Massive capital plan includes gas tax hike to pay for $41.5 billion in projects

A long-awaited capital plan was unveiled to key legislators Friday.

SHARE Massive capital plan includes gas tax hike to pay for $41.5 billion in projects
The Illinois State Capitol.

Lawmakers are negotiating a massive capital plan with just two weeks to go before the end of the spring legislative session.

AP file

Gov. J.B. Pritzker’s office on Friday revealed the details of a long-awaited and sweeping capital proposal to key legislators, and it includes a plan to invest $41.5 billion over six years and create an estimated 500,000 jobs, according to documents distributed to lawmakers during a briefing.

The state hasn’t had a major capital plan since 2009, when former Gov. Pat Quinn signed the $31 billion Illinois Jobs Now! Act.

How will the state pay for the new “Rebuild Illinois” plan? In part, a gas tax — raising the motor fuel tax by 19 cents by July 1 to bring in $560 million; raising the price of vehicle registration fees to bring in $490 million; a $34 per electric vehicle fee every other year and a bump to $250 per year in fees for electric vehicles to bring in $4 million; a $1 state tax for each ride-share trip to bring in $214 million; doubling the amount buyers and sellers currently pay the state on real estate transfer taxes for non-residential transactions to bring in $34 million; a bump in the liquor gallonage tax to bring in $120 million; a 6% tax on daily and hourly garage parking and 9% on monthly and annual garage parking to bring in $60 million; a 7% tax on cable, satellite and streaming services to bring in $150 million; a traded-in property exemption to bring in $60 million; and a video gaming terminal tax to bring in $90 million.

Many of those taxes are unpopular — and it’s unlikely all will make it through. The capital plan and its funding sources remain under negotiation, with just two weeks to go before the end of the legislative session. The plan is also just one of many massive proposals being floated around the Capital in the waning days of the spring session.

The proposal was distributed to the legislative leaders on Friday. And key legislators met with the governor’s office for a briefing on Friday, as well. The plan has been in the works for weeks.

The governor’s office said the proposal is a result of working group sessions with legislators on both sides of the aisle, calling it a “preliminary draft” on a plan to bring in jobs and “finally fix our crumbling infrastructure.”

“The administration looks forward to continuing to engaging in productive conversations before the proposal is finalized,” Pritzker spokeswoman Jordan Abudayyeh said in a statement.

The document includes details about funding the massive plan “through a combination of bonding and consistent, annual pay-as-you-go funding.” A motor fuel tax is called “the most reliable form of transportation funding,” in the documents.

The total bonding amounts to $17.807 billion over six years. The total the state would have to “pay-as-you-go” would be $7.035 billion in the same timeframe. Federal money would amount to $10.032 billion.

The plan proposes increasing the motor-fuel tax to 38 cents per gallon to generate about $1.2 billion in additional revenue annually. More than $650 million will go to local public agencies for highway and street departments, doubling their share of the motor fuel tax and “resulting in an additional $4 billion over the life of the program.”

The state would get $560 million annually in additional revenue from the motor fuel tax increase, the plan states. And a “new” vehicle registration fee would bring in $490 million.

The “Rebuilding Illinois” plan includes $28.6 billion for transportation, including nearly $11 billion for existing roads and bridges; more than $12 billion in new roads and bridges; and $3.4 billion for mass transit.

The plan also includes $5.9 billion for education, including $2.4 billion for higher education; $3 billion for school construction; $111 million for early childhood education; and $400 million for school maintenance.

State facilities would get $4.4 billion and $1 billion would go toward environmental and conservation efforts. That includes $140 million for renewable energy projects and $873 million for environmental, conservation and recreation projects.

Another $420 million would go toward broadband deployment; $440 million for health care and human services; and $711 million for economic and community development.

Steve Brown, spokesman for Illinois House Speaker Mike Madigan, called the proposal “another good step.”

“House caucuses will continue to work with [the] Governor to put out a plan that creates jobs and reverses neglect,” Brown said in a statement.

And State Sen. Martin Sandoval, D-Chicago, who has emerged as the point man for Senate Democrats in negotiating a capital plan, called it an “early draft” with changes ahead.

“We’ve been eagerly awaiting a framework from the Pritzker administration. As the Senate has gone around the state and led this bipartisan effort, there have been many changes, and I expect many more to come,” Sandoval said. “What you have here is an early draft of what a framework could look like. Going forward, I hope the governor’s as committed as I’ve been to an open, bipartisan process.”

Others weren’t so happy with the nearly $1.78 billion in proposed new or higher taxes.

“I oppose this plan because it includes massive tax hikes, including a gas tax increase, streaming tax and real estate transfer tax,” state Rep. David McSweeney, R-Barrington Hills, said. “We need a capital bill, but it should be funded by issuing bonds supported by a stream of future cash flows from sports gambling revenues and potentially the prudent expansion of some other existing kinds of gambling.”

And while the Illinois Chamber of Commerce said it is “encouraged” to see some of its ideas included in the proposal, the group noted most of the revenue is not new revenue and relies on existing state, federal and local sources “that were already planned.”

The group’s president and CEO Todd Maisch, also said he’s concerned about the streaming taxes to pay for non-transportation construction.

“The Chamber believes this will be an unreliable foundation for funding because it will be complex, unpopular and possibly unconstitutional,” Maisch said in a statement.

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