Gov. Quinn's ill-advised bailout; unions keep pressure on CTA

Instead of fixing a broken transit funding mechanism, Gov. Quinn is just postponing the inevitable by borrowing money to prevent CTA fare hikes. And as I mentioned last week, it's not at all surprising given this is an election year. As the Tribune noted in a scathing editorial Thursday, this is not doing anyone any favors, as it just piles more debt on the transit agency.

Frankly, I'd prefer a smaller fare hike and rescinding as many of the service cuts as possible. I think doing so would benefit more people.

Meanwhile, the CTA unions continue to say there's plenty of fat that could be cut in CTA management to avoid both fare hikes and service cuts. See the WGN-TV report below. I once thought the unions might come around and give in on some CTA demands, such as furlough days. I am no longer very hopeful.

 
 

CHICAGO TRIBUNE VIDEO

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  • So pissed at Quinn's short-sighted stunt. After Gov. Hairdo got booted from office I never thought I'd see another IL governor so hostile to the long-term viability of transit. How naive I was. If he thinks he's buying votes, he's sadly mistaken. Glad the Tribune nailed him last week. Sadder still is the total lack of spine on the part of the CTA Board to accept the money. I'm not really sure why I was expecting anything different, but a girl can dream.

  • In reply to marthat3:

    Sadder still is the total lack of spine on the part of the CTA Board
    ______________
    Nothing new about that. I see that Quinn is now violating Section 19 of the Act, http://www.chicagonow.com/blogs/cta-tattler/2009/11/quinns-ill-advised-bailout.html#comments as revealed in this press release. http://www.transitchicago.com/news/default.aspx?Month=&Year=&Category=2&ArticleId=2500 Nothing new about that, either.

  • In reply to jack:

    Sorry, wrong reference to the Act. http://ilga.gov/legislation/ilcs/ilcs3.asp?ActID=982&ChapAct=70%26nbsp%3BILCS%26nbsp%3B3605%2F&ChapterID=15&ChapterName=SPECIAL+DISTRICTS&ActName=Metropolitan+Transit+Authority+Act.

  • In reply to jack:

    ... I once thought the unions might come around and give in on some CTA demands, such as furlough days. I am no longer very hopeful.
    ______________________________________
    I might have mentioned two reasons for being less hopeful:

    1)The 80% who did not get 60 day letters know who they are.
    2)With this bailout, the union now expects another bailout to save service levels. For instance, Pace may have done the dumb thing by relying on service cuts to balance the suburban service budget and may now be crying on where is its share of the money, giving the CTA some moral support.

  • In reply to jack:

    It's certainly not any kind of a solution, but criticizing Quinn is unwarranted. He's boxed in by the economy destroying itself, Madigan's refusal to raise taxes, and the anti-tax mania that is still quite strong in Illinois and among demagogues like the Tribune editorial page.

    If Quinn had his way, I don't doubt he'd do the right thing and raise gas taxes and income taxes on the rich to fund transit and all the other vital public services that are now being gutted. Scapegoating him is counterproductive.

  • In reply to razetheladder:

    Jake, I think Quinn just should have let it go -- and not gotten involved at all. Just let the cuts and fare hikes go into effect as scheduled. That's why I'm criticizing him.

  • In reply to KevinO’Neil:

    Ok, I was misled when you wrote "Instead of fixing a broken transit funding mechanism..." - as if fixing transit funding were a viable option while anti-tax hysteria reigns.

    But condemning Quinn with broad brushstrokes obscures a much less clear-cut argument: is it wiser to preserve ridership at the cost of higher interest charges, in the hopes that the economy will rebound and allow the debt to be retired quickly, or does it make more sense to risk losing some riders permanently so as to avoid pushing sacrifice into the future?

    Both positions have strong arguments behind them. I prefer to focus my own criticism on the deeper problem: the structure of the Illinois tax code and the irrational aversion to raising taxes on those who can afford it.

  • In reply to razetheladder:

    Jake:
    Based on the Tribune article of today that CTA riders pay about 1/7th to 1/9th of the cost, what taxes are you personally willing to pay? And how much?

    Don't suggest raising others taxes until you answer that question.

  • In reply to jack:

    I'd gladly accept a 10 percent tax increase on my income of $30,000 if that would convince everyone who makes ten times that much to pay their fair share. But this is a red herring - people who make $30,000/year should *not* have their taxes increased. Their wages have been stagnant for 30 years - despite rising productivity - while the incomes of the rich have skyrocketed. This massive redistribution of wealth upward is the fundamental problem, and the anti-tax demagoguery is primarily meant to distract attention from decades of class warfare by the rich against the rest of us.

