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Capital bill roundup

Wednesday, May 22, 2019

* Kristen McQueary

But even fiscally conservative Republicans tend to get behind big capital bills. Building roads and bridges and schools is what government is supposed to do. A well-run government can essentially competitively bid a bond sale, get a low interest rate and pay back the bonds with a dedicated revenue stream, like sales and income taxes, backed by the full faith and credit of the state, over 30 years.

But nothing is ever typical in Illinois. Pritzker wants to increase the state’s take at the pump from 19 cents a gallon to 38 cents a gallon. That’s in addition to municipal taxes drivers already pay at the pump — Chicago and Cook County both charge extra — a motor fuel tax, an environmental impact tax and a regional transportation tax. This is why Illinois, and particularly Chicago, always outpaces other Midwestern states on fuel prices. It isn’t the price of the gasoline itself. It’s all the taxes folded into the pump price.

I wasn’t aware that basic sales or income taxes, which normally flow to GRF, are used as “dedicated” revenue streams for capital bills. You can most certainly bond using GRF money. It usually costs more without a dedicated stream, which would be separate from what normally flows into the general fund.

* Anyway, a number of states have raised their gas taxes in recent years. The US Chamber took a look at nine Republican-led state legislatures which hiked their gas taxes since 2016 (Alabama, Arkansas, Indiana, Ohio, Oklahoma, South Carolina, Tennessee, Utah and West Virginia). In six of those states, Republicans have since faced the voters and were overwhelmingly reelected

Apples and oranges probably, but still.

* Meanwhile, everybody wants more

An infusion of $2.8 billion to Chicago-area mass transit agencies — to be doled out over six years under a capital plan proposed by Gov. J.B. Pritzker — is great, but not enough, a top transit official said this week.

The CTA, Pace and Metra need that much on a yearly basis, Kirk Dillard, head of the Regional Transportation Authority, which oversees the three transit agencies, said Monday.

The way the money is being generated — by selling state bonds— will not provide the stable footing the three transit agencies need for longterm planning and investment, RTA officials quickly noted as they perused an outline of Pritzker’s plan that was released over the weekend.

Standing in contrast to this are a litany of proposed new, vehicle-related taxes that will help produce $23 billion for roads and bridge projects and presumably keep bearing fruit beyond the scope of the six-year capital plan.

”If we make it more expensive to drive and we don’t fund transit at the same time, I think it’s unfair to the working people of the state of Illinois,” Dillard said during a speech at the City Club of Chicago. “You’ve got to give them freedom of movement.”

Metra is sitting on a billion dollars in bonding authority.

* Hands are out everywhere

From outdoors enthusiasts to school superintendents, more Illinoisans are hopeful that Gov. J.B. Pritzker will sign a capital-spending bill, soon.

Locally, folks with some capital ideas include the La Salle elementary school board and a group of 30 northern Illinois residents who took a bus trip last week to Springfield to push for financial and perhaps staffing support for the Hennepin Canal.
One school’s need

Tuesday night, La Salle schools superintendent Brian DeBernardi said he is monitoring things to see if the district can get some aid for an impending, half-million-dollar asbestos-abatement and locker room remodeling and renovation project at Lincoln Jr. High.

“I hope they have matching grants for shovel-ready projects,” he told the school board members, noting that this project is one of them. He said he will notify all the people he needs to contact for the project, which the board is scheduled to vote on in June.

* More

Lawmakers and advocates praised Democratic Gov. J.B. Pritzker for allocating funds for affordable housing in his proposed capital plan, but said Tuesday his proposal is not nearly enough to properly address the infrastructure need that exists in Illinois.

In a preliminary plan called “Rebuild Illinois” and shared with legislators Friday, the governor allocated $175 million to build and improve cost-effective housing options primarily for seniors, those who are homeless, and people with disabilities.

But Democratic Rep. Delia Ramirez and Sen. Mattie Hunter, both from Chicago, were joined by community leaders from across the state in calling for the General Assembly to allocate nearly six times that amount.

Allison Clements, executive director of the Illinois Housing Council, said increasing the level of funding available for permanent, supportive housing to $1 billion would provide a “golden opportunity.”

