to pay Paul."
  
• My work requires that I finish a contract on time, and if I don't, I not only not get paid for this one, but won't get any more. The constant "give the legislature a couple of months more" mentality really bothers me (although the Gov., Jones, and the two Republicans, but not Madigan, claim that they can wrap this up in another 10 days). All the parties concerned should have known that the deadline for legislative action in the regular session was May 31, 2007, and should have acted accordingly, but the CTA, RTA, and legislature did not. I am also dismayed about all the posturing on taxes, and don't understand why, in light of the governor's objection, Hamos is so set on the sales tax, when the RTA originally offered a smörgÃ¥sbord of "funding sources."
  

I will not be happy until there is real reform, which includes reconstituting the boards (as was done in 1983, and I would only have one board) and removing the voting contingencies in SB572 to exercising coordination powers. I also join the call for a recall amendment to the State Constitution, since the governor and legislature, while talking a good game, can't get anything done in a timely manner. In the meantime, anything else is a bailout, whether for 2 months or maybe lasting 3 years.

[Kevin]

Capital Fax now says the federal government has approved the plan. Official announcement shortly.

Update: Madigan just told the house that the RTA has received approval. He also reports that him and Cross are on a 7-10 day timeline for a gaming-based capital bill.

[Guest]

Theyre now saying Pace will get 6 million dollars.

[Kevin]

Theyre now saying Pace will get 6 million dollars.

That's right. To clarify, $21 million is going to CTA and $6 million to Pace.

[trainman8119]

The ink on the money wasn't even dry on Friday, and on Saturday the talk in the news was how Doomsday 2 was avoided...and now for Doomsday 3. We get to hear this on and on for the next 7 weeks. You know, enough already. I'd put a few fare tokens out there that this won't be decided in the next 7-10 days as everyone is balleyhoed into believing. And seeing how this money came from highway grants, if I were a downstate Republican, I'd be livid right now. Blago must have promised the world to Tom Cross to even consider this latest salvation. So the way I see it, the CTA and Pace basically stole $27 million from the supposed barren state road fund without ever having to pay it back. This, my friends, is just simply wrong. I will again state that something bad has to happen before anything good can come out of this (ie November 4 doomsday would not necessarily have been a bad thing). So the CTA got some $18-19 million...now they can probably pay the radio stations and newspapers about $5 million (or more) for the silly ads run in media and print over the past 2 weeks about how poor they are. No accountability. Simply appalling !!!!!!!!!

[Busjack]

As part of the "Government Inaction" feature on Chicago Tonight yesterday, Carol Marin had a panel (including Lawrence Msall) about the costs of various forms of legislative inaction, including the RTA. The panelists seemed to concur with trainman that the hidden cost was what project was deprived of the $27 million in capital funds. They noted other costs, including the $3 million RTA lobbying program, $2 million CTA planning for the November 4 doomsday (which they said was probably lost because the January 2008 doomsday plan would be different), $11 million per month in pension contributions that supposedly could be avoided by enacting the bond issue and real estate transfer tax, etc. Also put on the table was that without a state capital plan, billions in federal matching funds were at risk.

For any of you that care, the WTTW site (link above) says Huberman's on tonight to discuss the transit drama. If experience is any guide, Brackett will ask the conventional wisdom questions.

[trainman8119]

A thought crossed my mind on my way home from work on Monday night. With all the talk of bailouts and tax plans and ideas for long term funding, a light bulb went off that I have not heard any discussion.

Should the plan for long term funding be solved with casino revenue, always a risky proposition (just ask Aurora, who put their stock in their boats and saw many projects go by the wayside when revenues dropped $10+ million when the Elgin boat opened), when would money from these ventures be available ???? I mean, if they are banking on a new facility in Chicago for the bulk of the money, this would not be active, I would think, for at least 2 years. It would take time to finally approve, built, find management, location, etc. What and/or where is the money for short term operations going to come from. If they can't operate on a short leash for short term now, what is the plan while things are being put in place. My bet, is that there is not one. Which would mean, that, if you hear of gambling money being used for roads, schools (remember the lottery ??) and transit, expect there to be much short term bellyaching, complete with fare hikes and service cuts anyway. IMO, this means two things. Either, the money crunch is not as severe as is portrayed (since we have had 2 quick fixes anyway) and there is money there, just not properly allocated/used...or November 4 should have just been implemented anyway, way back in April 2005 !!!!!!!

