Budget relies on uncertain funding; Civic Federation recommends increased pricing during times of high demand
(CHICAGO) In an analysis released today, the Civic Federation announced that it opposes the Chicago Transit Authority’s proposed FY2018 operating budget of $1.51 billion, because it relies on overly optimistic projections of restored funding from the State of Illinois and embarks on a dangerous path of borrowing for operational expenses to close the prior year shortfall. The full analysis is available here.
As detailed in the report, the CTA is resorting to $17.5 million in short-term borrowing to close the prior year’s budget gap. Further, the CTA is again relying on the overly optimistic revenue projections provided by the Regional Transportation Authority (RTA), which include restoration of $14 million in State funding that has not been provided since FY2015. The CTA has not released a plan for how it will make additional cuts in FY2018 to pay back the borrowing and then shore up the budget when an anticipated $14 million in State funding does not materialize.
“The CTA faces serious challenges, some of which are the result of inaction at the State and regional levels and others that are from outside forces, including historically low gas prices and increased rideshare popularity,” said Civic Federation President Laurence Msall. “However, by failing to face its economic reality in the present, the CTA is at risk for ever-greater financial problems in the future.”
As an alternative path to generate additional revenue, balance the budget and maintain service levels, the Civic Federation recommends implementing increased fares on trains and express buses during high-demand periods—such as rush hours and around large-scale events—in conjunction with the proposed 25-cent base-fare increase.
“Through increased use of Uber, Lyft and other services competing for CTA’s ridership, consumers have grown accustomed to peak-usage pricing,” said Msall. “We encourage CTA to embrace this concept by implementing a reasonable surcharge during periods of high rider demand.”
The Civic Federation has concerns that if the State fails to come through with anticipated reimbursements, and if the CTA does not implement new revenue measures, riders could face service cuts or an ongoing cycle of short-term borrowing to close budget gaps.
Despite opposition to the spending plan, the Civic Federation recognizes many positive items in the budget, including efficiencies, personnel reductions and the relatively modest, but ultimately insufficient, fare increase. The Federation further commends the CTA for recent strides made to improve the customer experience by modernizing the fleet, enhancing service levels and improving accessibility and security.
In order for the CTA, Metra and Pace to continue to function as key economic assets to the region, the Civic Federation believes that the State and RTA must exercise their responsibility to provide essential operating and capital support. The State must develop a capital improvement plan that adequately funds transit needs across Illinois. The Federation additionally suggests that the Chicago region might be better served by a truly integrated regional transit agency that serves both the suburbs and city by promoting coordination rather than competition, encouraging reasonable planning and recognizing State budget reality.