- Posted by Rich Miller        

  1. - Joe Procol Haram - Wednesday, May 22, 19 @ 1:53 pm:

    “fiscally conservative Republicans” uh where are they?
    The myth continues.

  2. - Give Me A Break - Wednesday, May 22, 19 @ 1:55 pm:

    As some on this blog have already said, if you are going to stick your neck out and vote to fund capital, make it a big enough plan that we don’t have to come back in two years and ask for more.

    Get everyone in on the plan, including Human Service non-profit providers.

  3. - Someone - Wednesday, May 22, 19 @ 1:55 pm:

    “Metra is sitting on a billion dollars in bonding authority.” Put your hand back in your pocket.

  4. - Ok - Wednesday, May 22, 19 @ 1:58 pm:

    Pump all your money into a few road projects to appease labor, and there are going to be a lot of people forced to fight over an ever-shrinking pot of “other.”

    I don’t see anyone clamoring for $23 billion for roads, so if you are Gov Office or legislative leaders, you are going to have to think real hard about how many bullets you can take for whom.

  5. - Simple Simon - Wednesday, May 22, 19 @ 2:01 pm:

    Why is it that my city has bonded over $200M for recent school improvements, leading me to pay nearly 3% of the assessed value of my house annually in property taxes, yet other districts think they should get state help?

    Maybe when everyone is paying a similar amount, including farms.

  6. - wordslinger - Wednesday, May 22, 19 @ 2:12 pm:

    Perhaps Katrina can explain the cuts/increased revenues she’s suggesting to replace the GRF funds dedicated to capital plan bonds.

    General Obligation doesn’t mean “free money.” You have to pay it back.

  7. - Father Ted - Wednesday, May 22, 19 @ 2:13 pm:

    “Metra is sitting on a billion dollars in bonding authority.”

    According to the RTA, Metra has nearly $12 billion in unfunded capital needs over the next 10 years. The billion simply isn’t enough.

    Also, I’m guessing Metra doesn’t want to have to pay the debt service on that borrowing if:
    a) it can get the state to cover these capital needs, and
    b) it means not having to continue to repeatedly raise fares and deal with those ramifications.

  8. - Rich Miller - Wednesday, May 22, 19 @ 2:17 pm:

    ===The billion simply isn’t enough.===

    No, but the $40+ billion in the capital bill isn’t enough, either.

  9. - Someone - Wednesday, May 22, 19 @ 2:21 pm:

    No one likes to pay debt service, Ted

  10. - Trainiac - Wednesday, May 22, 19 @ 4:06 pm:

    Good point. But I’m not sure how responsible it would be for Metra to borrow with no certainty of funding to pay off the debt service incurred.

  11. - Wylie Coyote - Wednesday, May 22, 19 @ 4:55 pm:

    I see mass transit clamoring for more money but I sure don’t see any mention of a fare increase. Sounds a little selfish to me if we’re all supposed to share in the pain…..

  12. - wordslinger - Wednesday, May 22, 19 @ 7:11 pm:

    –A well-run government can essentially competitively bid a bond sale, get a low interest rate and pay back the bonds with a dedicated revenue stream, like sales and income taxes, backed by the full faith and credit of the state, over 30 years.–

    A “dedicated revenue stream” denotes a revenue bond. The bonds are backed solely by the revenue source. If those are short to pay the bonds, caveat emptor.

    “Full, faith and credit” denotes a general obligation bond. The bonds are backed by every state revenue source, and debt service gets first crack at every one of them.

    They’re not the same thing.

    You can issue G.O. bonds and claim that they can be paid back solely by a specific revenue stream, but that has no legal standing. Full faith and credit means the whole schmear.

    So “full faith and credit” capital plan bonds from GRF would have first claim on every GRF dollar.

  13. - me again - Wednesday, May 22, 19 @ 7:43 pm:

    Wordslinger, transportation agencies issue revenue bonds. For Metra, revenue bonds would be backed by fares, just as CTA and Tollway bonds are. For airports, revenue bonds are backed by passenger facility charges.

Sorry, comments for this post are now closed.

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