Any ideas?????????????

[Busjack]

There is undoubtedly a combination of:

• license fees in advance, although Daley reportedly does not want to pay the $800 million for a city casino license
  
• bonding out prospective revenue.
  

It is also not clear where the Gov gets all of his bail-out money, or where the $500 million he vetoed (and supposedly allocated to health care, although that would seem to require the legislature approving an amendatory veto) went.

What is typical of the way this state does business is back in the Illinois First days, Jesse White said don't blame him for the $30 increase in license plate fees; the legislature imposed that to pay for the Illinois First bonds (now exhausted). When asked what paid for the new license plates, it turned out to be increases on vehicle title fees. Similarly, the Tollway didn't instantly get the funds for the current construction spree upon doubling tolls, but that supported a new round of bonds.

[trainman8119]

...but that supported a new round of bonds.

I understand the concept...bonds. But that said, it doesn't happen overnight, does it ?? If the situation is so dire, as is played out by our geniuses in charge, it would, I think, still create a short term problem. Now, I guess, if there is a solution in place, that kicks in the labor agreements, which, according to the WTTW show would save $11 million a month. But that is savings, not quick cash. So I contend, if the problem is that dire (which I now wonder just how dire it really is), there is still the potential for some short term dark days ahead. A "solution", once again, I contend, will still leave Ron, Carole, TJ and Phil standing on the river bridges downtown with their hands out once again begging for cash !!! The "solution" is nothing but a false sense of security.

[Busjack]

I understand the concept...bonds. But that said, it doesn't happen overnight, does it ??

Carole Brown works for Lehman Brothers. She is the one that claims to have figured out the pension bond deal. The real question is whether Lehman Brothers is the one ready to step up and profit from it? Inquiring minds want to know.

Of course, saving the $11 million a month (or $121 million a year) is the same as not spending it and having it to meet other obligations. The "quick cash" might be from the $500 million in vetoed appropriations or wherever the Gov gets his scratch, mentioned above.

As to whether the solution is a "sustainable funding source," the question is whether the final deal addresses the problem that CTA expenses go up 6% a year, while sales tax revenues go up 2%, according to the Auditor General. If it isn't, the palms will be out again.

[trainman8119]

I heard an interesting off the cuff statement this morning while watching the NBC5 news. They were discussing the impending doom, now set for January 20, should there be no new money. What was quietly mumbled during the report (by the reporter) was that should the money come, there would likely still be fare increases and service cuts. So as I predicted, no matter how much they get, it will never be enough. So, enough of the rhetoric and make the stinking cuts already and spare us all the nonsense...PLEASE !!!!!

[Busjack]

There are other reports that fare increases are on the table, including Sen. Rep. leader Frank Watson saying they are part of the solution, and Reilly apparently not contesting that. The counterweights to the immediate service cuts are (1) a solution apparently won't call for pulling 1/3 of the buses off the street (as the 2008 CTA budget proposes), and (2) the Gov. apparently realizes (see this Tribune editorial on the poll numbers for a recall and the Gov's job approval ratings) that he has no political future if doomsday actually arrives. Of course, as Carol Marin pointed out, one four letter word may enter into the impasse: "Lisa" (and I don't mean Simpson).

[wordguy]

A thought crossed my mind on my way home from work on Monday night. With all the talk of bailouts and tax plans and ideas for long term funding, a light bulb went off that I have not heard any discussion.

Should the plan for long term funding be solved with casino revenue, always a risky proposition (just ask Aurora, who put their stock in their boats and saw many projects go by the wayside when revenues dropped $10+ million when the Elgin boat opened), when would money from these ventures be available ???? I mean, if they are banking on a new facility in Chicago for the bulk of the money, this would not be active, I would think, for at least 2 years. It would take time to finally approve, built, find management, location, etc. What and/or where is the money for short term operations going to come from. If they can't operate on a short leash for short term now, what is the plan while things are being put in place. My bet, is that there is not one. Which would mean, that, if you hear of gambling money being used for roads, schools (remember the lottery ??) and transit, expect there to be much short term bellyaching, complete with fare hikes and service cuts anyway. IMO, this means two things. Either, the money crunch is not as severe as is portrayed (since we have had 2 quick fixes anyway) and there is money there, just not properly allocated/used...or November 4 should have just been implemented anyway, way back in April 2005 !!!!!!!

