Good afternoon, I am pleased to present the 
President’s recommended 2007 operating budget.

CTA’s 2007 proposed operating budget maintains the 
current levels of service and fares. The budget is 
balanced and is in compliance with the funding Mark 
and recovery ratio set by RTA. No capital funding for 
operations is assumed in the 2007 budget and two 
year financial plan. The budget assumes stable 
economic and employment growth. Inflation 
measured based on the CPI is estimated at 2.5%.

Slide 1
The greatest risk to the 2007 budget is the level of 
public funding. The funding mark includes a new 
regional transit funding source for $110.0 million. If 
this new funding source is not identified in the spring 
of 2007, CTA will have to fund other ways to budget 
for operating expenses is balance the budget 
including fare and service changes. Balancing the 
budget through service reductions could require 
reductions of up to 30% of the current service in 
2007.



Slide 2
The proposed Operating Expenses for 2007 is 
projected at $1.133 million. This is $96.5 million 
more than the 2006 budget primarily due to higher 
labor, commodity and energy prices. Labor expenses 
are $101.4 higher than the 2006 budget due to: 

*	The labor arbitration award
*	Service changes implemented mid year 2006 for 
the west side corridor
*	Higher health care
*	Retiree healthcare
*	Pension funding. 

Slide 3
As you know on May 4, 2006 the Illinois General 
Assembly approved a bill requiring cta beginning in 
2009 to fund its pension plan at a level percentage of 
payroll to achieve a 90% funding ratio in 50 years. 
This budget assumes higher contributions by 
employees and CTA to the pension plan in 2007.

The budget assumes an increase in positions of 34 
due to:
*	West Side service changes
*	Security and safety 

Slide 4 and 5
Energy and commodity price inflation are key 
assumptions in this budget and could impose 
additional risk to the projections. Material expense is 
up $10.8 million or 16.1% over the 2006 budget 
primarily due to commodity price increases realized 
in 2006. 

Fuel expense is up $13.2 million as the price per 
gallon is estimated at $2.50 per gallon—25% higher 
than 2006. Consumption is up 2.1% due to the higher 
service levels. 

Likewise, the budget for electric power is up 30% 
due to the end of the decade long rate freeze.



Slide 6
System generated revenues are estimated at $552.7 
million, $40.0 million or 7.8% more than the 2006 
budget. Fares and Pass revenues are up $41.8 million 
due to higher ridership growth and the significant 
impact of the 2006 fare change that included a $0.25 
increase in cash and rail transit card fares and the 
elimination of the paper transfers.

Slide 7
 Ridership is estimated at 505.9 million, 16.3 million 
or 3.3% more than the 2006 budget. 

Slide 8
Rail ridership is projected to increase 10.8% while 
bus ridership is estimated 0.8% less than the 2006 
budget. Again this reflects the trend experienced in 
2006.

Investment Income is also estimated at $12.1 million 
--$7.2 million or 145% more due to higher 
investment rates 

Slide 9
Turning now to CTA’s capital program, this slide 
illustrates the carious funding sources projected to be 
available for the 2007-2011 Capital Improvement 
Program.  The 2007-2011 program totals nearly $2.7 
billion with the majority of funding coming from 
various federal sources.  The other major funding 
source is CTA bonding at $425 million over the 5-
year period. There are almost no non-federal funds 
(state or RTA) other than CTA bonds.  

Slide 10
This slide illustrates the history of the Capital 
Program since 1998 and projects forward through 
2011.  With the passage of Illinois FIRST, CTA 
capital program grew significantly from 2000 
through 2004 reaching a peak of $786 million in 
2004.  When Illinois FIRST expired at the end of 
2004, CTA’s capital program began to shrink.  
Illinois FIRST provided approximately $176 million 
in capital funds each year.  The program dropped to a 
low of $417 million in 2006 and is projected to be 
only $434 million in 2007.  The 2007-2011 program 
would be even smaller were it not for CTA bonds.

Slide 11
This slide compares funding for rail projects, bus 
projects and systemwide projects.  The large majority 
of funds are used for rail system projects with smaller 
proportions for bus and systemwide projects.  This 
imbalance is due to the fact the rail projects are 
inherently more expensive than other types of 
projects and does not indicate that preference is being 
given to rail over bus projects.

Slide 12
Earlier this year, CTA undertook a complete 
assessment of its total capital need including the state 
of capital infrastructure as well as the cost to bring 
the entire system to a state of good repair.  At that 
time, CTA identified a total capital need of 
approximately $8 billion.  Of this amount, funding 
was identified for only $2.2 billion in projects leaving 
an unfunded need of $5.8 billion.  This is a snapshot 
of the status as of summer 2006 and will change over 
time as funding becomes available and the 
infrastructure continues to age.

Slide 13 and Slide 14
The final two slides illustrate some of the major 
projects in the 2007-2011 Capital Improvement 
Program.  Those projects include the following:
Bus Purchases:  $29.9 million in 2007, five year 
total of $141 million
Rail Car Purchases: $57.5 million in 2007, five 
year total of $319 million
Brown Line:  $63 million in 2007, five year total of 
$217.8 million
Rail Signal System (Blue Line & Loop):  $37.6 
million in 2007, five year total of $106.2 million
Howard Station:  $9 million in 2007, five year total 
of $36.7 million
Wilson Station:  $5.4 million in 2007, five year 
total of $61.2 million
Bus Mid-life Overhaul:  $16.7 million in 2007, five 
year total of $101.2 million
Rail Car Mid-life and Quarter-life Overhaul: $37.8 
million in 2007, five year total of $237.7 million
Debt Service Payments:  $30.3 million in 2007, 
five year total of $385.1 million