Roads to Nowhere: Illinois Hasn't Cashed in on Federal Clout to Collect its Highway Funds

Nov 1, 2008

The signing of the federal government’s 2005 transportation bill was practically a showcase of Illinois’ political clout on Capitol Hill. 

President George W. Bush chose a Caterpillar factory near Aurora to sign the $286 billion legislative measure that dictates how the federal government would spend transportation money from 2005 through 2009. Greeting the president in the Chicago suburbs that August morning was nearly every major Illinois politician, from then-Speaker of the U.S. House Dennis Hastert to Gov. Rod Blagojevich to Chicago Mayor Richard Daley to U.S. Sens. Dick Durbin and Barack Obama.

Illinois’ congressional delegation secured the largest chunk of guaranteed spending that the state had ever received, some $1.5 billion. That’s nearly a third more than the state’s normal haul, according to the delegation.

The package is larded with goodies. For Hastert’s area, there’s the Prairie Pathway to connect Interstates 80 and 88 in the far southwest suburbs of Chicago. In the St. Louis area, the law would pay to build a new bridge between Illinois and Missouri over the Mississippi River. There are street improvements outside Chicago public housing projects, a transportation museum for Navy Pier and bike paths, bridges and wider roads throughout the state. 

But what goes well in Washington, D.C., doesn’t necessarily go well in Springfield. 

It’s been three years since Bush signed the federal law, but Illinois still hasn’t passed a public works package to get the projects going. And state government has been operating without any type of major capital program since the end of the five-year Illinois First program that passed in 1999.

“We believe the federal government has provided Illinois with a strong start at funding infrastructure improvements, and we believe it is time for the state to act and not be left on the sidelines while another construction season is about to begin,” urged nearly the entire Illinois congressional delegation in a letter to state leaders back in January. Despite the prodding, the construction season came and went, and Illinois is still no closer to a deal.

As of late September, only 5 percent of the transportation funds earmarked for Illinois in the 2005 law had been spent.

U.S. Rep. John Shimkus, a Republican from Collinsville, says the congressional delegation’s bipartisan approach should be a model for Illinois lawmakers. 

“There are partisan differences [in the delegation], but there are a lot of things that are good for Illinois where there is no separation between the two [parties], and this was one of them. So you think you’d be able to do the same thing in Springfield. I think it’s an indictment on Democratic leadership in the state.”

The money at issue is above and beyond the normal highway funding the state receives from the federal government. Under the usual scheme, the federal government puts up $4 for every $1 a state pays, and a formula determines how much each state gets. Even without a capital bill, the Illinois Department of Transportation has largely been able to provide its share of the normal funding.

But earmarks are different. They’re special pet projects championed by individual members of Congress, and the money set aside doesn’t necessarily cover the entire cost of the project. The upside is the state can get money it wouldn’t otherwise receive from the federal government. The downside is the state may have to pay more than the normal one-fifth share to get a project going.

Theoretically, there’s no time limit for how long the state has to spend the federal dollars Congress set aside. But every year of inaction costs the state because the dollars won’t stretch as far. Construction costs are up dramatically. Rising oil prices push up the cost of petroleum-based materials, such as asphalt. Transporting materials is getting more expensive, too. And increased demand from abroad, especially China, means the price of iron is increasing as well. The American Association of State Highway and Transportation Officers reported in June that the price of building roads has shot up at least 50 percent in the last five years.

From a political perspective, the inaction has a price, too. The Illinois representatives who fought for a bigger take of the transportation money on Capitol Hill will have a harder time getting a piece of the pie next time if they have nothing to show for their previous efforts. 

Other states that put up their share of the construction costs for the federal projects will be able to argue that they will use the federal money more effectively. After the collapse of a major bridge over the Mississippi River in downtown Minneapolis last year, many states want to increase infrastructure spending to improve safety and boost their local economies. And congressional negotiations over transportation funds are coming soon; the next transportation bill is supposed to be passed next year.

U.S. Rep. Jerry Costello, a Democrat from Belleville and a 20-year veteran of the House who sits on the committee that crafts the transportation bill, says his colleagues on the panel are already asking questions about why Illinois hasn’t spent its allotment. That’s especially true because the money set aside for the Illinois-Missouri bridge was the most expensive earmark in the country. 

“If we go into 2009 without a capital bill, it’s going to be very difficult for me and others from our state to make the case that Illinois needs to receive a substantial amount of money in the next highway bill.”

In a worst-case scenario, Congress could even take back unspent funds now designated for Illinois. The federal government’s chief account for paying for road projects — funded with proceeds of the federal gas tax — nearly ran dry this fall; Congress had to divert $8 billion to keep it afloat until next spring. While transportation money is scarce, it could be tempting for lawmakers to take back money that’s not being used. Indeed, they have reclaimed unspent transportation money in the past.

Few people in Springfield doubt that Illinois needs a new public works program. But the political and financial obstacles standing in the way are significant.

The running feud between Blagojevich and fellow Democrat House Speaker Michael Madigan has affected nearly every major policy initiative in the Capitol, and a capital bill is no exception.

Madigan’s caucus is still smarting from Blagojevich’s handling of last year’s budget. The original agreement among legislative leaders included pet projects for lawmakers in each caucus. When the bill reached the governor’s desk, he vetoed out funding for many of the so-called “pork projects,” but he especially targeted money included by Madigan’s caucus members.

