Gov. Rauner's budget cuts could mean CTA fare hike; let the class war begin

The CTA would face $105 million cut in state funding under Gov. Bruce Rauner’s budget proposal – a 7 percent hit to its overall operating budget.

The Tribune reported this response from a CTA spokesperson: “Although CTA officials said it was too early to talk specifically about service cuts or fare hikes, (Brian) Steele said it is highly unlikely that the CTA would be able to absorb such a funding loss through operational efficiencies and administrative belt-tightening.”

Damen station interior improvedThe CTA would also face the elimination of $28 million it gets from the state for providing free and reduced-fare rides for seniors and riders with disabilities.

In the past I have maintained that the CTA should do what Metra is trying to do – raise fares in small, incremental amounts on a fairly regular basis so riders can plan for the increases.

So I’m not totally opposed to cuts in state funding to the CTA. What I object to is the fact that all the proposed cuts in the budget directly affect low- and middle-class Illinois residents, largely sparing the upper class.

So that’s class warfare.

Apparently, Rauner is opposed to any budget plan that would also raise revenue – such as an income tax surcharge on the rich and imposing a sales tax on services. These two potential revenue sources would spread the “pain” to the rich and upper-class citizens.

What do you think? Spare the CTA entirely of cuts? Reduce the cut somewhat and impose a smallish rate increase? Seek new revenue sources as suggested above?

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  • fb_avatar

    Now kids, you see why voting Tea Party is bad for us? They don't think about revenue at all...

    Truth be good, most of them don't think, period.

  • Hey, Wolf, I don't recall anyone from the Tea Party winning in Illinois.

    Also, "They don't think about revenue at all" doesn't apply to what Rauner has said about expanding the sales tax to cover services. If that becomes the case, RTA gets 1.25% of every haircut in Cook County.

    Amazing about how posters on most blogs and comment broads from both sides of the political spectrum have certain perceptual problems.

  • In reply to jack:

    Jack, I have read a number of reports on his budget speech yesterday and no one says he supported the tax on services. Do you have citation?

  • In reply to Kevin O’Neil:

    Run this Google search.

  • In reply to jack:

    He does support it, but it's not included in his current budget. This is just a starting point so he might include that as part of the negotiation. He really might have to if his pension savings idea is blown up by the Illinois Supreme Court.

  • In reply to chris:

    I had heard on the radio something about this being a negotiating point, but couldn't find a source for that. I had also heard on the radio Madigan embracing it, to which my immediate reaction was "don't throw something into Madigan's wheelhouse." Again, I didn't have a source to link to that.

  • In reply to jack:

    Right, he has not stated that, but Greg Hinz at Crain's and probably others have said they think this will be on the table. If it's not this time around, it will eventually. The Civic Federation concluded the problem can't be fixed with just cuts.

    http://www.chicagobusiness.com/article/20150212/BLOGS02/150219917/cant-fix-illinois-finances-without-tax-hikes-civic-federation-says

  • In reply to chris:

    That article also pointed out that retirement income is not being taxed and that the Civic Federation suggested a tax on it. Apparently someone who is not paying state income tax was the one who said "tax the well off."

  • In reply to jack:

    You are technically correct about the Tea Party. The guys drinking $1,000 wine from crystal, just use the Tea Party as their hammer to protect their interests. Your point about the sales tax increase however supports your opponent. Any economist will tell you that sales tax is a regressive tax, effecting the poor and middle class far more than the rich. It is one of the harshest examples of how the Rauner budget will effect the middle class and not the rich.

  • In reply to JB157:

    Probably depends on what services he intends to tax. I had relied on earlier reports of all services, including hair cuts, but the articles to which the above Google search linked listed business services, such as computer programming, and excluded services such as doctors, dentists, carpenters, and "barber shops, beauty parlors." So, I have to retreat on the latter, and that makes it less regressive. However, I wonder how Rauner is going to get lawyers to pay the proposed service tax.

  • In reply to jack:

    Lawyers wouldn't pay the tax. Their clients would. As all lawyers would be charging the tax, and a potential client can't utilize an out-of-state lawyer, they're basically unaffected.

