How are transit operations funded in Chicago vs. peer regions?

October 13, 2025

As Illinois legislators continue to discuss and consider ways to address the Chicago region’s looming transit fiscal cliff, there’s value in reviewing how transit operations are funded in peer regions and identifying ways our funding structure could be more sustainable.

What is operating funding?

Operating dollars are what keep our regional transit system moving. From paying operators to purchasing fuel, operating expenses encompass the costs of keeping transit running on a daily basis. Labor is the dominant expense, making up about 70% of the operating budget for the region, meaning most operations dollars go toward wages and benefits for bus drivers, train operators, mechanics, and other frontline workers that keep the system moving safely. In 2025, the regional transit operating budget is $4.147 billion.

Like many transit systems across the country, the Chicago region is facing a fiscal cliff as temporary federal COVID relief dollars are exhausted. Peer transit agencies—MTA in New York, MBTA in Boston, WMATA in Washington, DC, LA Metro in Los Angeles, and SEPTA in Philadelphia—have faced similar crises and have different approaches to funding their operations, with many receiving far more state support and, in some instances, local authority to raise operating dollars than is provided in Chicago.

How transit operations are funded in the RTA region

In northeastern Illinois, the RTA receives several different operating revenue streams, underpinned by a local sales tax collected in the six-county region, which provides the bulk of the funding for the system. These funds are distributed to CTA, Metra, and Pace to operate bus, rail, and ADA Paratransit service. Following is a breakdown of the system’s operating funding for 2025.

System-generated revenue

Before the COVID-19 pandemic, system-generated revenue—the bulk of which comes from fares—made up about half of the operating budget. This portion declined dramatically early in the pandemic and, although ridership and fare revenue have grown consistently in recent years, lasting changes in travel patterns and remote work mean neither are expected to return to 2019 levels in the near term. Additional revenue is generated from advertising, concessions, rentals, and other partnerships. In total, system generated revenue is budgeted to account for 19.8% of the operating budget in 2025.

Local revenues

Illinois law authorizes the RTA to impose a sales tax throughout the six-county Northeastern Illinois region. Proceeds from the RTA sales tax are paid directly to the RTA monthly.

The sales tax rates imposed by the RTA vary in line with differing levels of transit service provided in the six-county region. In Cook County and the City of Chicago, the RTA imposes a 1.25% sales tax, whereas in DuPage, Kane, Lake, McHenry, and Will Counties the rate is 0.50%. The RTA sales tax is expected to generate approximately $1.7 billion, or about 42% of the total operating budget, in 2025. Any change to the RTA sales tax rate requires action by the Illinois General Assembly, who last raised it in 2008.

In addition, in 2008, the General Assembly granted the City of Chicago the authority to impose an additional Real Estate Transfer Tax (RETT) of $1.50 per $500 of the transfer price on all property sales within the City for the purpose of providing financial assistance to the CTA. The CTA’s portion of the RETT is projected to account for 1.4% of the operating budget in 2025.

State funding

Much of the State’s funding for transit operations comes from its required match of 30% of the revenue realized from the RTA Sales Tax and the CTA’s portion of the RETT. Consequently, state funding for public transportation increases or decreases at rates equal to the growth or decline of both sales tax and the RETT.

Smaller portions of state funding come from other sources. The State is required by law to reimburse the RTA for the cost of the RTA’s debt service payments for bonds taken out for previous state capital programs since the 1990’s. The RTA expects to receive $103.4 million of this funding from the State in 2025.

The State also contributes funding for state and federally mandated ADA Paratransit and Free and Reduced Fare programs. More than 375,000 older adults and people with disabilities rely on these RTA administered programs to serve their mobility needs. Both programs have been drastically underfunded for decades, with the State contributing less than 8% of their total costs. Full state funding would solidify their future and address a significant portion of the transit system’s projected budget gap. Overall, state funding makes up less than 17% of the total operating budget, ranking Illinois last amongst peers in state support for transit operations.

How transit operations are funded in peer regions

Historical data from the National Transit Database (NTD) clearly shows that other states have contributed a larger share of operating support than in the RTA region, ranging from 20-60% versus less than 17% in the Chicago region. Based on analysis of the latest budgets from peer systems shown above, RTA still ranks last in state support for transit, even as others have since received more authority to raise local revenue to address their fiscal cliffs, shifting many of their overall funding breakdowns.

Sales taxes are key contributors to transit operations funding in peer regions, with 4 of the 5 systems shown here relying on sales taxes. The main difference between many of these systems and the RTA is that in peer regions sales taxes are accompanied by a wider variety of funding streams. This can help other transit systems weather economic uncertainty, while RTA’s funding structure is closely linked to the economy. MTA stands out especially in this regard, utilizing a wide variety of over 17 different state and local taxes, fees, and subsidies to cover operating costs. The agency also has the authority to collect tolls amounting to 13% of the annual operating budget through the MTA Bridge & Tunnel Authority, acting as a congestion management agency, something that is unique among transit systems in the U.S. These best practices also help to spread the cost of operating the system amongst a diverse set of stakeholders who use and benefit from it.

States have faced additional pressure to fund transit operations since the federal government stopped providing ongoing operating assistance to the nation’s largest transit systems in the early 1990s. While LA Metro and MBTA's most recent operating budgets include some federal support (less than 20%), these are generally non-recurring grant funds for preventative maintenance, safety improvements, and pilot service expansions, rather than regular operations.

Overreliance on funding mechanisms that are tied to the strength of the economy, like the sales tax, leaves the system vulnerable during economic downturns. Stronger state support, diversity of revenue streams, and additional authority to raise regional revenues, in line with how peer systems are funded across the country, would put the RTA system on a more sustainable fiscal path.

Take action for sustainable operations funding in the Chicago area

Go to SaveTransitNow.org to sign a letter urging lawmakers to enable sustainable funding and strategic reform so we can build a stronger transit system for all who rely on it.