User Fees-A Fair and Predictable Funding Source
The Transportation for Illinois Coalition (TFIC) firmly supports the traditional and effective funding for transportation infrastructure projects and maintenance through user fees paid by those who use the infrastructure. Transportation user fees take several forms including the motor fuel tax, vehicle registration fees, license plate fees, and transit fees. Why a user-fee funding model?
- It distributes the cost of infrastructure to those citizens who use the infrastructure. Not only is this fair, but it also provides for funding that is proportional to the infrastructure's use. More vehicles create more wear and tear, but they should also create more funding.
- Ongoing, reliable revenue streams generated by user fees allow for the kind of long-term planning that is necessary for transportation infrastructure. Most highway projects are multi-year in nature and solid, multi-year funding estimates are essential to ensure planning, engineering, environmental and other pre-construction activities are properly scheduled and their costs are not wasted due to annual funding uncertainties.
- A dedicated revenue stream provides for steady project funding, in addition to long-term planning for large projects. This prevents boom and bust cycles in the construction industry and prevents large job losses and business failures that result when an industry experiences a bust.
User Fee Shortfall
Highway funding at the state level is provided through a flat motor fuel tax of 19 cents a gallon, a $99 annual license plate fee and related vehicle/motorist fees. While predictable, these sources grow at only about 1-2% a year and do not keep up with inflation. As a result, funding for road improvements at both the state and local levels erodes as inflation outstrips the growth in user fee revenues. License plate fees were raised for transportation purposes in 2010, but the motor fuel tax has not been adjusted since 1990.
Local entities receive a percentage of the state motor fuel tax as their only funding for repair, maintenance, and construction of local roads. This means the declining value of the Motor Fuel Tax impacts them substantially. An additional burden was placed on locals when Illinois mandated all roads must be accessible to 80,000 poundtrucks. However, no increase in long-term funding has been offered.
Historically, transit received small amounts of capital funding for maintenance and occasional larger amounts for new projects when a new capital program was approved. However, in recent years no funding has been provided between capital programs. These boom-bust cycles not only affect jobs and businesses, they affect the systems' ability to maintain existing infrastructure. The annual investment needed to maintain existing Northeast Illinois Transit system is $2.5 billion. The annual average Capital Program from 2012-2016 is less than $800 million.
Inflation-driven cost increases further erode the dollars available for maintaining and repairing roads, transit, and rail systems. According to Engineering News Record, construction costs rose by more than 55% between 1998 and 2012.
A Transportation Crisis is Looming
There are serious questions about the future of Illinois' transportation system given the lack of adequate state funding and the impact of inflation on stagnant highway user fees. There has been dwindling opportunity to undertake necessary new projects for relieving congestion or expanding roads for economic development. The funding situation has already led to a decline in the condition of the existing system. Based on the current trajectory, Illinois will have around 5000 miles of roads in a state of bad repair by FY 2018. The number in FY 1998 was around 2000 miles.