Public transit agencies begin planning for ‘doomsday’ funding scenario

CHICAGO — Transit agency officials in Chicagoland met this week and formally began the process of planning for next year’s budget, including drawing up plans for major service cuts and potential layoffs.

It’s the latest chapter in an ongoing fight between public transit officials and state lawmakers over funding. Public transportation agencies’ federal COVID-19 relief funds are set to run out in 2026. Despite the funding, ridership on buses and trains still hasn’t reached prepandemic levels.

Now, transit agencies running buses and trains in northern Illinois are facing a $771 million annual combined budget gap — and lawmakers did not pass funding reform legislation by a critical May 31 deadline.

While House Speaker Emanuel “Chris” Welch told Capitol News Illinois last week that lawmakers “have time” to handle the situation, transit officials told a very different story at two meetings this week.

“We have told everyone they needed to act by May 31st or else,” Regional Transportation Authority board member Tom Kotarac said at a board meeting Thursday. “We are in the ‘or else’ phase.”

Officials at the RTA laid out a plan Thursday to handle the monetary uncertainty: create two budgets. In one scenario, budget planners assume the gap is filled, and agencies can move forward with the rough plan approved late last year.

“But we cannot operate on assumptions and pledges of good faith and promises. We just can’t, legally,” RTA government affairs director Rob Nash said.

The RTA board formally asked the agencies it oversees — the Chicago Transit Authority, Metra commuter rail and Pace Suburban Bus — to prepare a budget that assumes no new funding from Springfield before the end of the year. This means a roughly 20% reduction from what the agency expected.

Multiple RTA officials called it the “doomsday” scenario. RTA Chief Financial Officer Kevin Bueso said it would require “catastrophic” cuts. CTA acting President Nora Leerhsen told the CTA board on Wednesday that it was “severe and sobering for all of us and hard to stomach.”

Under both plans, the RTA would institute fare increases in 2026 and administrative “efficiencies” to reduce costs in 2025. The RTA also plans to create an ad hoc task force to plan cuts and manage the year’s unusual budget process.

The austerity measures are not just a piece of political theater. The RTA, under state law, must tell service boards the amount of revenue that will be available to them by Sept. 15 each year and the boards must submit individual budgets based on that revenue. The oversight agency releases preliminary funding amounts for transit planners to use months earlier in July.

Leerhsen said the CTA will continue to operate with its current 2025 service plan, but that over the summer and into the fall, the agency will hold public hearings to “more specifically consider” the consequences of the fiscal cliff.

The September deadline is three weeks before the General Assembly’s fall session begins — the earliest that lawmakers are scheduled to meet.

But even if lawmakers meet in October and pass funding reform, officials said that missing their spring deadline has already guaranteed harmful effects.

“I don’t want to give anyone false hope that there is still any way to avoid some of these negative impacts,” RTA Executive Director Leanne Redden said. “The negative impacts are here, and now we’re going to have to all work together to mitigate the worst of those impacts for as long as possible while the legislature continues to do their work.”

Even if lawmakers pass a new funding mechanism, because of the time it takes to implement new policies, that money might not become available to transit agencies until next summer, either due to far off effective dates on any new laws or the delays of implementing new policies.

Delays in funding would, according to Nash, impose “costs, financial and otherwise, to the system and to riders.”

“We are likely to face a challenge in the first part of 2026 no matter what the General Assembly does at this point,” Nash said during the Thursday RTA board meeting.

What’s next in Springfield

Over the past year, several proposals have been pitched in Springfield to address problems in Chicagoland transit agencies.

Two major proposals came from a coalition of environmentalists and labor unions. On Thursday, representatives of the Illinois Clean Jobs Coalition and Labor Alliance for Public Transportation, two groups that have occasionally disagreed on how to address transit agencies’ woes, released a joint statement.

The groups said the RTA’s Thursday meeting “unveiled the disastrous consequences of Springfield’s inaction” and called for lawmakers to meet this summer to address the problem.

“We cannot wait any longer — the General Assembly needs to avert further disaster and address the transit fiscal cliff with reforms and dedicated revenue, while working with existing agencies to ensure that we are investing in the future of our transit systems. The time to act is now,” the groups said.

While no proposal received close to the support it needed this spring, one bill made it through the Senate in the final hours of lawmakers’ legislative session.

That bill would have instituted several reforms that had been broadly agreed on, although not unanimous. Certain provisions laying out the balance of power on various boards were opposed by local governments.

Its funding mechanism, however, ignited quick controversy. The provision that sparked the greatest opposition would have instituted a $1.50 tax on package deliveries except on orders of groceries and medicine.

That provision drew near-immediate opposition from businesses and interest groups with influential networks of lobbyists. The major tech lobbying group TechNet, along with Uber, Instacart, DoorDash, Chicagoland Chamber of Commerce and several retail industry groups, registered their opposition.

That bill was not considered in the House, and no bill with a similar funding mechanism was proposed in that chamber.

Paula Worthington, an economist and senior lecturer at the University of Chicago, told Capitol News Illinois that imposing a new tax like the delivery fee would be difficult.

“That is a heavy lift, procedurally, legally,” Worthington said. “You can’t just wave a magic wand.”

Worthington pointed to other states’ systems of transit funding that typically include “some elements of shared burden.” Other states have implemented a “commuter transportation mobility” tax on certain businesses, taxes on road users, or expanding taxes on ride sharing companies. Worthington said Illinois could consider those or other taxes during discussions over the summer to identify a solution.

“But those discussions now need to be out in the public,” Worthington said.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.