The Enterprise Zone

The next governor of Illinois will inherit a public transit funding crisis and a controversy over electric utility rates – two major issues facing lawmakers on their return to Springfield during the November veto session, or early next year.

The Regional Transportation Authority faces a $160 million operating budget shortfall in 2007, a problem heightened by a lack of capital funding for construction projects. Meanwhile, electric utility rates – frozen since 1997 – could increase by 20 percent or more next year unless lawmakers intervene.

The Nov. 7 winner – incumbent Rod Blagojevich, Republican Judy Baar Topinka or Green Party candidate Richard Whitney -likely will be charged with brokering solutions on these two key consumer issues of transportation and energy.

New money campaign for transit

Leaders of the RTA, Chicago Transit Authority, Metra and Pace have been campaigning for new money as the combined agencies face a $102 million operating budget shortfall this year. That red ink is expected to increase to an estimated $160 million for 2007.

In recent weeks, transit leaders have developed their own campaign for new money, calling it “Moving Beyond Congestion.” Transit leaders such as RTA’s Chairman Jim Reilly have held news conferences, distributed pamphlets and spoken in public venues about the system’s funding crisis. Officials have threatened service cuts or fare hikes without additional revenue.

“Transportation funding will be a major subject for the spring legislative session,” said Jim LaBelle, deputy director of the Chicago Metropolis 2020 planning agency. “There are no capital funds (for the Regional Transportation Authority) that are not already allocated to an existing project. At the same time, the operating revenues are short of what’s needed to simply maintain the existing services. So, something has to give.”

While Blagojevich and Topinka aren’t centering their campaigns on the issue, LaBelle said, “it’s something that they both know they’re going to have to deal with in the spring.”

Federal funding for public transportation has been on the decline during the last 20 years, LaBelle said, leaving agencies such as the RTA to rely on local and state sources of funding.

But the RTA hasn’t received any new state capital dollars for construction projects like the Brown Line capacity expansion since the capital program “Illinois First” expired in 2004.

Blagojevich told the Metropolitan Planning Council that he would spend $850 million in mass transit statewide, including CTA and RTA. As part of his proposed jobs bill, public transit construction would create 85,000 new jobs across the state.

Topinka, currently the Republican state treasurer, has said she will seek a “significant investment” in capital needs, including developing a new transportation infrastructure plan and identifying funding sources.

Green Party candidate Richard Whitney has campaigned on a platform emphasizing investments in public transit and maintaining-rather than expanding-roads and highways.

Public transportation has to be a priority, Whitney said, because the era of cheap oil has ended, costs of road construction have spiked, and global warming is a serious threat.

“It’s a better way to reduce congestion,” Whitney said.

Nevertheless, he said, there are legitimate concerns about the way CTA has set its priorities.

Overall, Whitney said, he would support additional dollars to the RTA. He would also support new investments in inter-city public rail systems, and regional public transit for other areas of the state.

One business group – Business Leaders for Transportation – has called for a state capital spending program with four requirements: be accountable and transparent; invest in transit, roads and freight; provide new revenues; and spend money on new technologies and public-private partnerships.

Group members are hoping that the state’s political leaders will develop the same focus.

Illinois energy crisis

An issue that has yet to spark any serious political heat (at least between competing gubernatorial candidates) is that of a proposed extension of the electricity rate freeze.

The three major candidates – Blagojevich, Topinka and Whitney – have supported extending the rate freeze, and candidates throughout Illinois share those sentiments.

Neither Blagojevich nor Topinka returned numerous phone calls for a comment, but both have recently and publicly stated their support for an extended freeze.

Blagojevich in October referred to the September utility auction that could raise rates as “a back door way of trying to get a rate increase.”

Whitney agreed that a rate freeze would be good for consumers.

“To me, that’s a good first step,” he said in an interview.

But he questioned the reasoning behind the initial freeze in 1997. When established, the freeze set electricity rates higher than they should have been, racking up profits for the electric companies involved, Whitney said.

The electric companies, he said, lobbied in favor of the freeze because they anticipated the benefits of a future utility auction that might not produce any competition in the market.

“This was really a long-term scheme to deregulate,” he said.

But electric companies and advocacy groups said the issue is too serious to be taken lightly.

Commonwealth Edison officials have repeatedly warned that their firm, and other utilities, could go bankrupt if rates stay frozen.

“Such a measure would have severely negative consequences for our state, our economy and all consumers,” said Frank M. Clark, ComEd chief executive officer, in a statement.

So far, politicians have stuck to their guns that a rate freeze is the best way to protect consumers.

State legislators attempted to step in when Rep. Lisa M. Dugan (D-Kankakee) in February introduced the Electric Consumer Protection Act, which would extend the rate freeze for three more years. The governor and some state Democrats are pushing to have the bill decided during the November veto session of the Illinois General Assembly. The bill is sponsored by 19 other Democratic state representatives.

The proposed rate freeze extension is in response to the utility auction that awarded ComEd and Ameren Illinois major contracts for providing electricity to the state. The auction ended a decade-long rate freeze intended to encourage utility company competition in Illinois. ComEd, which provides electricity to the Chicago area, won with a winning bid of $65 per megawatt hour – what ComEd officials said is the current electricity wholesale price.

Company officials have said customers would see a 22 percent increase in their bills. But city officials and the Citizens Utility Board said the increase would be 25 percent.