The Regional Transportation Authority of Illinois’ fiscal picture has brightened between infusions of federal cash and higher sales tax collections, easing the grim toll on ridership levels exacted by the COVID-19 pandemic.
The RTA board approved amendments to the 2020 and 2021 budgets Thursday based on sales tax collections that didn’t fall as sharply as originally expected last year and
CARES Act funding signed last March provided about $1.4 billion allowing the service boards under the RTA’s oversight to avoid
The RTA is still awaiting additional apportionment details from the Federal Transit Administration on distribution of the roughly $30.5 billion of transit relief in the $1.9 trillion American Rescue Plan signed by President Biden March 11 but the authority expects to receive at least $1.5 billion. The aid will smooth out 2022 fiscal pressures on the RTA’s service boards that include the Chicago Transit Authority, Metra commuter rail, the Pace suburban bus service.
Between the stronger 2021 fiscal picture and new relief in the works “we will be able to take a collective pause from focusing on filling the 2021 budget gaps and next we look forward to beginning work on step three of our recovery strategy,” RTA Chief Executive Officer Leanne Redden told board members at a
The rosier fiscal scenario will allow the RTA later this spring to turn its attention to future planning “with an eye toward supporting recovery and leveraging what we’ve learned over the last year to reimagine how our transit system can emerge even stronger from this crisis,” Redden said.
In addition to the $1.5 billion, the RTA expects New Starts and Core Capacity grants of about $30 million and an additional $1 million in discretionary dollars.
The state is in line to receive a direct infusion of $7.5 billion and that could help speed up transit aid payments. It’s unclear yet whether with the federal aid coming the state might scale back on the fees it charges transit to collect its sales taxes or restore prior cuts.
Through February, the state remained about $189 million in the arrears. The state is eight months behind on debt service subsidies and three and half months behind on transit aid payments. The RTA’s carrying cost for the delay stands at $486,000 so far this year. It cost $5.1 million last year as the agency uses $400 million in short-term borrowing authority to manage state delays. About $125 million is currently outstanding.
Budget revisions
The board approved for a third time amendments to the 2020 budget underscoring the difficulty of predicting the pandemic’s fiscal blows.
Sales taxes declined a total of 9% overall last year, but that’s much better than predicted earlier in the pandemic, said Doug Anderson, manager of operating budgets and analysis. About $115 million of additional funds were collected between sales taxes and the state’s match.
“The sales tax outlook has continued to improve … although we have experienced year-over-year declines in each month since February you can see sales tax performance has been much better than expected,” Anderson said.
The agency predicted sales taxes would tumble by 30% in December but now expect a drop of just 10% when it receives the final figures in the coming days. The agency’s revised budget anticipated a 25% cut in November but collections were down only 7% that month.
In October, a 20% decline was projected while the actual drop was just 8%. The biggest decline occurred last April as the state shut down most non-essential businesses. The RTA feared a 50% cut but it fell by just 25%. In June, sales tax picked up so that only a 7% decline was seen compared to the forecasted 50% drop.
Ridership initially plummeted but began to pick up after businesses and restaurants began reopening in phases but remains at deeply depressed levels as many downtown Chicago commuters continue to work remotely. In January, actual ridership levels were down 5% from budgeted projections and remained at 73% below pre-pandemic levels.
The board also approved 2021 budget amendments with allocations doled out totaling $593 million. The amendment divvies up $486 million of federal dollars and doles out an additional $107 million in public transit funding between higher sales tax collections and state matching dollars after the RTA’s take of $10 million for operations.
The funds could fully close an estimated $442 million to $527 million service boards’ gap depending on Metra’s level of transit service, said Chief Financial Officer Bea Reyna-Hickey.
The RTA distributes the federal dollars on a newly established, needs-based criteria of where transit is most used and needed. That plan has raised the ire of some including Metra on the argument that it favors the CTA and penalizes Metra which cut service last year. Suburban board members approved the distribution but stressed that their support is based on COVID’s impact and that it should be applied in non-COVID funding allocations in the future.
“These are unique circumstances,” said board member Brian Sager.
Board member William Coulson warned that only a full-strength Metra could serve a reopened downtown.
The CTA is receiving $421.6 million between the federal — $361 million — and sales tax and state aid sources — $60 million — to fully wipe out a projected $372 million gap this year.
Metra gets $117 million in total — $83 million of federal aid and $34 million of state-based funds — to either eliminate or trim an estimated $70 million to $155 million hole depending on its service levels.
Pace gets total of $34 million, including $21 million of federal dollars and $13 million of state-based dollars. It had not projected a gap. Paratransit services get $20 million.
“It’s a tough one and it’s one in terms of coronavirus” we hope to never have to face again in our life time, board chairman Kirk Dillard said after the vote.
The combined budgets for Metra, Pace, and CTA total $3 billion. About $1.15 billion of operating revenue comes from system-generated revenue primarily from passenger fares. Public funding totals about $1.88 billion and comes from a regional sales tax and state funding.
Transit funding struggles prompted S&P Global Ratings to move the outlook on its AA rating of the RTA to negative from stable over the summer. Moody’s Investors Service in May moved the CTA and RTA’s outlooks to negative from stable. Moody’s affirmed the RTA’s sales tax bonds at A2.
Moody’s affirmed the CTA's ratings and moved the outlook to negative from stable on the A3 rating assigned to the CTA’s sales tax revenue bonds, and the CTA’s Public Building Commission of Chicago bonds backed by CTA lease payments, rated Baa1. Moody’s also affirmed the CTA’s federal grant receipt revenue bonds, rated A3 with a negative outlook.
Fitch Ratings rates the RTA AA-plus on its $1.7 billion of outstanding general obligation bonds and cash-flow notes and assigned a stable outlook.
S&P last year affirmed its A-plus rating on the second lien sales tax bonds and AA on the senior lien. Kroll Bond Rating Agency affirmed its AA-minus and AA ratings on the two liens. Both agencies assign a negative outlook.
