Ends and Means: Illinois faces added expenses with new federal transportation dollars

Oct 1, 2005

Charles N. Wheeler III
Credit WUIS/Illinois Issues

"Never look a gift horse in the mouth," cautioned the Roman theologian St. Jerome in a 5th century biblical commentary. Despite such sound advice, Illinois policymakers could hardly be blamed if they were to feel a tad concerned about the massive windfall of federal dollars — an estimated $9.4 billion over five years — the state could receive under the new transportation bill President George W. Bush signed in August.

While state leaders welcomed the federal bonanza for roads, bridges, mass transit and other transportation needs, they're in a position akin to the guy who wins a new car in the church raffle and has to figure out how to come up with the taxes, fees and other expenses that accompany his good fortune.

With the new transportation bill, the "additional expenses" the state faces are the matching amounts required to garner all the available federal dollars.

Transportation officials say they're confident they can find the roughly $1.7 billion needed to match the federal highway funds available over the lifetime of the federal law.

But in addition to a pot of money distributed through federal formulas — which the state generally can use for projects of its choosing — the new law earmarks dollars for a host of specific projects. In some cases, though, the federal money plus the state matching funds may not be enough to cover the full cost of a particular project.

Part of the difficulty is the result of unprecedented use of highway funds for general government spending.

For example, the proposed Prairie Parkway — dear to the heart of U.S. House Speaker Dennis Hastert, a Plano Republican — is down for $207 million. Add in the required state match of $52 million, and the total is only about a quarter of the estimated $1 billion price tag to build the new road between Interstates 80 and 88 in Hastert's district. State transportation officials haven't figured out yet where the additional dollars might be found.

Part of the difficulty is the result of unprecedented use of highway funds for general government spending. Gov. Rod Blagojevich's first two budgets siphoned off roughly $1.5 billion in gasoline taxes and license fees to help prop up general state spending, and an estimated $650 million more will be diverted this fiscal year. While highway user fees always have helped pay for such road-related activities as the state police and the secretary of state's licensing operation, the current administration's three-year average for such diversions is roughly double the amount funneled off in prior years.

Nor do record gasoline prices help the beleaguered road fund. The state's motor fuel tax — the single largest state source of highway and bridge money — is a uniform 19 cents a gallon, regardless of how high the pump price goes. So motorists today are paying the same amount per gallon as they did back in the good old days of 99-cent-a-gallon gas. True, drivers also pay a 5 percent state sales tax on gasoline, which does bring in more revenue as pump prices increase. But those receipts go into a different pot and aren't used for road construction or maintenance.

The challenge is even more daunting to find the roughly $650 million needed to match some $2.6 billion in mass transit funding, including federal dollars allocated by formula and money designated for specific projects. Moreover, the federal law authorizes 17 other new transit projects without setting aside any money to cover their estimated $7 billion cost. Instead, the 17 will have to compete with similar ones from across the nation for roughly $8 billion in discretionary transit money, with their chances of success depending in part on how much matching money the state puts up.

Of course, transit officials also are scrambling to cover operating costs. 

The CTA has warned that its 2006 budget could be more than $100 million in the red, again threatening fare increases, service cuts and layoffs. The latest projection comes on the heels of the legislature's spring decision to provide $54 million to keep service going this year.

In the past, the state sold bonds to get the money needed to match federal grants for mass transit, helping the Regional Transportation Authority, for instance, to expand its commuter rail services and to replace aging equipment. But the state has exhausted its borrowing authority, and, for the past two years, the legislature has refused to approve additional bond sales, which require three-fifths majorities in both chambers.

In May, legislation to borrow another $2.1 billion for highways and bridges fell four votes short in the Senate on a 32-25 roll call, as no Republican voted for the bill. In debate, GOP senators argued that Blagojevich and the Democratic majority failed to provide any new revenue source to retire the debt. Instead, the bonds would have been repaid from existing gasoline taxes and license fees, which Republicans said could drain away funds needed for future projects.

In fact, the governor initially proposed a 75-cent-a-pack increase in the state cigarette tax to pay off borrowing costs for his proposed capital budget, but the idea was quickly snuffed out by Chicago Democratic Senate President Emil Jones, and no alternative surfaced.

In prior years, transportation bond authorizations have been accompanied by new revenue sources; most recently, for example, license plate fees and alcohol taxes were raised in 1999 to underwrite the highway and mass transit projects contained in Illinois FIRST, former Gov. George Ryan's $12 billion public works program.

Besides fretting about the fiscal prudence of the governor's plan, Republicans complained that Blagojevich wouldn't say which road and bridge projects would be funded, raising concerns the new dollars would bankroll election-year spending in Democratic districts.

The Republicans' points are well taken, and their refusal to support new bonding authority mirrors the stance Democrats took a decade ago when they were in the legislative minority. Still, the clear need for better roads, bridges and transit services should be reason enough for the governor and legislative leaders to make sure that no federal transportation dollars slip away for lack of a match. 

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.

Illinois Issues, October 2005