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No big cuts at CTA

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Illinois

* Fare hikes and/or service cuts were rumored to be in the offing for the CTA today to patch a $66 million budget hole, but the transit agency went in a different direction at a morning news conference…

The measures include the recent elimination of 43 positions and cuts to 80 administrative positions before the end of the year. The move involves both layoffs and the elimination of vacant positions, the CTA said. The cuts will save $4.9 million, according to the CTA.

Further, the CTA is outsourcing garbage collection at its facilities, for a savings of $500,000 per year. The CTA also plans to defer non-critical contract spending, changing the labor mix, cutting bus maintenance costs through upgrades and preventative measures, using technology to make bus supervisors mobile rather than stationary.

Altogether, the measures are expected to save about $40 million, the CTA said. […]

This is despite the fact that ridership is way up.

Last week, the CTA reported that high gas prices and a poor economy have driven ridership on the CTA up 5.3 percent compared with last year. For the month of August, ridership was up 9.5 percent compared with a year earlier.

* What’s causing the budget shortfall? The Tribune explains some of it…

The budget crisis has been caused in part by soaring fuel and energy costs, which will be $37.3 million higher than last year.

The budget crisis was exacerbated by Gov. Rod Blagojevich’s decision to provide free rides for senior citizens and low-income disabled passengers. That will cost the agency at least $30 million this year.

The governor also vetoed more than $16 million in reduced-fare subsidies this year for the CTA in the state budget.

In addition, the City Council legislated free rides to disabled military veterans and active service men and women in uniform.

* Bus and train fares don’t cover the full cost of running the system. So when ridership and costs soar like they have this year and the subsidies don’t keep pace, then shortfalls result.

posted by Rich Miller
Monday, Sep 8, 08 @ 10:47 am

Comments

Why offer a proposal to allow senior to ride for free then turn around and veto money to cover those costs? I’m sure deficits at the CTA are a function of many different factors but that whole game that was played earlier this year certainly didn’t help. Is doomsday coming again?

Comment by Levois Monday, Sep 8, 08 @ 10:59 am
This topic could’ve also been filed under “governing by press release”. As usual, no forethought or consideration of the ramifications when Blagojevich “sweetened” the CTA bailout bill - only pandering to a select group of constituents.

Cutting service and raising fares were being considered, apparently. But a likely reason for these ideas being tabled was Daley; not because he’s mindful of the hardships either would cause, but because it would reflect negatively on the city’s Olympic bid.

We’re essentially being governed by a legislative body that has a history of corruption almost as insidious as Chicago. Lovely.

Comment by The Doc Monday, Sep 8, 08 @ 11:11 am
fuel costs aren’t the main problem, it is labor costs. Under the old system if you worked at the CTA for 3 years you got lifetime health benefits. Then they get cushy pensions as well.

Not to mention they are starting bus drivers off at about $19/hour. That’s almost $40,000 a year. Many kids coming out of college don’t even get a job that pays that well.

The CTA needs a serious overhaul. Some little things can be done. Why, for instance, do buses run every 8 minutes on Halsted? Why not every 10 minutes and cut one bus per hour. They need to increase transfers too. A lot of people take a bus to a rail terminal, therefore the bus or rail is only costing 25 cents. You need 76 people coming on the bus every hour just to pay for the driver.

The system is a mess and more subsidies will not solve the problems. Just look we just raised the sales tax for transit and they are still short.

Comment by nonewtaxes Monday, Sep 8, 08 @ 11:27 am
When each ride costs more than what the public transportation system patron deposits into the fare box rising ridership means a need for more subsidy money for the agency.

What is surprising is that the author of the article seems clueless about how the economics of public transportation work.

You can improve the cost structure and eliminate the rampant featherbedding and excessive benefits, but the underlying problem will always be there as long as each user needs a third party to pay the difference between what they pay and what it costs for the ride.

There is no free lunch and the taxpayers are not thrilled by the eternal subsidy game.