Any ideas?????????????

===Sorry about my klutziness (re: the previous blank post). I'm still not sure how to navigate the website; couldn't find any instructions).

Anyway, I agree with every point Trainman made regarding the risk of dependence on gambling revenue. But unless I'm wrong, the casinos are being proposed as a means of financing the package of programs that the downstate Republican legislators want, not for the RTA. While everything's being hashed out, it's these legislators that have been holding SB572 hostage.

As has been discussed in previous posts, the regional sales tax proposal being promoted by Rep. Hamos may not be an ideal solution either, but at least it would provide an immediate source of funding. I've suggested to both Ms. Hamos and my state rep, John Fritchey, that maybe the sales tax could be approved with some sort of sunset provision. (Admittedly, neither was real stoked on the idea.)

In the meantime, I have two other ideas, both long-term options:

1) Rep. Fritchey did tell me that he's planning to introduce a proposal for a new constitutional convention via referendum. If approved, it might be a good opportunity to craft an amendment enabling a progressive state income tax. (Apparently the present constitution doesn't allow for one). It seems to me that such a revised tax structure could be a fairer way to increase state revenue overall.

2) Lobby our congresspersons and senators to propose legislation that would restore federal operating subsidies for mass transit. Considering the concern over fuel prices, as well as future availability of oil, I think this would be the perfect time to start.

Any feedback, positive or negative, is welcome.

-Dan

[Busjack]

The uncertainty on whether the casino revenue would be used for transit is whether either the House or Gov. will blink on the sales tax issue. I can understand the Gov.'s position (even if it may be not helpful), but not why the House has dug in on the sales tax. I also don't agree with a lot of extraneous matter in the existing bill, such as a .25% collar county sales tax that presumably would be used for roads, on top of the .25% increase in the sales tax.

As far as operating, the feds got out of subsidizing that when Congressmen were asking in the late 80s why Boston should have a 25 cent fare (maybe 40 cents in NYC), while maybe 40 other states were getting nothing. The view was that if the locals want low fares, they can pay for them. While I can see the point that subsidizing transit would reduce dependence on foreign oil, it seems like the current philosophy is not the one of the 70s of controlling prices, allowing gas lines, and subsidizing transit, but let the price go up and the market deal with it. There was also then the mindset that now underlies the debate over the recovery ratio: why raise fares instead of subsidies, since local subsidies supposedly got a 50% fed match, until the funds ran out.

As far as the constitutional convention, the delegates better do something about the recall and remedies to prevent corruption on all levels of government in this state before making it easier to increase the income tax. At one time I lived in upstate New York, where they (at that time) had a progressive income tax going up to 7.75%. With inflation, pretty soon everyone was at the 7.75% marginal bracket and King Mario (Cuomo) resisted every effort to reduce it. While there was not the rampant corruption you see in Illinois, most of the money went to welfare, and the idea of street maintenance there was oil and gravel on top of the pavement. In essence, all forms of taxes (other than the sales tax) were twice as high, but the services worse (unless you were on Medicaid). But just think what would happen if (Count) Stroger had his hands on that type of money.

Not that I think that you are off base, but there is always another side to the story.

[wordguy]

The uncertainty on whether the casino revenue would be used for transit is whether either the House or Gov. will blink on the sales tax issue. I can understand the Gov.'s position (even if it may be not helpful), but not why the House has dug in on the sales tax. I also don't agree with a lot of extraneous matter in the existing bill, such as a .25% collar county sales tax that presumably would be used for roads, on top of the .25% increase in the sales tax.

As far as operating, the feds got out of subsidizing that when Congressmen were asking in the late 80s why Boston should have a 25 cent fare (maybe 40 cents in NYC), while maybe 40 other states were getting nothing. The view was that if the locals want low fares, they can pay for them. While I can see the point that subsidizing transit would reduce dependence on foreign oil, it seems like the current philosophy is not the one of the 70s of controlling prices, allowing gas lines, and subsidizing transit, but let the price go up and the market deal with it. There was also then the mindset that now underlies the debate over the recovery ratio: why raise fares instead of subsidies, since local subsidies supposedly got a 50% fed match, until the funds ran out.

