No-tax-hike plan can fund $10 billion for roads, bridges and buildings

May 16, 2019

IPI offers first plan built on reforms instead of special favors and tax hikes

CHICAGO (May 16, 2019) – While infrastructure improvements sit high on Illinois state lawmakers and Gov. J.B. Pritzker’s lists this legislative session, initial proposals to fund capital projects have been riddled with wasteful spending and political favoritism or have relied on economically damaging tax hikes and fees.

A 10-year capital plan released by the nonpartisan Illinois Policy Institute would solve these problems by financing more than $10 billion in additional spending on roads, bridges, government buildings and other structures – without making Illinoisans pay the highest gas taxes in the nation or shelling out $1,000 a year for electric cars.

In the new report, Illinois can spend another $10 billion on infrastructure without tax hikes,” researchers propose transparency, efficiency and wage-mandate relief that have been backed by experts and worked in other states. The reforms would require Illinois leaders to give up pork projects and ribbon-cutting photo-ops in favor of improving existing infrastructure due to merit and public need.

“There’s no question it’s time to repair and make improvements to Illinois’ roads and bridges. Unfortunately, lawmakers have been dodging new ideas for how to do this like Illinois drivers dodge potholes. Our reforms stop lawmakers from relying on the same old ideas that squander taxpayer money with handouts to special interests and pork projects,” said Adam Schuster, director of budget and tax research for the Illinois Policy Institute. “Instead, we maximize the economic benefit of infrastructure and make smart project selections so Illinois gets the best bang for its infrastructure buck.”

Although Illinois has not had a major new capital program since 2009, the Illinois governor proposes a capital budget every year based on existing revenue. In 2020, Gov. Pritzker planned $17.6 billion for capital spending. With an additional $10 billion from the Illinois Policy Institute plan, total state and local spending on infrastructure could reach nearly $28 billion.

Solutions from the report include:

  • Focus on maintenance infrastructure rather than expansive new projects.

Capital bills in Illinois are often used as a vote-buying tool to drum up support for unrelated legislation. While new projects can be doled out for favors, fixing existing structures offers little political clout. Maintenance also has a better return on investment and ensures infrastructure most used by the public will be prioritized for repair. In addition, Illinois should wait for an economic slowdown or for further details on a federal capital plan before spending on new projects.

  • Adopt an evidence-based, data-driven project selection process.

Illinois lawmakers need to take special interests out of the infrastructure process by ensuring capital dollars are being prioritized and spent as efficiently as possible. Objective, quantifiable systems, such as those used by Virginia, score and rank each project, providing transparency to better show if funds are being misused.

  • Reform costly prevailing wage mandates.

With labor accounting for an average of 20 to 30% of total construction project costs, prevailing wage reform would enable each infrastructure dollar in Illinois to go farther. Fully repealing Illinois’ prevailing wage law could save taxpayers an average of 10% on public construction costs, while adding thresholds for size, scope or cost would bring Illinois more in line with other states. Illinois is one of only eight states with prevailing wage mandates that apply the law to all construction.

  • Dedicate revenues.

Voters in 2016 overwhelmingly approved the “Lockbox” constitutional amendment, and there’s another opportunity to follow in its footsteps: dedicate revenues from state and local sales taxes on gasoline to transportation costs. By bringing in over $500 million from state sales tax revenue on gasoline and $136 million in additional tax revenue from legalized sports betting, Illinois can secure $5.8 billion in bonds for an immediate infusion into critical infrastructure needs at lower interest rates than unsecured bonds. Combined with more than $400 million in annual local sales tax revenue from gas purchases, total new state and local spending over 10 years for infrastructure would exceed $10 billion. To offset the hole in the general funds budget, lawmakers could look to reforms such as asking state workers to pick up a bigger portion of their health insurance to bring costs more in line with the private sector.

To read the full report and capital plan, visit: