Rebuild Illinois infrastructure plan could face significant shortfall due to COVID-19

The state could underperform expectations on motor fuel tax revenue by up to $560 million in 2020 alone

May 06, 2020
Rebuild Illinois infrastructure plan could face significant shortfall due to COVID-19
Image: Illinois Economic Policy Institute

A new report from the Illinois Economic Policy Institute (ILEPI) shows how the COVID-19 pandemic has created significant new challenges for the six-year, $45 billion infrastructure modernization plan the state passed last year.

“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,” ILEPI Policy Director and study co-author Frank Manzo IV said in a statement. “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.

One program reviewed by ILEPI researchers that could be especially hard hit is Rebuild Illinois—a bipartisan infrastructure plan that was signed into law in June of 2019. The six-year, $45 billion program 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. But since the state’s efforts to contain the spread of COVID-19 went into effect, road travel is down as much as 46% and reported ridership on public transit systems has declined as much as 90% since January.

Estimated annual motor fuel tax revenue losses
Image: Illinois Economic Policy Institute

“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,” study-co-author and ILEPI transportation analyst Mary Tyler said. “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 underperform expectations on MFT revenue by between $300 million and $560 million in 2020 alone.”

ILEPI says recent research has found that Chicago’s “state of good repair” transit backlog was nearing $20 billion, 20% 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.

ILEPI researchers found that emergency federal support to state transportation agencies could offer an especially high return on investment, generating $1.57 for every dollar spent nationally, and anywhere from $1.74 to $3.52 for every dollar invested in the state of Illinois.

Economic impact of investing in Illinois infrastructure
Image: Illinois Economic Policy Institute

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SOURCE: Illinois Economic Policy Institute

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