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* As we were told yesterday, there will likely be no fare hikes this year, but there may be no avoiding any fare hikes in the near future…
A CTA fare hike is looking more likely next year as the transit agency, hit hard by free rides for senior citizens and rising fuel costs, announced $40 million in internal cuts to balance this year’s budget.
“A fare increase has to be on the table” in 2009, CTA Chairman Carole Brown said Monday.
The free rides for nearly 100,000 senior citizens and others each day will cost the CTA at least $30 million this year and double that amount next year, according to projections based on soaring increases in non-paying riders. […]
A decision on hiking fares will be made after next Monday when the Regional Transportation Authority sets the CTA’s funding levels for 2009, Huberman said.
Further straining the CTA’s bottom line, the RTA has already warned about lower-than-expected revenue from a state sales-tax increase that the legislature approved in January for Chicago-area transit.
Also, the guv’s veto of $16 million for reduced fare subsidies will reportedly cost the CTA double that amount next year.
* More…
CTA Chairman Carole Brown says, “I don’t think anyone anticipated the rise in fuel costs to this degree, as well as really the explosion in the number of senior riders who are going to ride for free.”
Thoughts?
posted by Rich Miller
Tuesday, Sep 9, 08 @ 10:47 am
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CTA Chairman Carole Brown says, “I don’t think anyone anticipated…, as well as really the explosion in the number of senior riders who are going to ride for free.”
Obviously, no one at the CTA ever volunteered to help at a senior citizen picnic. The chemical reaction between the words senior citizen and free are a volatile mixture.
What she really should say is, due to our poor planning and the Governor’s poor approval ratings we will need to stick it to the paying riders because we already stuck it to the taxpayers.
Comment by Phineas J. Whoopee Tuesday, Sep 9, 08 @ 11:04 am
Here are some questions I would like some enterprising reporter to ask the CTA:
A) An “explosion” in senior riders is the reason? Senior ridership increased by 45%, according to the stats in the paper. Weren’t their original estimates of $30 million based on a DOUBLING of ridership? Now, it is twice as expensive next year from less than half the increase they expected?
B) The 29,000 riders per day increase of seniors would equal 8.4 million rides this year, based on a March 17 start date. Is it REALLY costing them $4 per ride for these senior riders?
C) They haven’t actually ADDED any new service, so even if you have new riders, where is the increased expense coming in?
D) Is it more likely that this budget hole came from the $100 million cost overrun at Block 37?
E) In the end, didn’t they just got a half a billion dollar increase in funding from us taxpayers? Did they burn through it THAT quickly?
You can call me biased, and I am, but I am just very skeptical of their claim that seniors riding free is breaking the bank when the math doesn’t add up. I strongly support transit funding, but maybe they need to open the books on this.
If someone can prove my estimates wrong, I will change my tune.
Comment by GoBearsss Tuesday, Sep 9, 08 @ 11:05 am
The CTA isn’t actually losing $30 million due to free rides for seniors. A fair amount of those trips might never have been taken had they been required to pay. These lost revenues assume that demand is perfectly inelastic … i.e., that if free rides were eliminated, all of these free riders would pay the fare. That cannot be the case.
Comment by Occasional commenter Tuesday, Sep 9, 08 @ 11:07 am
I think it’s impressive that their budget probably would have been fine had Blago not put his dirty fingers all over the funding package to include free rides. Imagine if our brilliant gov. hadn’t done that. The legislature would still have passed the funding and other transit reforms, and the CTA would actually be in decent shape for once, despite the rise in fuel costs. We have to give the CTA credit for cleaning up its act and finding a viable solution to ongoing funding crises. It’s not their fault Rod was playing games with the legislation.
Comment by Lee Tuesday, Sep 9, 08 @ 11:10 am
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Pingback by CTA Fare Hikes On The Way | A Chicago Blog Tuesday, Sep 9, 08 @ 11:11 am
Yeah that guy Rod and his bright ideas. Well OK the free rides for senior isn’t helping the CTA’s financial situation, but what else isn’t helping. Free rides for seniors isn’t the only reason.
Comment by Levois Tuesday, Sep 9, 08 @ 11:59 am
As a down-stater, I can hardly wait to once again subsidize the CTA. Now that the Gov has closed most of our State parks south of I-80, I can hardly think of a better way to spend my tax $.
