Chicago to state lawmakers: ‘Seize the opportunity’ for gas tax hike

By Vincent Caruso, Illinois Policy Institute | Dec 5, 2018


Chicago Mayor Rahm Emanuel is looking to secure new capital funding from the state in the scarce months before his final term in office expires. And city leaders have informed Springfield how they should raise the revenue: by hiking the gas tax.

Chicago Department of Transportation Commissioner Rebekah Scheinfeld called upon state lawmakers Nov. 27 to increase the state’s gas tax to help finance the city’s transportation needs, according to the Chicago Sun-Times.

Emanuel introduced Schneider at a luncheon event, during which she encouraged lawmakers in Springfield to “seize the opportunity to hammer out a long-term transportation funding solution,” according to the Sun-Times, noting that the outgoing mayor “has been specific about a gas tax.”

The state last passed a capital bill in 2009, when it appropriated $31 billion for infrastructure projects. Emanuel has long held a new capital bill, fueled by a gas tax hike, at the top of his wish list. In 2016, Illinois voters approved an amendment to the state constitution mandating revenue generated through motor fuel taxes can only be used for transportation projects.

Pain at the pump

Illinois is one of just seven states that levies a separate sales tax on gasoline. But that’s only one of the taxes hitting residents at the pump. For example, the typical Chicagoan’s gasoline bill includes the following taxes:

  • A federal motor fuel (excise) tax of 18.4 cents
  • State underground storage and environmental fees of a little over 1 cent
  • A slew of sales taxes that total 10.25 percent*:
    • 6.25 percent state sales tax
    • 1.25 percent Chicago sales tax
    • 1.75 percent Cook County sales tax
    • 1.00 percent Regional Transportation Authority sales tax
  • And more state and local motor fuel (excise) taxes:
    • 19 cent state motor fuel tax
    • 5 cent Chicago motor fuel tax
    • 6 cent Cook County motor fuel tax 
*How these taxes are layered on matters. Illinois sales taxes are first applied on the base cost of gas plus the federal tax and environmental fees. Then, state and local excise taxes are layered on after the sales taxes are applied.

Scheinfeld noted alternate routes through which Chicago has funded transportation projects in recent years, including the sale of air rights, the city’s controversial Tax Increment Financing tool and a federal loan secured through the Transportation Infrastructure Finance and Innovation Act.

One of those projects was the $32 million “Loop Link” rapid transit system downtown, the merits and results of which many have called into question.

“Folks can quibble about whether we’ve achieved the exact targets planned for the project,” Scheinfeld said, according to the Sun-Times. “But I say most importantly Loop Link shows what is possible.”

It remains to be seen whether Emanuel’s push for a gas tax hike finds cooperation in the governor’s mansion come January, when Gov.-elect J.B. Pritzker will inherit the keys from outgoing Gov. Bruce Rauner. And taxpayers should keep in mind there’s also the possibility that the General Assembly could pass a gas tax hike before Pritzker even takes office.

High taxes are the No. 1 reason Illinoisans cite for wanting to leave the state. Rather than increasing the burden on overtaxed Illinoisans, state lawmakers should revisit the state’s unfunded mandates that increase costs on municipalities’ capital investments. Reforming Illinois’ outdated prevailing wage and workers’ compensation laws would go far in freeing up resources that could be allocated toward transportation and infrastructure.

When lawmakers return to Springfield in January, they must focus solely on reforms aimed at making Illinois a state in which more people wish to plant roots. Increasing taxes on motorists is only bound to drive more Illinoisans out.

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