  • In reply to SpinyNorman:

    1. If it is like the "retailer's occupational tax," which this state has (it is not a sales tax, as pointed out in the Hartney Oil decision), they would pay it. Now whether they can pass it along...
    2. Haven't you heard of contingency fees? The government doesn't get paid if the lawyer doesn't win? And if an hourly rate, does it really go up from $350/hour to $356.73/hour? Is the tax also imposed on pass on charges for postage?

    But the essential issue is that the Bar Associations have clout and are not going to sit still letting the state turn their members into tax collectors. They probably will also claim that only the Illinois Supreme Court has jurisdiction over their members.

    So, good luck on this one.

  • In reply to jack:

    I don't believe he did. Look for in round 2 when the legislature proposes revenue increase to actually address the problem.

  • "boards"

  • It's time to pay the piper. As the Tribune notes today, the legislature has kicked the can down the road long enough.

    A fare increase is not unwarranted. If anyone thinks $3 to ride the train to a job downtown is too much, try driving, and paying the $20 a day parking rate.

  • In reply to SpinyNorman:

    I have the feeling that this is a "squeeze the inefficiencies out of the pig" proposal. If Emanuel is so aggrieved by this budget proposal, maybe he doesn't want to say that any attempt at reforming transit in the RTA area is dead on arrival.

    Besides that, I thought Rauner was Emanuel's friend and gave Emanuel a job.

  • In reply to SpinyNorman:

    And $3 to ride the train downtown means $3 to ride it back home at night. Many people who are spending that $6 a day do so because they can't afford the $20+ for parking and gas. Just because some people can afford $20+ doesn't mean everyone can, and doesn't mean we should ignore that fact.

  • In reply to eeep:

    eeep: Not sure what your point is. $6 would be less than $20 parking. Also, the $3 proposal doesn't take into account the number of people who use passes and pay reduced fares, since all the recent CTA financial reports say that the average fare is $1.12, not the $2.25 cash fare. It costs about $3 to produce that $1.12 ride.

  • Kevin: The income tax surcharge would require an amendment to the Illinois Constitution. That failed last time because the Democrat representative from Highwood, I mean Highland Park and Lake Forest, voted against it. That is, unless Madigan is planning another way to violate the meaning of the state constitution, like most things the legislature tries to pass.

    And, of course, a referendum on a "millionaires' tax" would be blatant class warfare, even though the 99% would vote for it. Then all the entrepreneurs with LLCs and S corporations would move to Florida, just like Jimmy John did, because those small business profits are taxed directly to the owners.

    Is that really going to work? Is that going to encourage revenue growth by creating new jobs and increased economic activity?

    Instead, impose the service tax, and see if the people who go to the hairdressers on 79th St. complain.

  • fb_avatar

    "Then all the entrepreneurs with LLCs and S corporations would move to Florida, just like Jimmy John did, because those small business profits are taxed directly to the owners."

    Ah yes, the Jimmy Johns move to...oh wait, that never happened. They're still headquartered in Campaign.

  • In reply to Joseph Finn:

    But does Jimmy himself live there? Remember I said that the tax was on the income of the owner, not the corporation.

    I'm sure you can dig up the relevant personal state income tax return, Joseph.

  • fb_avatar

    I am 70 year old disabled (walk with cane for 2 blocks and then must stop), retired Chicago public librarian (on a pension whose value is being reduced by Mayor Emmanuel's cuts combined with increases in medical and medication assessments) and I resent having CTA service reduced and made more expensive. THE FIRST STEP SHOULD BE TO TAX THE WELL OFF. Only after that would I accept a modest increase in fares on a regular basis. I would oppose reductions in service in any case -- the CTA in non rush hours is scarce enough as it is. And awkward to use -- when I take buses to get to my podiatrist I must go north to Balbo and Michigan to catch a southbound bus to get to 29th and Michigan. Stephen Metzger

  • In reply to Stephen Metzger:

    Tax the "well off"? You mean they are not paying taxes? Gee, I thought the rich paid state income tax just like every other citizen based on their federal gross income. You learn something new every day.