Comment by Plutocrat03 Monday, Sep 8, 08 @ 11:45 am
I do think CTA and RTA are worthy of some assitance, HOWEVER somone should look at the operating expesne contained in salaraies and retirement benefits. Many of those employees receieve fomrulas based retirments benefits that have nothing to do with the actual amount of money contributed to the account by employee and employer (401(k) style)

Private business long ago abandoned these formula based retirments accounts as way to costly. Before tossing huge sums of money I think a fair evaluation of salaries and benefit cost is in order.

Same for Universities.

Comment by Ghost Monday, Sep 8, 08 @ 12:44 pm
There is a public good involved with mass transportation, so subsidies are logical as the tradeoff for less congestion on the roads and less oil consumed. But increased ridership has to mean more revenues — just add another car or two onto the length of the trains; how much expense can that add?

I just wonder if they smell fresh meat available from the Sweeps bill, and want their piece of the action.

Comment by Capitol View Monday, Sep 8, 08 @ 1:16 pm
hmmmmmmmm the same old babble and finger pointing. Here’s a new idea to consider - Everyone who rides has a cost factor. Let some work the cost off by making contributions based on their expertise. That could be fundraising or media relations, or laboring, but something to cut costs and add to the product.

I think one thing is clear - the existing system of labor contracts, pensions which are honored, but not funded needs to be changed. The political system hasn’t served the needed services well. New thinking is needed!

Doug Dobmeyer

Comment by Doug Dobmeyer Monday, Sep 8, 08 @ 1:32 pm
The issue isn’t one of subsidy. It’s a question of regional priorities and wise investment. If we spent as much energy scrutinizing government spending on roads and highways and other subsidies associated with driving, we would have realized long ago that transit is a great deal. And we wouldn’t need to have any of this discussion right now.

Comment by Lee Monday, Sep 8, 08 @ 1:54 pm
Lee, I’m in agreement with your assessment, but it’s simply not gonna happen, at least not short-term. That’s why a modest fare increase across the board is needed, and should be implemented before year’s end. A $2.25 (as opposed to the current $2) ride from Rosemont or 95th or Kimball is quite a deal. What’s more, the CTA consistently reminds us that they’ve $6 billion-plus in capital needs, and that doesn’t really include any meaningful system expansion. If escalating gas prices and a 10% year-over-year increase in ridership doesn’t spur any legislative action from local, state, or federal government, what will?

Sadly, and ironically, Daley seems to be the most interested in enhancing and expanding the CTA, but we all know the reason for that…

Comment by The Doc Monday, Sep 8, 08 @ 2:24 pm
Hasn’t the CTA just admitted to wasting $150 million on an ill-advised Block 37 Superstation, for express trains to O’Hare on a fantastic proposed new dedicated right-of-way along the existing Blue Line that would cost another billion or so to get people to O’Hare 20 minutes faster? Doesn’t the CTA now want to spend another $45 million to mothball Block 37 and settle any lawsuit with the developer? Just asking. Now they want help on the $66 million deficit?

Comment by Legal Eagle Monday, Sep 8, 08 @ 2:30 pm
If it is good policy to lease the skyway for 99 years, and to sell off the state lottery, and to maybe lease out Midway airport, why not put the CTA on E-bay, or similar.

It is an incredible franchise and a monopoly. It will sell. In private hands, it will make money.

Selling with a guarantee of an infusion of capital by buyers may be the only way to get rid of an 1880’s train system and get rapid transit system that will not embarass the city in 2016.

Comment by Anon III Monday, Sep 8, 08 @ 2:37 pm
Has there ever been a study showing what the average cost of a typical CTA/RTA rider across the entire system and what the charges would have to be if there were no state or city funding? Using AnonIII’s idea of a private CTA, if it could show a real profit why not go that way?Trouble is rides would surely be significantly above $2.00. Where is the political tipping/screaming point: $3, $5, $7 compared to what people are used to and compared to the cost of driving?

Comment by zatoichi Monday, Sep 8, 08 @ 3:02 pm
Anon III, you say: “It is an incredible franchise and a monopoly. It will sell. In private hands, it will make money.”