As far as the constitutional convention, the delegates better do something about the recall and remedies to prevent corruption on all levels of government in this state before making it easier to increase the income tax. At one time I lived in upstate New York, where they (at that time) had a progressive income tax going up to 7.75%. With inflation, pretty soon everyone was at the 7.75% marginal bracket and King Mario (Cuomo) resisted every effort to reduce it. While there was not the rampant corruption you see in Illinois, most of the money went to welfare, and the idea of street maintenance there was oil and gravel on top of the pavement. In essence, all forms of taxes (other than the sales tax) were twice as high, but the services worse (unless you were on Medicaid). But just think what would happen if (Count) Stroger had his hands on that type of money.

Not that I think that you are off base, but there is always another side to the story.

===I believe that the reason the House is focused on the sales tax is because it would seem to be the only realistic means of providing immediate funding for transit. However, agreed that the extraneous items are being proposed such as the "tax on top of the tax" for road projects are curious. IMO, expansion of casino gambling should be a non-starter. Aside from the fact that it would takes years to implement, it could potentially create more problems than it would solve. (e.g., the danger of more recreatiopnal gamblers becoming addicted. Also, I'm not at all confident that the Daley administration could operate a corruption-free gambling center.). Last of all, it's a de facto regressive tax (though admittedly, the sales tax is too).

Agreed that transit subsidies would primarily benefit the most urban states. But let's look at the big picture. Overall, Illinois taxpayers contibute a great deal more to federal coffers than the state receives in federal benefits. Consider the nation's arms merchants, for example. We all pay (through the nose) for military weapons that can obliterate the planet many times over. What proportion of those corporations are located in Illinois? (I'm not suggesting that they should be). I don't believe that anyone is suggesting massive fare cuts a la late'80s Boston ('though it would be nice). Perhaps with a changing of the guard in the White House and a stronger Democratic presence in Congress, priorities will change.

Regarding agenda priorities for a constitutional convention, I couldn't agree more! A recall option is SORELY needed. (Lt. Gov. Pat Quinn has already suggested this as a referendum independent of con-con. Sidebar: If Pat Quinn was to ever run for governor, he'd have my unqualified support).

Finally, in regard to an Illinois progressive income tax, I'm not suggesting New York State as a role model. Agreed that bracket creep is a major concern, but isn't it true that tax rates can be indexed to inflation?

As far as the other related issues mentioned, I think there's a strong argument there in favor of the power of recall.

Best to all,

Dan

[Guest]

Why does that jerk that calls himself a State Senator Ricky Hendon as usual throws the race issue into this?. He pulls that same game always. This transit crisis is not about "Casinos being built to fund transit and fill the pockets of white people!" as he says. What a jerk! Rickey Hendon makes me sick! To him its always about race.

[Busjack]

5750: I agree in this case. I suppose that he rather that his people walk. My observations of the summit farce as portrayed on TV are (1) if the city bottled water tax were in effect, Mayor Daley would have cleaned up, and (2) the legislators were giving us b.s. if they said that they were going to resolve the transit issue within 7 to 10 days of November 1. One would have thought that Mayor Daley was there to crack heads, but apparently not.

Also, a quick response to Dan: An income tax could be indexed, but it is too easy for the legislatures not to. While the federal income tax is indexed, the AMT is not, and you now have both sides of the aisle in Congress crying that they can't replace the revenue.

[Guest]

5750: I agree in this case. I suppose that he rather that his people walk. My observations of the summit farce as portrayed on TV are (1) if the city bottled water tax were in effect, Mayor Daley would have cleaned up, and (2) the legislators were giving us b.s. if they said that they were going to resolve the transit issue within 7 to 10 days of November 1. One would have thought that Mayor Daley was there to crack heads, but apparently not.

Also, a quick response to Dan: An income tax could be indexed, but it is too easy for the legislatures not to. While the federal income tax is indexed, the AMT is not, and you now have both sides of the aisle in Congress crying that they can't replace the revenue.

Its unbelieveable how dirty Hendon is. Its always racism according to him. Everytime you see him on the news making some ridiculous statement he always has to make it a race issue. He loves to get people riled up with his racial comments. Its upsetting how an elected official has to use the term "racism" all the time for his personal goals. He himself is making himself look like a racist.

[Busjack]

To move on, I was surprised that on Fox Chicago's coverage of the summit, Emil Jones said "We didn't create this problem. We are trying to help." When asked who did, he said "CTA Management, of course."