But mistrust toward the governor is pervasive. Lawmakers remember how he put on hold construction projects and grants slated for their communities under Illinois First, the signature public works project crafted by Republican Gov. George Ryan in his first year as governor.

Legislators don’t want to raise money for construction projects if there’s no guarantee projects in their districts will be funded. 

The question of how to pay for a major public works program presents problems, as well.

Clayton Harris III, executive director of the Illinois Works Coalition and Blagojevich’s point person on forging the capital bill, says that in dozens of meetings with residents across the state, he found very little support for raising taxes to pay for construction projects.

Of course, Blagojevich has steadfastly opposed increasing the state’s income or sales taxes. But for many of the state’s residents, taxes are going up anyway. Last winter, state lawmakers approved an extra quarter-cent sales tax in the Chicago region to fund public transportation there, and Cook County — home to about 5.3 million of the state’s 12.8 million residents — hiked its sales tax by a full percentage point in March.

So the governor revived two ideas that have fared poorly at the Statehouse before: leasing the state lottery and expanding gambling. 

Blagojevich first suggested a $34 billion package that relied on expanding gambling in the state, an idea that has been a nonstarter in the House. Madigan responded by putting forward a plan to ensure the state wouldn’t lose out on any federal funding, but the size of the measure — just $1.8 billion — paled in comparison with Blagojevich’s original proposal. 

Since then, the sides have inched closer to an agreement but still remain miles apart. 

The governor reduced the size of his wish list to $25 billion. The House, in turn, approved a measure to allow Blagojevich to lease 80 percent of the Illinois Lottery in exchange for up to $10 billion in cash up front. The governor has said he would devote the proceeds to capital projects and to education, where revenue from the lottery is currently directed.

But the economic crisis, particularly on Wall Street, could hamper the state’s plans to privatize part of the lottery. Rep. Gary Hannig, the House Democrats’ top budget negotiator, notes that the credit crisis — where banks are unwilling to lend money to even the creditworthiest borrowers because they need the cash on hand themselves — could jeopardize the leasing plan. 

“You have to wonder: Who would have $10 billion and would be willing to risk it?” asks Hannig. 

Legislation to finance a new capital plan has faced economic obstacles
during most of Blagojevich’s tenure. 

While Blagojevich has been in office, the state has endured two major downswings in the national economy, leaving limited resources for the state to spend on new construction. The governor assumed office in 2003, when Illinois was still reeling from the economic aftereffects of the September 2001 terrorist attacks, and state government suffered two years of decreasing revenue for the first time since World War II.

Still, proponents of the capital plan say the same bad economic news that lawmakers are fretting about is exactly the reason why the state must pass a “jobs bill.” The Blagojevich administration estimated its original $34 billion could create as many as 700,000 jobs (labor allies say the new, scaled-back version could still deliver 535,000 jobs). 

The proposal would mean more school construction, more investment in public transportation (which has seen a surge in ridership as gasoline prices climb), and more public dollars promoting state-of-the-art technology.

In fact, President Bush touted the potential economic benefits of the transportation bill during the signing ceremony in the Chicago suburbs.

“This bill is going to help modernize the highway system and improve 
quality of life for a lot of people. And these projects will require workers. Highways just don’t happen; people have got to show up and do the work to refit a highway or build a bridge. And they need new equipment to do so. So the bill I’m signing is going to help give hundreds of thousands of Americans good-paying jobs,” he said at the time.

Illinois business and labor groups have tried to reinforce that point as they’ve championed the economic benefits of a new capital plan.

Jason Keller, legislative director for the Illinois AFL-CIO, says the union coalition is most interested in the jobs a major new public works program would provide. The group has supported just about every major capital bill floated in the General Assembly, he says. Union members have turned out to support every one, he adds.

“From our point of view, the funding mechanism isn’t as important as the spending,” Keller says. 

The building program is a “top priority,” especially for building and trade unions, he says. “Unfortunately, there’s only so many times you can bring them [union members] down to Springfield to hold a rally.”

Still, advocates hope for a break in the impasse during the General 
Assembly’s November veto session, following the elections.

Costello, the Democratic congressman, says both Madigan and Blagojevich could help spur passage of the capital bill. The governor could allay concerns about how the money would be spent by agreeing to spell out all the projects in the bill. And the House speaker could push his members to support funding for the new program, Costello suggests.

Harris, from the Illinois Works Coalition, says time is running out on lawmakers if they want to act in time for the 2009 construction season. 

“Here we are in October, and we’re not putting shovel to dirt because none of the projects are funded. In all honesty, if we don’t get something relatively soon, we can lose next year, too,” he says. That’s especially true for bridge projects, which require more time to plan than highway building projects. 

And indeed, there has been some progress, with the House’s approval of a lottery lease and the governor’s agreement to scale back his building plans. Blagojevich and Madigan even embraced at the August Democratic National Convention in Denver, after U.S. Rep. Jesse Jackson Jr., a Democrat from Chicago, called on the party to unite to honor Obama’s message for unity as he campaigns for president.

Harris says he is encouraged by the progress. “I believe everyone’s heart is in the same place. Everyone has the same goal. People are taking different roads to get to that final pact, and if we could just get everyone on the same road, it’ll be good.” 

Daniel C. Vock is reporter for Stateline.org, which is based in Washington, D.C. 

Illinois Issues, November 2008