A little-known legal loophole has scrambled state efforts to save transit agencies from financial disaster

Looking for funding options to save the Chicago region’s transit systems from potentially crippling cuts, state lawmakers earlier this year considered what appeared to be a straightforward plan: tap an existing transportation tax and use the money for transportation.

The idea met a fierce backlash.

The state proposal targeted tax money collected for Cook and the collar counties for the Regional Transportation Authority. In many instances, that money wasn’t being spent on transportation at all — $83 million of the roughly $193 million in transportation taxes collected last year by the collar counties around Cook was spent on cops and courts. The tax is collected on all retail sales, excluding most food and medical costs.

It is all perfectly legal, thanks to a loophole written into state law at the behest of DuPage County leaders in 2008.

DuPage County last year collected nearly $70 million on behalf of the RTA and spent it on operations and infrastructure for the county sheriff’s office.

“We support a strong regional transit system but taking away the county share of the RTA sales tax would have devastating effects on public safety,” said Deborah Conroy, chair of the DuPage County Board of Commissioners.

The collar counties have spent less than 2% of their RTA tax collections on a loosely connected web of transit services that are struggling to stay afloat despite overwhelming demand. They spend the rest on a combination of law enforcement and road engineering, according to an Illinois Answers Project analysis of their budgets.

DuPage is the only county that spends its entire share of the tax on law enforcement. It taps other revenues to fund about $1.8 million annually for paratransit and $1.25 million in yearly spending on projects related to transit like sidewalk construction, county officials said.

“In every resident survey we do, we hear loud and clear residents’ No. 1 priority is public safety,” Conroy said. “If the state takes its revenue from us, there will be massive layoffs in the public safety sector, including the sheriff’s office, state’s attorney’s office, public defender and probation.”

During negotiations earlier this year about how to pull Chicago-area transit agencies from the brink of a fiscal cliff, a proposal emerged that would have redirected the collar counties’ shares of the RTA sales tax toward a sweeping new agency, dubbed the Northeast Illinois Transit Authority.

Collar county leaders strongly opposed the measure since they would lose control of tens of millions of dollars spent on county services. State lawmakers have promised another attempt at saving the transit agencies from financial disaster in the veto session that’s scheduled to end Oct. 30 but will likely have to find another revenue source for the $1.5 billion in new annual funding their plans need.

The proposal was, however, backed by the Chicago-based nonprofit Metropolitan Planning Council.

“If we need to increase transit funding … this is a sales tax levied via the Regional Transportation Authority,” said Audrey Wennink, senior director of transportation policy for the council. “We have a dire, dire, transit funding crisis, and we’re spending this money on roads and public safety. It … begs rethinking what we’re doing, and what our priorities are.”

In statements and interviews, leaders of all five collar counties emphasized the importance of transit in the suburbs and touted their fledgling efforts to serve their constituents who don’t drive. They also defended their decisions to dedicate scant funding to transit services while pumping tens of millions of dollars they receive from the RTA sales tax into roadway projects and — in some cases — law enforcement.

“Right now we have local control of the use of the money,” Kane County Board Chairperson Corinne Pierog said in an interview with Illinois Answers. “And they’re looking at a pot of resource money to be able to fund transit. Fine. But why are you taking the local money from roads, paratransit, safety, accessibility, away with no way to replenish it?”

How the RTA tax came to be

Since 2008, each collar county has been collecting a share of the RTA tax. State leaders at the time tripled the sales tax across the five counties as part of a law designed to shore up the CTA’s pension fund and to preserve federally mandated paratransit services across the region.

The law raised the existing RTA sales tax to 1% in Cook County and 0.75% in the collar counties, in part to fund Pace’s administration of a regional paratransit system — but it allowed the collars to keep one-third of the revenues — as long as they spent the money on “public transportation services or facilities or to fund operating, capital, right-of-way, construction, and maintenance costs of other transportation purposes.”

The bill lacked the votes it needed to pass, according to Conroy — until three Republican legislators from DuPage County offered their support if three words were added before the spending limitations: “public safety and.”

One of those legislators was state Sen. Kirk Dillard, who is now chair of the RTA.

“It probably was a political decision made by legislative leaders — not by me, I was just a rank-and-file member at the time,” Dillard said in an interview. “The counties had pressures, budgetary pressures, and this was something they helped use to put on additional votes.”