  • In reply to SpinyNorman:

    Spiny, as I wrote above there's a proposal out there to have millionaires and above pay an additional 3 percent income tax.

  • In reply to Kevin O’Neil:

    And I wrote above that it was unconstitutional. But apparently you believe Mike Madigan on this issue, too.

    I don't necessarily agree with the priorities Rauner set out in the budget, but I do agree that we can't let transit be run in the uneconomical and disorganized way it is in this area.

    And people in the RTA region are paying $140 million in retailers' occupational tax for paratransit for people like Stephen. And I bet people representing Stephen are pressing the lawsuits that ANY pension reform is unconstitutional.

  • In reply to Kevin O’Neil:

    Yes, I understand that, Kevin. I was being flippant. Stephen didn't say anything about the (unconstitutional) proposed 3% tax. He said, "TAX THE WELL OFF", implying that the well off don't pay taxes. Of course they pay taxes.

    In fact, they pay a hell of a lot more in taxes than most. I simply can't get my head around the fact that some people think a flat tax is unfair. I don't see what's unfair about someone making twice as much as you paying twice as much in taxes. They sure the hell don't use twice the public services. If anything, they use less. I can't imagine there are too many multimillionaires on the CTA each morning, other than Rahm.

  • In reply to SpinyNorman:

    Probably a bit more than the less well off on an absolute percentage basis, since Rauner and your average large family on the south side get the same number of personal exemptions at $2125 each. On the other hand, Rauner probably gets a bigger property tax credit.

    But you are right, that Kevin hasn't given any justification for the Madigan surcharge other than class warfare. It just depends what class is taking the offensive. And given Madigan's numerous conflicts of interest, is he figuring out some way that he would not be subject to the surcharge?

  • This decrease in funding wouldn't be so bad if funding for roads were decreased at the same rate.

  • In reply to ibilldavis:

    I've said elsewhere that I didn't understand that tradeoff. Maybe, like Emanuel, he wants the endorsement of the construction trade unions.

  • Abolish the RTA and I think you can find your operating savings right there.

    There is talk that Rauner could give Capital funds as a sweetener to ease operating cuts. This could actually help the CTA even things out if they spend it in a way that saves them operating costs.

    Can they also abolish some of the mandated free rides they impose on the CTA to help ease some of these cuts?

  • In reply to chris:

    The legislature could do that, but that would lose them votes from people like one of our posters.Blago claimed that the free rides were a no cost perk, but they weren't.

    Again, on priorities, I questioned the proposal to cut the reduced fare subsidy, but you bring up the tradeoff that maybe the legislature should still first reduce free and reduced fare rides to those mandated by federal law, which is half fare but only off rush hour.

  • Tax the rich! Tax them more! Tax on what's left after housing, food, clothing etc. Tax financial services! Tax property valued greater than x more than less than x. (Parse it slowly. It makes sense.)

    Soak the rich. Let them move to Indiana or some Caribbean tax haven. Lets face it at this point they are the problem not any part of a solution.

    Since they are responsible for the class war we should not only defend ourselves but go on offense. Nationalize everything that is claimed to be "to big to fail."

  • fb_avatar

    CTA's 2014 operating expenses were roughly $1.3 billion (I rounded that down). CTA's 2014 revenues from ridership were roughly $600 million (and I round that one up). So were does the money come from to cover the $700 million shortfall? TAXES!!!!
    In other words, taxpayers all across the State of Illinois (and from across the US because the federal government also provides funding to the CTA to cover its annual shortfalls) are subsidizing every single ride that every single CTA rider takes - over 53% of every ride! Some of the commenters here talk of fairness, where is the fairness in that? Just keep taxing the wealth creators until they all "move to Indiana or some Caribbean tax haven" and then let's see how the government continues to subsidize the lives of the takers.

  • In reply to TGiF:

    Your point is generally correct, but gets more complicated in that it doesn't account for capital, most of which was subsidized, but with CTA going in hock for bonds, leases, and TIFIA, some is now coming out of fares. Also, Emanuel's CDOT projects (such as the Cermak McCormick Place station) for which CTA is the "user agency" come out of property tax money that theoretically could have gone to something else, although that TIF money was essentially a slush fund under the Daley administration. One has to wonder if city finances are so bad because Daley put most of the city into TIF zones.

