SPRINGFIELD – Outside the busy systems of buses and trains moving about a million commuters around Chicago and its suburbs every day, 54 public transit agencies provide services throughout the rest of Illinois in communities surrounded by farmland and or home to state colleges and universities.
State lawmakers are spending this spring’s legislative session debating how to solve a $771 million funding gap the Chicago area’s public transportation agencies face in 2026. But downstate public transit agencies are also facing a similar plight as costs rise beyond the state’s longstanding funding commitment.
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“We want (legislators) to be aware that it’s a statewide problem even though the nature of the problem is a little different,” Champaign-Urbana Mass Transit District CEO Karl Gnadt said in an interview. “There is a financial problem statewide.”
The Illinois Public Transportation Association, which represents public transit agencies throughout the state, including in Chicago, is asking lawmakers to consider reforming the formula that doles out money to downstate public transit agencies.
The association also projects that the Downstate Transit Improvement Fund, which pays for infrastructure projects at downstate transit agencies, could become insolvent by 2029 without changes to how it is funded.
Costs exceeding state support
Chicago area transit agencies face financial challenges as federal COVID-19 funds run out and rider patterns change thanks to work-from-home policies adopted during the pandemic. Rider fares are also no longer enough to cover half of the agencies’ revenue as required by state law. That requirement was suspended during the pandemic but is set to go back into effect this summer.
Downstate agencies are facing a different problem at the same time.
While the funding in the Chicago area, the state covers up to 65% of expenses for downstate transit agencies. But because of rising costs and lackluster economic growth in downstate communities that hinders sales tax revenue, funding shortfalls are growing.
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Like nearly every other sector of the economy, public transportation agencies are facing rising costs for maintenance in addition to recruiting and retaining employees.
A 17-year-old formula in state law requires about 7.5% of sales taxes collected in areas served by transit agencies to be deposited into the state’s Downstate Public Transportation Fund. The fund provides downstate agencies with funding for up to 65% of their operating expenses while local funding sources such as property taxes, rider fares, bus advertisement sales and cost-sharing contracts cover the other 35%.
More than $460 million dollars was allocated to public transportation agencies outside Chicago through that fund in the current fiscal year. Appropriations range from $99.6 million to the St. Clair County Transit District that provides a portion of the rail and bus service in the St. Louis metro area to a $209,200 for a “dial-a-ride” program for seniors in Douglas County in East Central Illinois.
But the gap between the costs that local and state funding sources cover is growing. In fiscal year 2024, the state deposited $150 million less than lawmakers had budgeted, according to the association, and transit leaders expect this gap to keep growing.
Combined with slower economic and property tax growth outside the Chicago area, local governments are struggling to cover 35% of public transportation costs as expenses increase.
“There’s no mechanism to get money from elsewhere,” Laura Calderon, head of the Illinois Public Transportation Association, said. Downstate agencies could collectively face a $42 million shortfall next year. Though smaller than Chicago’s budget gap, just a few million dollars less in funding could have major impacts for downstate agencies, Gnadt said.
Without funding changes, Gnadt said the Champaign-Urbana Mass Transit District would have to implement “dramatic” service cuts.
Boosting state funding
Downstate public transportation agencies are asking lawmakers to allow more money from sales taxes to go toward public transportation. Under a change proposed by the IPTA, about 9.4% of sales tax revenue generated in communities with public transportation would go toward downstate public transit, rather than the current 7.5%.
According to the association, this change would increase funding by $79.3 million annually beginning in fiscal year 2026. By fiscal year 2034, the association wants lawmakers to boost funding to 12%, which would increase yearly funding by $265 million.
That’s “not much of a difference in the overall tax collection for the state, but it’s a meaningful difference for downstate transit,” Gnadt said.
Downstate agencies deliver a lot of services for free or reduced fares and the typical distance traveled on trips is farther than in major cities, meaning fare hikes are not an ideal way to raise revenue, Calderon said.
The association is also seeking to increase the state’s portion of funding for downstate transit agencies. Rather than having the state cover up to 65% of operational expenses across the board, the association wants the state to cover 75% of expenses for urban agencies and 80% for rural agencies serving populations less than 50,000 people.
Transit officials and lawmakers are considering other proposals to increase funding, including a new tax on electric utility companies. Senate Transportation Committee chair Sen. Ram Villivalam, D-Chicago, said in an interview he’s making the same request to downstate transit agencies that he is to Chicago agencies: they must make reforms to improve service and accountability for their riders before lawmakers pony up money.
“Whether it’s the northeastern Illinois region of the state or downstate, we are requesting public transit agencies to come forward with reforms to ensure that the level of service that’s being provided to our residents meets their needs,” Villivalam said.
That includes improving planning coordination between agencies that may serve similar areas, Villivalam said.
While much of the legislature’s attention is on Chicago’s issues, Calderon said lawmakers are receptive to downstate public transit needs.
“The budget is tight this year and so seeking an increase in a portion of the state sales tax going to transit is going to be a challenge,” Calderon said.
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Villivalam observed that during nearly a dozen hearings his Senate committee has held over the last year, there have been few objections to increasing state funding for public transit but many calls for the state to increase its investment.
“That has really spoken to the fact that there’s a consensus that we need to fund public transit,” he said. “What level of service, what the governance looks like, what level of funding — those are questions that we’re going to come together and work on.”
Villivalam said he is “cautiously optimistic” that lawmakers will pass transit reforms for the entire state before the General Assembly is scheduled to adjourn on May 31.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