Dillard recalled he was taking cues from Bob Schillerstrom, then the DuPage County Board chair, who “clearly wanted more money for DuPage County” as a prerequisite for backing any bill.

“If I could draw the bill myself, I probably would have had all the money go toward mass transit,” Dillard said. “But it’s a decision made in a bigger political environment.”

Schillerstrom said he advocated for the public safety carve-out at the time.

“Generally speaking, I think the way that the money has been divided out to be used for taxpayers has been a good use,” Schillerstrom said. “DuPage County is a pretty safe place. I think that they have good transportation.”

Some DuPage County residents disagree.

Rowen Julian, an organizer with The People’s Lobby who lives in Wheaton, called for the county to spend more on transportation. Earlier this year, Julian led a group of residents to visit the office of Sen. Laura Ellman, a Democrat from Naperville, to advocate for increased access to public transit.

“To me, it seems like we’re using the resources that we have to further alienate and move populations away from each other,” Julian said. “And I would love to see us use our resources to really level the playing field, but also to support the people who are most vulnerable.”

Before the 2008 negotiations, DuPage County “had the foresight to create a sustainable, dedicated funding source” for its roads in the form of a gas tax it levied in 1990 and therefore had no need for more transportation funding, Conroy said.

Since then, the west-suburban county has been gradually shifting its budget to rely on the RTA sales tax for the majority of funding for the DuPage County sheriff’s office.

“It was a mistake to have such broad inclusion” in the legal language for how counties could spend the money, said Joseph Schwieterman, a longtime transportation researcher and professor of public policy at DePaul University. “Since ‘public safety’ is a whole category unto itself … you could fund a whole county police department under the guise of the RTA [and] supporting transit.”

The loophole flies in the face of “a core principle of state and local public finance,” which is that “when you have revenue sources for specific purposes, you use those revenue sources for those specific purposes,” said Justin Marlowe, a professor at the University of Chicago’s Harris School of Public Policy. Marlowe in 2023 sat on the steering committee for a state-appointed task force designed to chart out funding and reform solutions for Chicago’s transit agencies.

“Public safety is important for transit without question, but the connection between public safety writ large, like your sheriff, and public transit, can be … diffuse,” Marlowe said. “It does raise that question of whether those are resources that could be used differently within the system for a more transit-specific purpose.”

When the clawback proposal emerged from Springfield earlier this year to redirect all RTA tax dollars back toward the Northeast Illinois Transit Authority, Conroy was joined in the backlash by leaders from the other four collar counties in the RTA region.

“If enacted, this bill would slash over 50% of the revenue that funds Lake County’s transportation program,” Lake County Board Chairperson Sandy Hart wrote in a May 29 statement. “It is impossible to cover this loss of revenue, which will have a negative impact on economic development and safety projects.”

Leaders of McHenry and Lake counties passed measures resolving not to spend any of their RTA sales tax dollars on public safety, concentrating 100% of the money on transportation-related spending, officials said.

McHenry uses part of its share of the funding for MCRide, the only public dial-a-ride service in the Chicago region that’s available to residents of all ages and abilities. The small northwest-suburban county also tapped the fund to help bankroll the construction of a new Metra rail yard in Woodstock, county officials said.

South and southwest-suburban Will County spent about $17 million from its RTA Tax Revenue Fund on road engineering projects and road-related bond repayments in 2024, while it collected nearly $39 million from the tax, spending records show. The county spent about another $6 million to pay off bonds tied to the courthouse and sheriff’s office, officials said.

Will County Executive ​​Jennifer Bertino-Tarrant wrote in a statement that she has “been advocating for long-needed improvements to our region’s public transit system” but opposes the proposal to recapture the county’s sales taxes to be spent on transit.

“During a period of uncertainty relating to federal funding and economic conditions, this would have had severe local repercussions,” Bertino-Tarrant said. “Reallocations to make up for this loss of obligated funding would most certainly include extreme cuts to programs for seniors, programs to support those with medical needs and our public safety agencies.”

Meanwhile, Kane County has come to emulate DuPage County, its neighbor to the east, by diverting an increasing share of its sales tax revenues to its jail and court system.

‘A fiscal adjustment’

Kane County taxpayers paid $26.3 million for the county’s share of the RTA sales tax in 2024, records show.

