CTA sets the stage for 2012 fare hike with big deficit announcement

With Tuesday's announcement of a $277 million deficit, the CTA has set the stage for tougher union negotiations and an inevitable fare hike in 2012.

Union contracts expire at the end of this year, and CTA President Forrest Claypool minced no words Tuesday in pinning most of the blame for the deficit on "archaic work rules" and "the highest cost-adjusted rail and bus operator salaries in the nation."

Though Claypool still hasn't formally announced a fare increase for 2012, the hints were stronger than ever in his press release and remarks before the City Club of Chicago. From the release:

"Claypool said it was time to deal with these challenges and make decisions that will fix the CTA’s broken fiscal system.

“We can’t defer the hard decisions any longer. The CTA’s cost structure is too high given the revenues and tax receipts we have to operate it,” Claypool said. “Changes are needed now to shore up the CTA’s fiscal situation. A robust, modern transit system is not just important to transit riders. It is important to the livability of the region and its ability to attract jobs and businesses. An investment in transit is an investment in the future of this region.”

Claypool won't release his budget for "several weeks," thus missing the RTA's deadline for submission. The CTA president caught RTA heat for his tardiness, said a Tribune report.

“It is certainly disheartening that the CTA is late because the RTA needs to take a regional view on how the three transit budgets will affect riders who use multiple transit systems,’’ said Jordan Matyas, RTA deputy executive director. “When you are talking about fare increases, a CTA fare increase could affect a fare increase at Metra.’’

Frankly, I don't understand how the CTA could draw up a final budget without knowing the results of union negotiations.

Thus, the most interesting parts of this budget certainly are still way ahead of us. Hold on to your floor and seat poles, we're in for a wild ride.

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  • :Let's start backwards first:

    "Frankly, I don't understand how the CTA could draw up a final budget without knowing the results of union negotiations."

    It has always been that way. Look at any budget document and it has a list of deadlines supposedly mandated by the RTA Act.

    Yet, the last couple of contracts were the result of arbitration. The Huberman one was supposedly a negotiated settlement of the arbitration case, contingent on getting the tax increase, which they did. If you remember, I posted a link to where Kruesi said that the CTA Board had no choice but to accept that arbitrator's award.

    Kelly sure didn't sound last night like he was going to roll over in a couple of days.

    So, you do what Rodriguez did--you pass a budget and tell the union, either you agree to reforms, or a bunch of you get laid off. But you don't wait until 2014 to propose a 2012 budget.

    Off that--
    --I knew that Claypool was messed up when Metra and Pace said what their proposed budgets were, but CTA couldn't.

    --I don't see how a lack of a CTA budget affects Metra. They have a proposed budget, apparently justified their fare increase to Kirk and Durbin (like they really had to), the distribution ratios under the RTA Act are set, and even Mike Payne knows that CTA is not going to be subsidizing Metra.

    --With "corporate speak" like "cost adjusted salaries" and the extra board supposedly costing $40 million a year, Gump still has a long way to go to get to $277 million, which I think is about 50% more than what caused the drastic cutbacks in 2010.

    --The real problem is that with various schemes, the state, CTA, and RTA have borrowed to the point that fare increases are probably going to go to debt service, just like the Real Estate Transfer Tax not working. Ergo, those entities can no longer borrow their way out of it, like that was going to work for the last three years.

    That's the bottom line.

  • In reply to jack:

    Let me also clarify something for the people here who are unclear on the concept, which, in this case, unfortunately includes you, Kevin.

    As I implied by saying that the distribution ratios were pretty much set in the RTA Act (except for discretionary money usually given to the CTA), the process starts with the RTA estimating tax revenues and telling the service boards how much each can expect. That process is set out in any service board budget document.

    The process is notCTA saying that it has, say, $900 million in labor costs, and so the RTA should fund that. That's bassackward.

  • In reply to jack:

    I have to agree with you this time jack, there is no way CTA could subsidize anybody else.

    However, concurrent with the 2015 implementation of inter-agency fare policies, a way could be found to collect, share, and distribute funds from an MED 'L' operation; along with the overall intertransfer policies governing all the Transit Operators.

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