Comment by How Ironic Tuesday, Sep 9, 08 @ 12:47 pm
HI, while the state park closures are an abomination, downstate is a net importer when it comes to taxes. You’re not financing anything in Chicago.
Comment by Rich Miller Tuesday, Sep 9, 08 @ 12:50 pm
The Trib nails it in one of today’s editorials, from which I give you three key paragraphs:
“Last week, Blagojevich signed a bill that requires public transit agencies to provide free rides for poor people who have disabilities. Earlier this year, he insisted on those agencies give free rides for senior citizens. (The Chicago City Council also got in the act, telling the CTA to give free rides to soldiers and disabled veterans.)
“Meanwhile, Blagojevich has cut the state funding that transit agencies counted on to help pay for free and discounted transit rides. That’s putting a squeeze on the people who have to provide the services the governor loves to give away.”
And: “So, just months after Blagojevich—and the Illinois legislature—helped bail the CTA out of a budget crisis, they are shoving the CTA back into a crisis.”
And for GoBearsss @ 11:05 a.m., the higher expense is coming from higher gasoline and diesel fuel costs. All transit agencies across the country are reeling under higher gas prices, too, just as ridership is skyrocketing.
The bill is now due for 50 years’ worth of ignoring every non-driving option for getting around, and this part of it has been aggravated by Gov. SFB and legislators who saw a “gimme” chance to pander to seniors.
Transit and passenger rail will serve this state much better in the post-oil world that’s a-birthing than expanded highways. The sooner we face and deal with this new reality, the better off we’ll be. Not that I’m holding my breath…
Comment by Railfan Tuesday, Sep 9, 08 @ 12:59 pm
Railfan, that editorial was inaccessible earlier.
Comment by Rich Miller Tuesday, Sep 9, 08 @ 1:00 pm
Rich,
I figured as much, hence the quoted grafs instead of an attempted link. Besides, why burden everyone else with all the annoying ads, pop-ups, screen peels and video feeds?
Comment by Railfan Tuesday, Sep 9, 08 @ 1:03 pm
“the higher expense is coming from higher gasoline and diesel fuel costs”
Right, not seniors. As the CTA’s Chief Financial Officer admits.
Note that no mention of impacts due to seniors in any financial report to date. They even say that their “average fare” is UP and above budget.
What it does note, however, are fuel costs, and that revenue from the Real Estate Transfer Tax is about $3.5 million per month below budget (wouldn’t that be $42 million per year? Or, about exactly what they say their deficit is?).
Comment by GoBearsss Tuesday, Sep 9, 08 @ 1:41 pm
Sorry - the RETT was actually down $4.3 million per month.
Even worse!
Comment by GoBearsss Tuesday, Sep 9, 08 @ 1:47 pm
blaming seniors is bs.
There are only 2 direct costs related to the seniors:
1. The cost to riders in terms of more crowded trains and buses should seniors ride more frequently at peak times.
2. The lost revenues from seniors who paid full or reduced fares before.
More likely, the budget gap is due to the economy going into a recession, causing sales taxes to come in below projection, which is made even worse by the Daley and Strogers recent sales tax hike.
The mothballing of Block 37. The extra millions for shutting that money vacuum down expands CTA’s budgetary hole.
The biggest cause, however, would be the falling real estate transfer taxes. With the housing market in Chicago sliding backwards, those revenue projections are going to be waaaaaaaaaaaaay short.
If CTA could get more capital funds, it could speed up the upgrading of the bus fleet. Hybrid buses get nearly double the fuel efficiency of standard buses.
The ancient rolling stock can’t be helpful to CTA’s operating costs.
And the years of neglect from the Mayor’s Office caused the tracks to fall apart so that now the CTA has to spend that much more time and money getting things bolstered to meet minimal safety requirements.
At the end of the day, this is the Mayors fault. He wanted Block 37. He appointed Kruesi and Brown. And people want to trust Daley with the Olympics?
Comment by jerry 101 Tuesday, Sep 9, 08 @ 1:57 pm
Nothing’s free, no matter how many people would like it to be.
Comment by steve schnorf Tuesday, Sep 9, 08 @ 2:17 pm
How about “The Chicago Transit Board today approved a five-year $4.2 million contract to Jones Land LaSalle to outsource certain real estate management responsibilities of CTA properties” and they now hired a Chief of Marketing Revenue (sorry, may be the wrong title) at $190,000 to oversee this contract. JLL states they will generate $100Million from these properties which now generate $7Million per year. So they will generate 300% more by blessing these properties, all in horrible shape?
