Taxes on haircuts and miles instead of gas? Amid transit crisis, new funding ideas spring up

With a public transit doomsday looming, two very different ways of increasing state revenues have emerged as the Illinois General Assembly’s Spring Session heads into the home stretch.

They range from levying a tax on services such as haircuts, to taxing Illinoisans on the number of miles they drive instead of the gallons of gas they buy.

The mileage tax idea surfaced as part of Senate Bill 1938, which seeks to give the Regional Transportation Authority stronger oversight powers of Metra, Pace and the CTA.

The three agencies face a $770 million shortfall in 2026, when federal COVID-19 aid runs out. Multiple lawmakers have demanded governance reforms before they consider financial aid.

Bill proponents argue state and federal motor fuel taxes are dwindling and unsustainable because of more fuel-efficient cars and electric vehicles.

The legislation, backed by several labor unions, would set up a pilot project involving 1,000 drivers to test the feasibility of assessing a fee based on miles traveled.

“The beauty to the road usage charge system is that you give people choices,” International Union of Operating Engineers Local 150 official Mark Poulos said during a recent Senate Transportation Committee hearing.

The proposed fee equates to about 3 to 4 cents a mile, compared to an average of 7 cents for passenger vehicles on the Illinois tollway, he said.

Drivers could pay a set amount every year, or take a photo of their odometer every month and upload it to an application that calculates the fee, or plug a device into their vehicle’s computer that records the miles driven.

Over the long-term, the road usage charge could not only pay for roads and bridges, but help bail out public transportation.

Meanwhile, this week the Center for Tax and Budget Accountability, Chicago Metropolitan Agency for Planning, Civic Federation and Illinois Economic Policy Institute issued a “Modernizing Illinois’ Sales Tax” report.

The coalition said the state’s sales tax is outdated and doesn’t reflect the surge in consumer spending on services.

“The time has come for Illinois to modernize its sales tax by expanding its base to include more consumer services,” leaders contend.

Examples of service taxes could include haircuts, pool cleaning, carpet cleaning, appliance repair, landscaping and professional services such as architects or attorneys.

The coalition, however, does not endorse taxes on professional services.

The new fees could generate about $2 billion annually that could be channeled into public transit, education and addressing the state’s pension debt.

The coalition has not lined up any lawmakers to sponsor a bill as of last week.

Taxpayers’ Federation of Illinois President Maurice Scholten cautioned in a statement that “new sales tax revenues would take a significant amount of time before they are available to address these critical services.”

The Regional Transit Authority last week warned of massive cuts in 2026 if no financial aid comes from the legislature by the end of May.

However, House Transportation Committee for Regulation, Roads and Bridges Chairman Marty Moylan of Des Plaines said Thursday “we’re not going to give them any money until we get some reforms.”

Adding to the legislative mix is a proposal to abolish the boards of Metra, Pace, the CTA and RTA, and merge the four into a super agency.

Stay tuned.

One more thing

Lake Forest Democratic state Sen. Julie Morrison’s bill requiring seat belts in new school buses passed the Senate Transportation Committee Tuesday.

The legislation now heads to the Senate for a full vote. The National Transportation Safety Board has said while school buses are among the safest vehicles on the road, seat belts are critical for preventing injuries and deaths in crashes.

You should know

Democratic state Reps. Anna Moeller of Elgin and Suzanne Ness of Carpentersville are hosting a North Suburban Transit Listening Session on April 17. Officials with the Chicago Metropolitan Agency for Planning will explain their plan of action for regional transportation.

“I think it’s really important we not only hear from civic leaders, but from average people who use transit to hear what they would like to see in a revamped, restructured system,” Moeller said.

The session runs from 5:30 to 7 p.m. at Algonquin village hall, 2200 Harnish Drive.