The Chicago Transit Authority is projecting a record deficit for 2004, according to revised figures released Wednesday that threaten to force the agency to raise fares, curtail service or lay off employees.
CTA officials said no decisions have been made on how to correct the budget imbalance, which is projected at $9 million in 2003 and worsening to a gaping $88 million in 2004.
The Regional Transportation Authority issued the sobering numbers one day after Mayor Richard Daley said a case had not been made for the first CTA fare increase in 12 years.
“You can’t just come up and say, `I want a fare increase,'” Daley said Tuesday. “Everybody will want increases in their budgets.”
The dire deficit projection was released as CTA bus drivers and mechanics, who have been without a contract since 2000, continued to threaten a work slowdown or stoppage unless their contract dispute is resolved.
About 150 CTA workers, led by Rev. Jesse Jackson and the Rainbow/PUSH Coalition, protested Wednesday in Daley Plaza for what union spokesman Joe Hicks called a “fair and right contract” that guarantees just wages, better benefits and increased safety.
Jackson said that face-to-face negotiations between union and CTA officials–not just arbitration–must occur this week and make appreciable progress or the drivers will be “forced to escalate” the situation with a slowdown.
The projected $88 million deficit in 2004 is partly the result of a weak economy that has halted five years of CTA ridership growth and slashed sales-tax revenue the CTA heavily relies on to balance its budget. The CTA is required by law to generate at least 50 percent of its operating budget from customers, and deficits may not exceed the amount of sales tax and other public funding available.
Metra and Pace boosted fares in recent years, giving them a little financial breathing room in the upcoming budget process.
CTA ridership is down by 5 million rides, or 2.4 percent, in the first six months of 2003 compared with last year, the CTA said.
After squeaking by so far in 2003 without a fare increase, the CTA has no alternative other than to hold down costs and increase revenue, said Joseph Costello, chief financial officer at the RTA, which oversees the finances of the CTA, Metra and Pace.
“Unless you were holding out for a miracle, this should not be a surprise,” Costello said.
The last CTA fare increase, which boosted fares to $1.50 from $1.25, occurred in 1991. The CTA is evaluating the impact on ridership that would result from raising the base fare by up to 50 cents, a transit official said. Fare increases traditionally lead to a loss of riders.
Costello said a 50-cent hike would be “more than you would need” to erase next year’s projected $88 million deficit, although the deficit could increase if sales taxes collected in the Chicago area fall below the already downwardly revised estimates.
The CTA, which has focused in recent years on increasing ridership during off-peak hours, when there is excess capacity, is expected to use a fare hike as an opportunity to attract new customers to buy monthly passes and other fare cards that offer unlimited rides during a specified period. It would lure the new riders by imposing a smaller percentage fare increase on seven-day and 30-day passes.
Transit agencies in other metropolitan area have increased fares, including the MTA in New York, which raised its base fare to $2 this year.
CTA President Frank Kruesi was unavailable for comment, but CTA spokeswoman Noelle Gaffney said it is “too early to know exactly what the budget challenges will be.
“There are a lot of things we do internally to decrease costs and increase revenues.”
Asked about the prospect of a fare increase, Gaffney said: “Yes, there will be challenges in 2004.”
Laurence Msall, president of the Civic Federation of Chicago, said the CTA should concentrate on cutting costs and opening its books to the public. He said staff reductions and purchasing reforms should be studied first.
“The CTA is facing the same sales-tax pressure that the city of Chicago and the state are facing,” Msall said.
In its 2003 budget approved by the RTA, the CTA forecast a record $453 million operating deficit, which the RTA said could be covered by the sales-tax subsidy. But new numbers show the deficit has grown to $462 million, leaving the $9 million shortfall.
Next year’s projections are more dismal. The CTA initially showed a $442 million deficit in its preliminary 2004 budget. But new estimates boost the red ink to $530 million, leaving the CTA short $88 million.
RTA Chairman Thomas McCracken Jr. said new tax-revenue estimates issued by the state “are more dire than the projections made by the RTA” last year.
The CTA avoided a fare increase this year thanks to a roughly $20 million bailout from the RTA. But RTA officials said a reserve fund to help the CTA, Metra and Pace through emergencies is nearly empty.
But the budget deficit is no excuse to continue underpaying drivers and mechanics, said the protesters at Daley Plaza.
“There can be a raise without a fare hike,” said driver Tealie Smith, 56. “The money they do have they spend on everybody else, but can’t find it for us on the front lines.”
Smith was referring to a recent decision by the CTA board to increase pensions for top employees, including Kruesi.