Comment by James the Intolerant Tuesday, Sep 9, 08 @ 2:58 pm
To paraphrase Milton Friedman; Governor Pinnochio - “there is no such thing as a ‘free ride’” As the Tribune editorial points out, your freebies, coupled with the veto of funding for discount fares, make a fare increase for “working people” inevitable. Your fiscal delusions cost real money!
You must have been listening to Dick Cheny when he said ” Reagan proved that deficits don’t matter.” We found out that you considered yourself a “Reagan Democrat” after you got elected.
Comment by Captain America Tuesday, Sep 9, 08 @ 3:24 pm
Good rant by the Mayor today on who to blame for any fare hikes, but it really flares my temper that Blago’s spokesman blew it off and announced CTA should follow the states example and cut jobs. This from the guy’s office who is droaning on and on over jobs for people, we must have a CP to put people to work blah blah. Follow Rod’s example? How many jobs has Rod pitched out the door in the last few weeks. If the CTA were to follow Rod’s example they would just shutter a number of vehicles and scale back the routes, you know, like the example of shuttering historical sites, closing parks, smacking DCFS at the front line . How do those spokespeople spout such hot air and expect it to be a creditable defense.
Comment by Princess Tuesday, Sep 9, 08 @ 3:43 pm
There is no one to blame for an increase in CTA fares. It is the foundation of the business model.
When costs go up, money has to come from somewhere. It is irrational to consider the subsidized mass transit user to be completely immune from cost pressures. Whens cost go up the fares need to be adjusted accordingly.
All the arguments of good for society vs taxpayer subsidy only work as far as deciding what percentage of a subsidy will be provided. When you keep the fares flat, the required subsidy continues to increase. What percent of the costs does the fare box cover today? 40%, 30%, 20%? At what point do you give up the fare charade and allow free rides for all?
When will the taxpayers who support this system start demanding services that will work for them? Currently we have a city centric system designed to bring people from the ‘burbs into the central core and back. Workers need to be able to move from ‘burb to ‘burb. Someone will play the equal services card for the rural communities as well some day.
Comment by Plutocrat03 Tuesday, Sep 9, 08 @ 5:51 pm
Can anybody answer this? Fuel prices won’t stay up for ever, but whenever fuel prices go down they could always lower the fares right? Yeah I’m sure most of us knows the answer to that.
Comment by Levois Tuesday, Sep 9, 08 @ 6:45 pm
You know it’s a good thing that Carole Brown is only the chairman of the CTA with this foolish behavior and not somewhere where she’s responsible for a lot of other people’s…oh, never mind. That place ain’t doin’ so well either.
Privatize this, Mr. Mayor.
Comment by Arthur Andersen Tuesday, Sep 9, 08 @ 6:59 pm
Believe me, math makes my head hurt, but isn’t it something like this?
The CTA is losing money on the free rides for seniors who were previously riding the system. They’re not “losing” money because of new free senior riders, because they’re not adding buses and cars or increasing routes because of added senior ridership.
Is that correct? As much as I like to rap Blago’s knuckles, I’m wondering if he’s not taking a bigger hit than he deserves here. The CTA has been in crisis since Moses wore short pants.
The whole regional transit issue really needs some deep thinking regarding funding sources (sales tax), contracts (all those folks sitting in the former ticket booths all day doing nothing) and priorities (all those empty buses riding up and down DuPage and Kane).
Jim Reilly is the head of RTA and there’s no better brain to get the ball rolling. And if Obama wins, and we can cash any chips with him, Durbin, Daley, Rahm, et. al. should see to it that we can have half as good a system as Metro, the excellent DC system that loses money hand over fist taking all the feds to work.
Comment by wordslinger Tuesday, Sep 9, 08 @ 8:14 pm
=the excellent DC system that loses money hand over fist taking all the feds to work=
except the thousands of various Feds that aggravate global warming by having some kind of security detail/bodyguard/driver movin’ them around in a ginormous SUV or Crown Vic 24/7.
oops, wrong thread?
Comment by Arthur Andersen Tuesday, Sep 9, 08 @ 9:46 pm