Peer states pursue sustainable transit funding while Chicago’s fiscal cliff approaches

Beginning in 2026, Chicago’s regional transit system will face a projected $770 million annual budget gap. At nearly 20% of the annual operating budget, this gap, if not addressed by spring 2025, would lead to severe service cuts and fare increases, and prohibit any additional improvements to the region’s transit system.

The RTA system is not alone in facing many of its current challenges. Large transit systems across the U.S. are facing proportionally similar funding gaps as they draw down remaining federal COVID relief funds, many facing shorter timelines than our region. In 2023 and 2024, as systems in Pennsylvania, California, and Massachusetts confronted their fiscal cliffs, state lawmakers provided stopgap funding allowing for continued operations while pursuing long-term solutions. Many lawmakers and advocates cited the need for more time to build consensus around transit’s funding needs. For some, that has proved successful, while others continue to face challenges in building support for new revenues even after multiple attempts.

In our region, the RTA has convened a wide range of transit stakeholders to build support for sustainable transit funding. Despite the diversity of perspectives in our region, there is wide agreement on the need for additional revenues for the transit system to improve and expand service. RTA’s Transforming Transit proposal lays out a blueprint for how new funding can be paired with strategic reforms to create a transit system that works better for everyone. While we advocate for legislative action to address the fiscal cliff at the state level, RTA is looking to other transit agencies’ experiences building consensus and how it has affected their chances of success at securing sustainable funding.

Achieving consensus on funding remains difficult in the Bay Area

In 2023, state lawmakers in California provided transit agencies with temporary relief funding and the ability to flex capital dollars to transit operations. That allowed agencies like Bay Area Rapid Transit (BART) to stretch out their federal relief funding into 2025 and avoid the most drastic levels of service cuts and fare increases. In the meantime, BART has had to implement a hiring freeze, cut operating costs across all departments, and maintain fare increases, balancing service quality with cost efficiencies. BART was one of the most fare-reliant systems in the nation pre-pandemic and has experienced slow ridership growth in the years since, in part due to serving a region with the highest remote work rate in the nation. As temporary relief funding dwindles, BART is facing a $375M structural operating gap in 2027 and is seeking enabling legislation at the state level to pursue a regional funding measure to be put to a referendum in late 2026.

This is not the first attempt at a regional funding measure—Bay Area lawmakers have introduced bills each legislative session since 2023 aimed at providing additional transit funding. So far, lawmakers have had to pause each piece of legislation, citing the need to build additional consensus. Each pause pushes the timeline back for BART and other area transit agencies to receive funding, given the additional step of passing a voter referendum before funding is finally approved, collected, and disbursed. BART has joined a statewide coalition of transit stakeholders to advocate for an additional $2 billion in flexible funding for transit operations and capital in this year’s state budget to allow agencies to ensure operations are not disrupted in the interim. This year will be especially critical for legislation to move forward so that agencies like BART can move beyond austerity measures to delivering high-quality service enabled by sustainable funding.

Inaction leads to emergency measures in Philadelphia

Pennsylvania is another example where consensus on transit’s funding needs has remained elusive. In the Philadelphia region, the Southeastern Pennsylvania Transportation Authority (SEPTA) is currently operating with its last allocation of one-time bridge funds before their $213 million fiscal cliff is projected to affect the system this summer, absent additional funding. A series of stops and starts for comprehensive funding proposals in the state legislature led to the prospect of double-digit fare increases and service cuts by the end of 2024, at which point Gov. Josh Shapiro directed an emergency one-time infusion of funding from flexing highway funds to transit to temporarily prevent cuts. Gov. Shapiro has included another sustainable transit funding proposal in his FY2026 budget, but SEPTA is planning for fare increases and drastic service cuts in the event that the state fails to come to an agreement again by the end of this legislative session.

Bold action in Massachusetts

Consensus building can be less complicated with a large, dynamic funding source in the conversation, as was the case with Fair Share tax revenue for the Massachusetts Bay Transportation Authority (MBTA), which provides transit service in the Boston area. In Massachusetts, the Fair Share Amendment created a 4 percent tax on personal incomes over $1 million and went into effect in 2023. Fair Share revenues are collected annually and put toward operations and capital for education and transportation throughout the state.

In 2024 the MBTA projected a $182 million operating deficit, ballooning to nearly $700 million by 2026. Gov. Maura Healey prioritized transit in her FY2025 budget, increasing MBTA’s regular operating subsidy and providing earmarked funding for workforce development and income-based fare programs from Fair Share revenues. This one-time funding served as a bridge while a task force charged with making recommendations for long-term, sustainable revenues for the state’s transportation system produced their report.

Released in January 2025, the report recommended continued use of Fair Share revenue to stabilize public transportation system operations. Gov. Healey’s FY2026 budget proposal follows through on the recommendation, directing over $1.2 billion in Fair Share revenue over the next two years to double down on investments in fare programs, workforce development, general operations funding, and replenishment of MBTA’s budget reserve fund. While the state legislature still needs to approve a final budget package, having a large, sustainable source of funding paired with the governor’s support certainly makes it less of an uphill battle for transit systems like MBTA.

Lessons Illinois can learn from peer states

There are several key takeaways that the RTA and the Service Boards can learn from the Bay Area, Philadelphia, and Boston. First, and probably most importantly, driving consensus on the value of transit and identifying sustainable revenue sources for transit operations can be challenging given competing priorities at the state level. RTA sales tax anchors the regional transit budget, which only applies in the six-county region where the system operates and has historically accounted for over 40 percent of the operating budget. But the pandemic has exposed how this critical revenue source must be complemented with additional revenue sources and direct state funding for state-mandated free and reduced-fare programs to achieve long-term sustainability.

The RTA is uniquely positioned to take a regional approach to conversations about the value of the system here in Illinois, which has resulted in broad agreement amongst key decision-makers on the benefits that transit brings to our region and the need for sustainable funding and strategic reform. Not only have policymakers agreed on the value of transit, but voters across the nation have as well.

Second, delaying action begins to hurt riders and harm the system as the fiscal cliff nears. Agencies can only implement austerity measures for so long before service degrades rapidly. BART and SEPTA have both implemented cost cutting measures and are planning for more should funding not come through. By then investments will need to go twice as far, and riders and other stakeholders’ capacity for continued advocacy is at risk. Significant momentum can get lost in the continued whiplash and news fatigue brought on by temporary funding plugs.

Lastly, bold leadership from elected officials in prioritizing transit can help funding proposals reach the finish line. Gov. Healey is taking the lead in ensuring that the state’s commitment to policies like income-based fare programs, workforce development, and safety initiatives is paired with the level of investment needed to ensure their success. State leaders can be a guiding force in promoting transformative funding solutions that activate broader constituencies and build momentum in a way that more modest solutions might not.

Join the Transit is the Answer Coalition

Transforming Transit is the RTA’s vision for a world-class regional transit system with $1.5 billion in annual operating funding supported by a stronger RTA. To achieve this system, Illinois policy makers must reach a transit funding solution by this May to avoid service cuts of up to 40 percent. The RTA is working with policy makers at all levels of government to develop sustainable funding solutions and improve the system for all riders. Join the Transit is the Answer Coalition to help bring about the legislative changes needed to support transit at this pivotal moment.