OK.

Do you any evidence that shows companies, either here or abroad, are interested in buying an aged mass transit system, one that needs billions of capital upgrades?

Do you any information about what a business model would look like for such an undertaking?

Do you have any assurance that such a private-ownership scheme would avoid the problems that led to public takeover of the CTA in the early-to-mid 20th century?

Finally, how would a private owner work with the other two members of the RTA?

Comment by tom73 Monday, Sep 8, 08 @ 3:04 pm
Tom73:
There are private transportation companies everywhere: Airlines, interstate bus companies, charter buses, taxi cab companies, & school bus companies. If you want to ride, you pay the fare.

You say CTA can’t survive as a private system? I ask if it can survive as a public system?

Anybody can stay in business if they have the unlimited funds of the taxpayers to pay the bills.

This is not completely publicly owned system now. Any capital improvements are financed by bonds, and the taxpayers pay private investors interest on the bonds at the going rate for the use of their money. Why not pay private investors for their management too?

Comment by Anon III Monday, Sep 8, 08 @ 3:24 pm
Cutting mass transit service in a major metropolitan area never made any sense, even without the current gas prices. We should be moving in the opposite direction.

Kudos to Hubermnan for making small reductions in adminstrative services/staff. I’m sure there is room for more adminstrative streamlinning and consolidation.

Garbage collection outsourcing seems sensible.I hope they assit the employees who lose their jobs in getting placed. I thnk they should consider outsourcing other services not directly related to the core mission of transporation in the interest of efficiency/cost saving.

However, I think the front line workers are entitled to decent wages and reasoable benefit packages.

Blago’s continued policy of creating unfunded mandates for free services without any funding can only be characrezed as idiotic grandstanding. Reduceed fares make sense - free service makes little or no sense, except for poor people on relatively low fixed incomes. Aa a whole disabled people are more deserving of free service than the elderly, many of whom are very well off.

Let’s hope we start investing in our mass transit infrastructure sometime soon!

Comment by Captain America Monday, Sep 8, 08 @ 3:24 pm
Anon III: I should have been more clear.

Do you know of any company anywhere that would be interested, in reality, in buying, upgrading and running the CTA?

I did not ask what you thought might be nice, but for actual evidence of any interest. For instance, do you know of any companies that have bought aging mass transit systems anywhere in the world and then operated them with little or no taxpayer-backed subsidy?

Yes, my bias is against private ownership for various reason, but, honestly, I am for nearly anything at this point that would make Chicago-area mass transit better. In short, I could be persuaded to the benefits of private ownership were some of those questions answered with realistic information.

Comment by tom73 Monday, Sep 8, 08 @ 3:30 pm
“It is an incredible franchise and a monopoly.”

It’s not a monopoly. Cars are a competing form of transportation, and we continue to heavily subsidize driving, which throws off any potential for profit through the private market. We’d first have to charge market-rate prices for street parking and road use in the city, and traffic enforcement, etc., to create a fair market. Then you could talk about privatizing transit as well.

Doc, I agree a fare hike should be on the table. But it needs to be part of a larger discussion about our greater transportation system, including cars, pedestrians and bikes. We need to consider more carefully where we’re driving our horse with the carrots and sticks we’re holding right now.

Comment by Lee Monday, Sep 8, 08 @ 3:34 pm
===We’d first have to charge market-rate prices for street parking and road use in the city====

Imagine what the price for road/bridge usage would be in rural Downstate areas that have a lot less traffic.

If you think that only mass transit is subsidized, you are either woefully uninformed or deliberately deceptive.

Comment by Rich Miller Monday, Sep 8, 08 @ 3:36 pm
Society cannot afford a subsidy of substantially more than 50% of the operating subsidy of any public benefit.

That, for example is why the famous bridge to nowhere makes no sense. Costs are too large for the number of people served…..

Comment by Plutocrat03 Monday, Sep 8, 08 @ 9:02 pm