County officials estimate that up to 15% of the funds they spend on roadway projects go toward “last-mile connections” like bus shelters, sidewalk expansions and other projects designed for the people who don’t drive, said Tom Rickert, deputy director for the Kane County Division of Transportation.

That leaves about $16 million in RTA sales tax revenues that Kane County last year dedicated to roadway projects like street resurfacing, bridge repairs and traffic signal operations. The county spent about another $7.5 million in revenues from the tax to cover expenses for its court system and law enforcement operations.

Pierog, the chairperson of the Kane County Board, defended county leaders’ recent decision to shift an even greater share of the county’s RTA sales tax money away from transportation in favor of its jail and courts.

“They had to take money from transportation to be able to support the needs for public safety,” Pierog said in an interview with Illinois Answers Project. “Since population has increased, the need for public safety has also increased.”

“Unfortunately, we all have to take an adjustment, a fiscal adjustment, until we can find other paths,” Pierog said.

As a result of the transition to spending more on public safety, the county has paused about 19 transportation-related projects, such as safety upgrades to an accident-prone intersection, Rickert said.

“A significant portion of our RTA sales tax that goes to transportation goes to just maintenance, the resurfacing of roads, the repair of bridges,” Rickert said, adding, “If our legislators were to utilize that to shore up transit, we wouldn’t even have enough monies to maintain the roadways.”

Pierog spoke at a special meeting of the Illinois Senate Transportation Committee held in Kane County last year, calling on the state to increase funding to improve transit access in her county.

Also testifying was Maya Wade, a student at Elgin Community College in Kane County. Wade had to quit the job she loved as an optician at a small, family-owned business in Wheaton because there were “no feasible” public transit options, and she was spending half her monthly budget on Ubers — upward of $80 a day.

“From my perspective and experience, there’s not enough accessibility and transportation for students,” Wade, 31, told the committee.

Stories like Wade’s abounded during committee hearings held in the collar counties last year, according to Wennink of the Metropolitan Planning Council.

“We listened to hours of them, and literally everyone says they want more transit,” Wennink said. “But meanwhile, the money that is given to the counties for transit is not being used on transit. So there’s a disconnect there.”

The future of suburban transit

State legislative leaders have vowed to take another swing during this month’s veto session after they failed in the spring to pass comprehensive legislation to reform and shore up the region’s transit system.

Their blueprint is the 134-page Plan of Action for Regional Transit, developed by the Chicago Metropolitan Agency for Planning (CMAP) under the direction of the state legislature. The plan called on lawmakers to reach beyond stopgap funding and instead find $1.5 billion in new annual revenues to fund an improved and integrated transit system.

An RTA board member examines a chart illustrating the transit funding gap, during a committee meeting earlier this month. (Credit: Victor Hilitski/For Illinois Answers Project) Doing so, they argued, would benefit everyone in the region — including those who live in the collar counties, where public transit is scarce.

“A high-functioning transit system benefits people who live in the collar counties who never set foot on transit by managing congestion,” said Elizabeth Scott, a principal policy analyst with CMAP. “If our transit system collapses, the consequences on the highways are going to be devastating. We can expect gridlock everywhere.”

Amy Rynell, executive director of the Chicago-based Active Transportation Alliance, said that suburbs could have a “huge opportunity” for economic growth if their residents see improved transit service.

She also lamented that lawmakers “immediately squashed” proposals to recoup the counties’ shares of the RTA tax instead of considering any long-term plan to wean them off the funding source.

“I think we could have a really thoughtful approach to it,” Rynell said. “It just didn’t happen.”

State Rep. Kam Buckner (D-Chicago), a lead sponsor of transit reform and funding legislation in Springfield, declined to say Monday whether the “clawback” proposal was still on the table as lawmakers headed into the final week of the fall veto session. But he said he was “extremely confident” that a deal would come together by the end of the week.

“We’ve been working tirelessly … to create what we hope will be a best version of this bill — what we believe will be the most comprehensive funding and reform bill in the history of this county,” Buckner said.

Another legislative negotiator, Rep. Eva-Dina Delgado (D-Chicago), wrote in a statement that she “understand[s] the difficulties local governments face in balancing their budgets.”

“The region relies on reliable and safe transportation, and we will work with our local partners to ensure that any package that passes accomplishes that goal,” Delgado said.