One Year In, Fuel Consumption and Transit Ridership Continue to Lag Pre-Pandemic Levels
La Grange: Though its historic 2019 capital infrastructure plan was estimated to boost Illinois’ state transportation revenues by almost $2 billion dollars annually, state transportation and transit agency revenue generated $1 billion less than expected over the past year due to pandemic-related declines in fuel consumption, sales taxes, and transit ridership, according to a new study by the non-partisan Illinois Economic Policy Institute (ILEPI).
Read the Report, COVID-19 and Transportation Funding in Illinois: One Year Later
“The COVID-19 pandemic has had costly and disruptive impacts on people, businesses, and institutions in every corner of our state,” said study author and ILEPI Transportation Analyst Mary Tyler. “While some sectors, including transportation, are beginning to rebound, they continue to lag well behind pre-pandemic levels. And it’s important to understand these impacts have significant implications not just for the future implementation of the Rebuild Illinois capital plan, but the state’s broader post-pandemic economic recovery as well.”
The state’s major transportation revenue streams—motor fuel taxes and transit system fees—saw their steepest declines in the two months immediately following the state’s March 21st stay-at-home order. During this period, statewide vehicle miles traveled (VMT) were as much as 40% less in 2020 compared to 2019. The state’s overall VMT finished the first year of the pandemic down 15% compared with pre-pandemic levels, and ridership for various Chicago area transit systems fell an average of between 50% and 90%. As of yet, neither has recovered back to pre-pandemic levels.
“Because the historic Rebuild Illinois plan doubled the motor fuel tax, the good news is that despite the drop in VMT, Illinois is still generating $800 million more in gas tax revenue than it was prior to the passage of the capital plan,” Tyler added. “The bad news is that because of the decrease in VMT, gas tax revenue still ended up being $308 million less than was projected pre-pandemic.”
Illinois’ MFT revenue is distributed to multiple state funds that support the Illinois Department of Transportation (IDOT), local governments, and transit agencies. The report notes that the $308 million in COVID-related MFT losses translates into a loss of $151 million for the state Road Fund and State Construction Account, $30 million for capital funding for transit agencies, and $126 million for statewide local governments.
While motor fuel taxes represent two-thirds of the new annual revenue for the state’s $45 billion infrastructure modernization effort, the declining ridership for Chicago area transit systems and a loss of local sales tax revenues that fund the Regional Transit Authority (RTA) have also been adversely affected by the pandemic.
“According to publicly available data, local sales taxes generated $96 million less for the RTA between March and November 2020 compared with the year prior,” Tyler added. “And combined farebox revenue from the CTA, Pace, and Metra generated $645 million less in 2020 compared to 2019.”
The $1.9 trillion American Rescue Plan recently signed into law by the Biden Administration does include provisions that could minimize the pandemic’s near-term financial impacts on state and local governments in Illinois, as well as its transportation systems. According to a release from Illinois Senator Dick Durbin, the legislation provides an estimated $1.5 billion in transit funding for the Chicago region to help fund operating expenses and payroll for RTA workers through 2023, as well as $7.5 billion for state governments and $5.5 billion for local governments.
While Illinois lifted its stay-at-home order in May, Tyler’s report also suggests that broader economic changes—such as increased access to remote work and distance education opportunities—could have longer-lasting effects on travel patterns and transportation revenues across the state.
“According to the U.S. Census Bureau, 35% of Illinois workers who commuted prior to the pandemic are now working from home,” Tyler said. “And, over the last year, we have actually seen average morning commute times decrease in the Chicago area, even as midday traffic increased. To ensure the effectiveness of infrastructure investments as we return to a new normal, this will be an area that demands further study and responsive policymaking in the coming years.”
The Illinois Economic Policy Institute (ILEPI) is a nonpartisan, nonprofit organization which uses advanced statistics and the latest forecasting models to promote thoughtful economic growth for businesses and working families.