CTA PRESIDENT RELEASES 2007 BUDGET RECOMMENDATIONS

October 12, 2006
10/12/06

In his tenth budget recommendation, Chicago Transit Authority President Frank Kruesi proposed a $1.133 billion budget for 2007 that would maintain current fares and service levels. Due in part to anticipated funding of healthcare and pension contributions and higher energy prices, the proposed budget is $96.5 million, or 9.3 percent, more than the 2006 budget. 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. It needs an additional
$580.5 million in public funding to fulfill its 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. But, in keeping with the funding marks RTA adopted for the CTA last month, Kruesi's budget recommendation anticipates that new transit funding sources will be identified in 2007 to maintain service. If no additional funding is obtained, CTA will be required to take actions to balance its operating budget, as mandated by law.

?RTA Chairman Jim Reilly has expressed confidence that a solution will be found and I personally share his
confidence," said Kruesi. "With more funding, the CTA and our sister agencies will be able to do more and ridership will grow. Without it, the current system cannot be maintained and will have to shrink. By working together and addressing the funding challenge on a regional, bipartisan basis, I am confident that the region will choose the right path."

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.

Kruesi added that by investing in bus and rail service, renovating rail lines and improving accessibility, the CTA has, in recent years, regained more than 45 million of the annual rides lost due to a lack of investment. This increase is nearly equal to the annual transit ridership in greater St. Louis. But despite this progress, the underlying funding structure that helped fuel CTA's steep decline in the first place has not changed. By not addressing this operating funding problem for so long, and by not renewing capital programs for transit, another downward spiral could begin. There is a clear connection between funding levels, service levels and ridership, he said.

Kruesi also made his recommendations for the CTA's next five-year Capital Improvement Plan (CIP) and said that the 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. This state legislation, which funded transit, roads and other infrastructure improvements, had provided as much as $176 million annually for critical CTA capital projects. Capital funding shortfalls have resulted in deferred maintenance, delays in infrastructure improvements, and difficulty in planning, financing and implementing multi-year projects.

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.

Based on available funding, Kruesi said the proposed 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. Yesterday the Chicago Transit Board approved a bond issuance that would help fund the capital plan.

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.

?The CTA's long-standing capital goal is to reach a 'state of Good Repair." ?It requires that equipment and facilities are upgraded and replaced in a timely manner and that service management systems should be modern and reliable," said Kruesi. ?The right capital investments can decrease operating costs, increase reliability and improve overall service quality. It is our hope that through the Moving Beyond Congestion initiative led by the RTA, there will be a consensus on the need to secure more resources so that transit can thrive. We will continue to make the case for investing in core markets where transit plays a critical mobility and economic role."

With proper funding, he said, CTA could advance more rapidly toward a state of good repair, accelerating the renovation of century-old rail lines, replacement of worn-out buses and trains, and refurbishment of maintenance facilities. Service frequency and hours of operation could expand to tap new markets, relieve overcrowding, and increase transit's competitiveness with the automobile.

CTA customers and the general public will have the opportunity to provide comments to the Chicago Transit Board on the President's 2007 Budget Recommendations at an upcoming public hearing scheduled for Wednesday, November 8, at
6 p.m., at the CTA Headquarters, 567 W. Lake Street, second floor conference room, Chicago, Illinois, 60661.

The Chicago Transit Board will consider the proposed budget at a November meeting. It will also be presented to the Cook County Board in November, as required by the RTA Act. The Chicago Transit Board must submit a budget to the RTA by November 15th and the RTA must approve budgets for the service boards by year end.

Written and oral comments will be taken into consideration prior to implementation of the 2007 budget. This input will be welcomed at the hearing or by correspondence addressed to Gregory P. Longhini, Assistant Secretary of the Board, Chicago Transit Authority, P.O. Box 7567, Chicago, Illinois 60680-7567. Deadline to submit written comments is Tuesday,
November 14, 2006. E-mail comments may be submitted through Tuesday, November 14, 2006 by writing to CTABoard@transitchicago.com.

The proposed budget is available for public review at the CTA's General Office at the 567 W. Lake Street, Chicago, Illinois, 60661, second floor, weekdays between 8 a.m. and 4:30 p.m. Regular and large print copies are available at this location. Copies will also be available at the main office of the Regional Transportation Authority, reception desk, Suite 1550, 175 W. Jackson, Chicago, Illinois 60604. A copy of the proposed budget is also posted on the CTA's web site at www.transitchicago.com. A list of libraries and additional locations where the document will be available is attached.

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Copies of the budget proposal will also be available at the reference desks of the following libraries:

Chicago Public Library - 3 Regional Locations

Harold Washington Public Library
400 S. State Street, 10th Floor
Chicago, IL 60605

Sulzer Regional Library
4455 N. Lincoln Avenue
Chicago, IL 60625

Woodson Regional Library
9525 S. Halsted Street
Chicago, IL 60628

Suburban Libraries

Evanston Public Library
1703 Orrington Avenue
Evanston, IL 60201

Evergreen Park Public Library
9400 S. Troy Avenue
Evergreen Park, IL 60805

Oak Park Public Library
834 Lake Street
Oak Park, IL 60301

Riverdale Public Library
208 W. 144th Street
Riverdale, IL 60827

Skokie Public Library
5215 W. Oakton Street
Skokie, IL 60077

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