  • In reply to TGiF:

    A good chunk of the funds come from a gas tax. I also drive, and I have *absolutely* no problem with taking some of the tax and funding public transportation. Hundreds of thousands of commuters use public transportation each day. If we don't provide a viable means of getting these people to their jobs, what are they going to do? Drive? The highways are at a standstill most of the day as it is. We can't build enough capacity to handle the current traffic, so we'd be facing Carrmageddon if those riders decided to attempt to drive.

  • In reply to SpinyNorman:

    The only "good chunk" would be federal capital grants, and there haven't been too many of them lately.

    Most of the capital money around here comes from "Governor Quinn's Build Illinois."

  • In reply to jack:

    BTW, the Daily Herald points out that if you want to fund Governor Quinn's program, go out to the suburbs where you can pump money into video poker machines at Stella's, Penny's, Betty's, etc., since the proceeds of that go into that fund. Also drink more booze and drop more cash into the various other revenue measures in PA 96-34.

  • Now there is a big change in everything, since Rahm did NOT win the election -- now he is forced into a run-off against Chuy Garcia. (I've already volunteered to work for his campaign) Most of the folks who voted for other candidates were really voting against Rahm, now that they have one candidate to unite behind -- it may be bye-bye time for Rahm. (he looked so hurt, and dejected)

  • Well now things have changed, Rahm did NOT win the election and is forced into a run-off against Chuy Garcia (I have already volunteered to work for his campaign). Most of the folks who voted for other candidates were really voting against Rahm -- and now that they have a single candidate, Rahm may have to say bye-bye......

    He looked so hurt, and dejected!

  • Kevin, please delete one of these, I didn't think the first one went through. Sorry!

  • See, you do know how to hit reply!

  • The political dynamic there did seem a bit unpredictable. For instance, if the polls a couple of weeks out were to be believed, Rahm got none of the undecided vote.

    Apparently Rahm being "tone deaf" was an issue, although apparently with regard to things other than CTA. There was the obvious one about schools, but Jesse White coming out yesterday saying to get rid of the red light cameras and Rahm giving a standard response didn't help.

    Maybe interesting is that the last time around, Rahm said he was campaigning at 95th 10 times, but nothing was said about anything like that this time.

    While there was a picture of Chuy on a CTA platform, nobody has indicated whether he has a CTA platform, including whether he will allow it to be governed in a manner that is consistent with the law, something Rahm has not. Also, where he is going to get a source of money for all the deficits all over the city and "sister agencies."

    Finally, on the CTA front, with Pewar getting an overwhelming victory, does he now have the clout to get something other than the brushoff on the 11 bus?

  • None of them mentioned anything about anything except crime, and schools. A huge City like Chicago is like an Orchestra, more than a piano and a trumpet.

    They have to be made to quantify these things before the Public, like the Belmont Flyover -- which delay problems could be easily solved by a single high-speed switch, and some spiraled precision rail-crossing diamonds: http://www.railway-technical.com/Jap...ut-160-kmh.jpg and without any major construction.....

    I have joined the Garcia Campaign as a volunteer, and will do my best to help get him elected. Thusly, I have created a Yahoo Group Coalition to assist Mayor Chuy Garcia in understanding the Public Transit wants and needs of his diverse Constituents. Anyone can post, and all messages are monitored. Please consider joining: https://groups.yahoo.com/neo/groups/GarciaTransitCoalition/info

  • Back to this one, the Tribune finally says, as we should have known:

    Democratic House Speaker Michael Madigan ... [has] revived his call to amend the Illinois Constitution to tax millionaires an extra 3 percentage points, saying it could generate $1 billion a year for school funding. But even if the idea was supported by lawmakers, the question couldn't appear on the ballot for voters to ratify until 2016 — meaning there would be no affect [sic] on the current budget deficit.

    So, for several reasons, you'll have to go back to the drawing board, since this won't fix the state's FY 2015 and 2016 deficits, not to mention, not provide transit funding.

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