The state of Illinois has not paid the Regional Transportation Authority since July and now owes the transit agency $250 million, the RTA said today.
The recession has forced state government to pick and choose where to send its limited funding, and the Chicago region's transportation agencies have gotten the short end of the stick.
To bridge the gap, the RTA has the authority to issue $260 million in "working cash" — essentially IOU notes. While the RTA still has a few other sources of funding to get by on, the state’s non-payment could become a big problem if it lasts much longer.
"We have to let them know the consequences of this situation," RTA Executive Director Stephen Schlickman told the agency's board today. "We don't want doomsday all over again."
While the RTA doesn’t anticipate another doomsday scenario from the state’s lack of payments, Schlickman said that could happen if the state continues its delinquency through the summer.
He doesn’t expect it to, though. While state has been juggling payments to its various groups, Schlickman said that when a particular agency indicates they really need the money, the state has been ponying up.
“If we tell them the dire consequences of not getting this money, they will move us up the list of people that they owe,” Schlickman said of the state. “Over half a year has gone by, but fortunately, because of the working cash, we’ve gotten through this.”
Using IOUs instead of cash, however, has a cost. The RTA’s chief financial officer, Joe Costello, said the notes’ 2 percent interest will set the agency back about $5 million per year.
Schlickman and Costello say one solution is for the state to give the RTA more authority to use working cash, which would let them roll the payments over from year to year.
Even with that ability, though, “This is not an efficient way to run a business,” Schlickman said.
Without more borrowing authority or the promised funding, the price could soon be passed on from the RTA to its subsidiaries CTA, Metra and Pace — forcing the already-strapped agencies to make more cuts.
UPDATE 6:00 p.m.:
Carol Knowles, spokeswoman for Illinois comptroller and gubernatorial candidate Dan Hynes, confirmed that the RTA has roughly $142 million worth of invoices sitting unpaid, but that help might be on the way soon.
“It’s my understanding that some funding may be going out to them [the RTA] within the next few days,” Knowles said.
The state’s massive funding shortfall has simply made it that much more difficult to choose who gets available cash.
“We’re doing the best we can to work with everyone and help them as much as we can when they get into a crisis situation, but when you have a $5 billion backlog, pretty much everything turns into a crisis,” Knowles said. “You have to weigh everything and do the best you can to keep everybody going.”
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