CHICAGO TRANSIT BOARD APPROVES 2007 BUDGET

November 14, 2006
11/14/06

The Chicago Transit Board today approved the 2007 operating budget of$1.133 billion that maintains current fares and service levels. The 2007 budget is $96.5 million, or 9.3 percent more than the 2006 budget due to anticipated funding of healthcare, pension contributions and higher energy prices. Without these costs, the budget growth would have been 3.2 percent, or the rate of inflation.

In 2007, the CTA expects to generate $552.7 million through fares and other revenue initiatives. An additional $580.5 million in public funding is needed to fulfill CTA's operating needs and meet retiree pension and healthcare liabilities growing through an arbitration award and under state law. At present, only $470.3 million of the public funding has been identified. CTA will be required to take actions to balance its operating budget, as mandated by law, if no additional funding is obtained.

?While we have approved this budget, we are mindful that more than $110 million in funding has not been identified," said Chicago Transit Board Chairman Carole Brown. ?Our budgets are always based on a series of assumptions and the revenue projections in this budget conform to the funding marks established by the RTA. They are leading a campaign to secure sufficient transit funding to not only maintain existing service, but enable expansion to increase ridership and relieve traffic congestion throughout the region. RTA Chairman Jim Reilly has expressed confidence that the effort will be successful."

Since the state last revisited funding for the day-to-day operations of CTA, Metra and Pace in 1983, CTA has grappled with a steep decline in inflation-adjusted funding levels. Between 1985 and 2004, CTA's public funding for mainline bus and rail operations trailed inflation by more than one percent every year. These reductions have added up. If funding had just kept even with inflation since 1985, CTA cumulatively would have received $1.6 billion more to operate its buses and trains.

"CTA has made strides in revitalizing ridership by investing in bus and rail service, renovating rail lines and improving accessibility over the past few years," said CTA President Frank Kruesi. "However, our funding is not keeping up with inflation and there still are numerous projects that are necessary to bring the system to a state of good repair. Proper funding is critical to the future of public transit not just at CTA but throughout Northeastern Illinois."

The Board also approved the CTA's next five-year Capital Improvement Plan (CIP). Based on available funding, the five-year CIP totals $2.7 billion with $1.0 billion programmed for vital system expansion, including completing the Brown Line capacity expansion project; and the other $1.7 billion in projects to renew CTA assets, replace the fleet and bring the system to a state of good repair.

In October, the Chicago Transit Board approved a bond issuance that would help fund the capital plan.

Brown added that last year the Board allocated capital funds to begin additional subregional studies for the far South Side and South Suburbs, the Southwest Side and Southwest Suburbs, and the Northwest Side and Northwest Suburbs. As the community outreach phase of those studies begins in 2007, she asked that the CTA continue the precedent set on the West Side, where efficiency improvements are reinvested in improved service.

Unlike the past two years, the proposed program does not divert scarce capital funds to balance the operating budget. With the loss of Illinois FIRST, the CTA's capital program is shrinking and cannot continue to be used to shore up an increasing operating deficit.

CTA faces a severe capital funding shortfall that threatens its ability to reach a state of good repair. In just the past two years, CTA's capital budget has been slashed by over $400 million. Not only has capital money been used to cover operating budget shortfalls, but new state capital funding for transit has also stopped with the expiration of Illinois FIRST. Capital funding shortfalls have resulted in deferred maintenance, delays in infrastructure improvements, and difficulty in planning, financing and implementing multi-year projects. With the loss of Illinois FIRST, the CTA's capital program is shrinking and cannot continue to be used to buttress increasing operating deficits.

Following a rigorous 18-month assessment, the CTA estimates that an$8 billion capital investment is needed in the next five years in order to allow the agency to continue to provide safe and reliable service and meet growing transit needs. Including all planned rail line extensions would increase the figure to more than $10 billion.

The Chicago Transit Board must submit a budget to the RTA by November 15 and the RTA must approve budgets for the service boards by year end.

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