  • In reply to razetheladder:

    Your red herring argument doesn't wash. It is real easy to advocate raising everyone else's taxes. Quinn and Hynes are both running on that platform. Hynes isn't disclosing, except on the occasional interview, that one of his ways of "solving" the problem is increasing the RTA's tax base by extending the tax to services. When all the users of beauty parlors find that out, they will be crying that he didn't restrict it to the wealthy. Quinn wants to raise everyone's income tax by 66% (not the 10% you seem willing to pay) and it isn't clear whether he would commensurately raise the exemption.

    BTW, you didn't tell us the amount. Am I supposed to figure out what someone making $30,000 a year pays in income, sales, real estate transfer, and other taxes?

    To put it simply, rhetoric alone will not pay the 84%-90% of the cost of your bus ride that you and other riders do not seem willing to pay.

  • In reply to jack:

    Or even if you take J-Man's numbers, only 1/4th of the cost.

  • In reply to jack:

    Sorry if I was unclear - what I meant was I would personally be willing to pay $3000 more in taxes (10 percent of my income) if that would get well-off people to pay their share.

    You dismissed my argument without actually addressing it. There has been a massive redistribution of wealth upward over the last generation - rich people are getting far more than their fair share of the wealth produced by society. That's why tax increases should be focused on them.

  • In reply to razetheladder:

    Basically for the reasons stated by MK. Also, unless you are getting your $30,000 income from the government, some capitalist is going to have to provide the job you'll need to get out of your depressed income level.

  • In reply to razetheladder:

    Jack, you have to remember, it was a Hilkevitch story, meaning he doesn't really dig deep and try and figure out if the CTA is gaming him. In fact, those figures are completely ridiculous and are easily proven as bogus by CTA's own Budget Book, available online. Their 2009 projecte Operating Expense is $1.271 Billion. Their annual rides are expected to be 517 Million. Do the math, that's $2.45 of cost per ride. Now, even if you add in the Capital expenditures (why they would do such a thing, who knows?) that's another $815 million, only raising the cost to $4.03 per ride. No where near the $7 or $9.

    In fact, on pages 96-97, CTA does a "Comparative Analysis" to other cities, and shows a "Operating Expense/Unlinked Trip" of only $2.82.

    So the CTA brass are completely playing with numbers, which is a risky game to do when you have a union negotiation going on. The CTA has the upper hand, and has plenty of things to talk the Union down on in this economy, yet to go out and look like liars, is real risky, in my mind.

    [What's even scary, for all of us, is that the Tribune didn't even bother to fact-check. Should I believe the other Tribune transportation story about the Tollway projects being on-time and within budgets? How can believe them if they just repeat what the officials are feeding them?]

    By the way, Kevin O, there are probably not that many Union staff who can give a furlough--they are needed to keep operations going. Pay cuts or benefit cuts are the only reasonable things probably on the table. Both you and Hinz made this mistake, recently.

  • In reply to JMan01:

    JMan, thanks for your comments. When I suggested that union staff should take furlough days off, I didn't indicate under what circmstances that could occur. You are correct that if would be near impossible -- without sizeable overtime -- to pull this off without some cuts. So why not do *some* cuts to save the bulk of routes. And while you're at it, go ahead and pay some OT. It's still cheaper than bringing on another person.

  • Since you didn't figure it out, it is that "Members of the Board shall be residents of the metropolitan area and persons of recognized business ability." It isn't clear to me that an environmental activist and a poverty attorney meet that qualification.

  • It looks like bus drivers make twice as much as jake, plus benefits. I wonder if he is still defending subsidizing their pay.

  • Hey Jake,

    A lot of people would saying paying 40% if your income is a fair share. I would agree with what others have said. Lets cut the fat, waste, and corruption before we start raising taxes. There are tons of unemployed people in Illinois who would love to be making $15 an hour right now. The union is choking the city.

  • For the purposes of discussion, and to let people make up their minds as to whether it's unfair to ask the union employees to take a pay freeze, here is a salary (wage) increase/decrease comparison.

    Assume a union employee and a non-union employee made $68,000 per year in 2007.

    In 2010 (assuming they are still employed), the union employee will make $76,841, and the non-union employee will make $67,090 - a disparity of almost 13%.

    In 2011, the union employee will make $79,530, and the non-union employee will still make $67,090 (unless there are additional furlough/unpaid days).
    This is a salary difference of 15%.

    Now, I'm not advocating that union employees be asked to take furlough days, since staffing levels are needed for service. However, I see nothing wrong with asking the Union to forgo the 3-3.5% pay increases in 2010 and 2011 - to help save other jobs and to maintain service for customers.

  • I don't have as much of a problem with high salaries, as these pension guarantees. There is a reason the private sector no longer offers them to new employees? It is unsustainable.

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