COVID-19 pandemic fallout could cost Illinois $560 million in 2020 transportation revenues
A study from the Illinois Economic Policy Institute (ILEPI) estimates the impact of the COVID-19 pandemic could cost the state $560 million in transportation revenues in 2020 as a result of reduced commuting and the closure of gaming operations.
The challenges from the pandemic will land especially hard within the realm of the state’s new six-year, $45-billion capital plan, Rebuild Illinois, that was signed in to law in June 2019 and provides long-term funding for transportation infrastructure, including transit throughout the state.
“The downstream effects of the COVID-19 economic disruption will extend far beyond the immediate hardships for businesses who have closed their doors and employees who have been laid off,” said ILEPI Policy Director and study co-author Frank Manzo IV. “Vital public services and planned infrastructure investments by both states and municipalities are being threatened by the loss of income, corporate, sales, fuel and other tax revenues on which they rely.”
Researchers at the University of Illinois have already predicted that COVID-19 related tax revenue losses could cost the state $4.3 billion between 2020 and 2021 and as much as $28 billion by 2023.
Rebuild Illinois was developed to address decades-long maintenance and modernization backlogs to the state’s roads, bridges, transit systems, schools, water and broadband systems. Revenues from motor fuel taxes (MFT) and an expansion of gaming operations represented the single largest new revenue sources for the program. Yet since the state’s efforts to contain the spread of COVID-19 went into effect, road travel is down as much as 46 percent, gaming businesses have been shut down since mid-March, and reported ridership on public transit systems has declined as much as 90 percent since January.
“As part of the Rebuild Illinois plan, annual revenues from the state’s Motor Fuel Tax (MFT) were expected to increase from $1.3 billion to nearly $2.6 billion,” said study-co-author and ILEPI transportation analyst Mary Tyler. “After applying the Chicago Metropolitan Agency for Planning’s (CMAP) estimates on pandemic related travel disruptions to three scenarios, with travel disruptions lasting from 6 to 10 months, we found that the state could under-perform expectations on MFT revenue by between $300 million and $560 million in 2020 alone.”
While Congress is expected to consider measures to provide additional support to first responders and others impacted by strained state and local budgets, researchers note that, in Illinois, there are both public safety and economic factors that should inform an infrastructure component to these discussions.
For example, recent research has found that Chicago’s “state of good repair” transit backlog was nearing $20 billion, 20 percent of IDOT roadways were considered to be in “poor condition,” and more than one-third of the state’s bridges were either structurally deficient or had exceeded their design life. Years-long unsustainable funding sources led to these issues, resulting in a $4.6 billion annual shortfall in transportation funding prior to Rebuild Illinois, contributing to even more extensive maintenance, roadway safety and congestion-addressing needs.
“The historic infrastructure investment—which was planned for Illinois before COVID-19—was vital to the safety of the traveling public, but also to the economic future of our state,” added study co-author Jill Gigstad. “The data shows that, after COVID-19, it will be even more important because these investments will not only generate tens of thousands of jobs, but billions of dollars in consumer spending—a game-changing economic multiplier we will need to drive an expeditious recovery across all sectors.”
