CHICAGO TRANSIT BOARD APPROVES TWO BUDGETS FOR 2005

November 8, 2004
11/8/04

CTA Awaits Action from the Illinois General Assembly on Regional Funding to Determine Which Budget to Implement in 2005

The Chicago Transit Board today approved two versions of CTA's 2005 budget ?one that assumes additional state funding and one that does not. The CTA is seeking increased regional transit funding from the Illinois General Assembly. The version of the budget that ultimately is implemented will depend on whether or not the General Assembly increases transit funding during the veto session that convenes this week.

The Regional Mobility version of CTA's 2005 budget was developed in the hopes that the General Assembly will acknowledge the importance of public transit to the region, and revise the out-dated funding structure for public transit. The Gridlock version anticipates no new funding from the General Assembly and includes significant service cuts. Although the board passed both budgets, it deferred approval of specific service cuts until next month.

Since CTA President Frank Kruesi submitted both proposed budgets to board members on October 4, the plan outlining service cuts and the reduction of CTA's workforce has undergone careful scrutiny by board members as well as the general public at a series of four public hearings held last month.

At its October meeting, the Chicago Transit Board asked CTA staff for an analysis of the impact a base fare increase would have on the proposed service cuts. In 2004, the CTA raised base fares for the first time in 12 years in order to eliminate an $88 million deficit. In a report to the board today, staff reported that another fare increase would not eliminate the need for service cuts and doing both would lead to an accelerated decrease in ridership in 2005 and beyond. In sum, a combination of fare increases and service cuts would do more harm to the stability of the system overall than service cuts alone.

In voting to keep the base fare at $1.75, Chicago Transit Board Chairman Carole Brown noted that CTA's fares have risen 95% since 1983 which is also the last time the funding structure was changed. ?CTA customers should not continue to pay the price for a broken funding system," she said.

The board approved the budgets proposed by President Kruesi, but with some modifications. Although approving a fare increase for paratransit services, the board voted to allow children of paratransit customers to receive discounts similar to those on mainline service. Children under age six can ride free and children aged seven to 11 will pay $1.75, a 50 percent discount on the paratransit fare of $3.50.

?There was very compelling testimony at our public hearings regarding the needs of people with disabilities who use paratransit to take their children to doctors," said Chicago Transit Board Chairman Carole Brown. ?The overall increase in the base paratransit fare is not something we take lightly and we are committed to working with the disabled community and the General Assembly to identify a dedicated revenue source so that decisions about paratransit service and fares can be addressed separately from the budget challenges facing CTA's mainline service."

The board approved a rate increase to $2 for Park-and-Ride lots, but asked that staff continue to evaluate opportunities to maximize revenue and use. The board also requested quarterly reports on bus bunching mitigation, joint health care purchasing and other initiatives that could lead to additional efficiencies. To encourage even greater use of the Chicago Card Plus, the board voted to waive the $5 fee from January through March 31, 2005 for customers who are in the tax-free Transit Benefit program. Finally, the board said the budget could no longer fund free passes for retirees.

?In approving both budgets, the board recognizes the fact that CTA must be prepared to serve its customers going forward regardless of the outcome of the funding issue," added Brown. ?Both President Kruesi and I have worked hard over the past few months to convince legislators to take action. No one wants to cut service. The damage to the region and its residents would be far reaching, however, everything depends on what is decided by the General Assembly over the next two weeks."

?The way in which transit is funded in this region has resulted in a 20-year erosion of CTA's purchasing power. We are at a crossroads and the General Assembly must look at the consequences of not updating the funding amount or formula for more than two decades," explained CTA President Frank Kruesi. ?Through the combined systems of CTA, Metra and Pace, the Chicago area has one of the most extensive public transit networks in the United States. But transit is not appropriately funded in this region and if that is not corrected CTA will have no choice but to only provide the level of service its funding will support. That, in turn, will impact mobility and traffic throughout the region."

The Regional Mobility budget recommends an operating budget of $1.02 billion that would include a public funding level of $524 million ? an increase of $82.5 million over 2004. This level of funding will enable CTA to maintain current service levels and continue developing service improvements to build ridership. This will include the addition of weekend service on the Cermak (Douglas) branch of the Blue Line and may include other enhancements. In addition, select fees and fares will increase to help maintain critical aspects of the system. These include the University Pass (U-Pass), parking fees and paratransit fares. Increases will help offset the cost of providing these services. The CTA will also reduce its non-service delivery workforce by 200 positions because of improved efficiency of operations.

The Gridlock version of the budget reflects the limited funding that will be available to CTA if the General Assembly takes no action. In that scenario, the RTA will only provide public funding of $441.6 million to CTA in 2005, the same level of public funding CTA received in 2002, resulting in an operating budget of $912 million. This funding level is 2.68 percent less than CTA received in 2003; considering inflation, it amounts to a funding decrease of $35.7 million in real terms.

To achieve a balanced budget, more than one-fifth of existing CTA bus and rail service will be eliminated in January 2005. Of the current 152 bus routes in operation, 30 will be eliminated completely including weekdays, Saturdays and Sundays. An additional 21 routes will have weekend service eliminated, and nine others will have a segment of the route eliminated. Virtually all bus and rail routes will face some service reductions. In addition to eliminating 250 jobs that are not directly involved in the delivery of bus or rail service, another 1,000 jobs will be eliminated as a direct result of service cuts.

Two weeks ago, letters of notification of termination or possible layoff were sent to 1,087 CTA employees to comply with a 60-day notification requirement. The majority of the positions are directly related to the proposed service cuts CTA will be forced to make if the General Assembly does not take action to provide additional funding for public transit.

"We had to prepare our employees as well as our customers for the possibility of service cuts and the loss of positions related to those cuts if we are forced to implement the Gridlock version of the 2005 budget," said Kruesi. ?The Gridlock budget reflects the dramatic service cuts that the CTA, its customers, its employees, and the region may be forced to live with. It is not something we want to do but it is the reality of the situation."

'service cuts and layoffs are not a foregone conclusion," added Brown. ?The opportunity still exists to effect change and preserve a strong transit network with continued opportunities for growth. Neither the CTA nor the RTA have the power to increase public funding levels for transit. That power lies with the General Assembly."

While the federal government reviews and modifies the federal funding program for transit every five to six years, no modifications have been made to the RTA Act in over 20 years, despite changes in funding sources and new obligations, growing congestion, regional ridership losses and worsening air pollution. Keeping the funding as is will leave CTA few options but to make deep cuts to service. Substantial progress in terms of ridership growth and service improvements over the past six years will be undone. CTA's capital program may also be threatened. The federal government will be reluctant to provide discretionary funding for projects in regions that do not show strong local support for existing transit operations.

Without a change in the funding formula, the situation will continue to get worse.These examples of reduced services are only the first step in a series of cuts that will be required if CTA's funding level continues to erode. Without corrective action that provides CTA with sustainable funding relief, additional cuts will follow in 2006 and 2007. The CTA will have to reduce the operating budget by an additional $34.4 million in 2006 and by $10.3 million in 2007 in order to balance its budget and meet the recovery ratio mandated by the RTA under the current structure.

Further information on planned service reductions can be found on www.keepchicagolandmoving.com or at the Office of the Secretary, Chicago Transit Authority, 567 West Lake Street, Chicago, Illinois.

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