The Math Behind the CTA Fare Increase

Besides Rahm Emanuel’s comments about how people can just drive instead of buying more expensive CTA passes, the Chicago Transit Authority really is in a bit of a fix, thanks to increased costs, declining federal subsidies, the disappearance of the stimulus, reduced state subsidies, and perhaps the fiscal cliff.

CTA car

 

Today in Gapers Block, Ramsin Canon has a good piece on the mayor’s less-than-felicitous response to CTA fare increases, which boils down to “let them drive cars.”

And from the point of view of a supposed Millionaire’s Mayor, weekly passes may seem to be something that tourists buy, thus raising their cost a way to milk out-of-towners. But they’re also purchased by people who can’t afford to pay for a monthly pass in one shot, even if they’d ultimately save money, because they rarely have that much free cash on hand. Since something like 55% of CTA users buy daily, weekly or monthly cards, that has to be a significant proportion.

It’s also bad policy, more to the point. One of the only positives to come out of the parking meter privatization was that market-pricing of parking would induce people to walk, bike, and use public transport, thus freeing up the streets and improving circulation. Parking is aregressively funded subsidy; non-drivers subsidize drivers. There’s a lot of reasons for this, but it mainly operates through the zoning code; developers are required to provide a certain amount of parking, which is therefore built into the cost of development that is passed on to consumers. Parking also creates inefficiencies of time; people cruising looking for parking and people pulling in and out of spots (or double parking) interfere directly with the operation of buses (and preclude the possibility of bus rapid transit).

Though the recent fare increases pretty much keep fares up with inflation over the years, I’m sympathetic to the need to buy weekly passes instead of monthly for financial reasons, as that’s the spot I was stuck in during college, when I was working downtown. 

After I posted on the change in CTA fares over the years, @GovInTrenches asked: has the public funding of CTA kept up over the years? It’s a good question, and the answer is basically yes, but it does point to a major reason why CTA fares are going up.

Compare 2002 to 2012. In 2002, the RTA gave the CTA about $441.6 million, or $567.9 million in 2012 dollars, and the CTA generated $473.2 million through fares, advertisements, and the like. That ratio, about half and half with a little more coming from the CTA, is pretty typical (and is mandated by law).

Of course, some things have gotten more expensive, well past the rate of inflation. In 2002, the CTA spent $23 million on fuel ($29 million in 2012 dollars). In 2012, it spent $65 million.

By comparison, labor cost more: $667.6 million in 2002, or $858.4 million in 2012 dollars, compared to $919.1 million, in both years 73 percent of the budget. While labor (always the biggest chunk of the CTA budget) increased by about $60 million in inflation-adjusted dollars, fuel, a comparatively minor piece, increased by $42 million.

Then there’s the matter of the CTA’s reduced fares, which have blown a hole in the CTA budget:

Notably, the Authority is supposed to receive a subsidy from the State of Illinois to provide free and reduced fare rides; however, the free rides program still accounts for millions in lost revenues from fares that are not entirely replaced by the subsidy. In its FY2010 budget, the Authority estimated that the free rides program alone would cost the Authority $30 million in lost revenue for the fiscal year and budgeted that it would only receive $16.1 million from the State’s reduced fare subsidy.[5] Estimates from the University of Illinois at Chicago’s College of Urban Planning and Public Affairs’ Analysis of the RTA Seniors and People with Disabilities Ride Free Programs project that the Seniors Ride Free program cost the CTA between $16.9 million and $59.2 million in lost revenues.[6]  Furthermore, the State’s subsidy has dramatically declined from years before the implementation of Senior Free Rides Program. Until FY2008 the amount annually granted from the State was approximately $32.0 million.

In 2002, the reduced-fare subsidy was $32.3 million ($41.2 million in 2012 dollars). In 2012, it was $28 million.

So various aspects of running the CTA have gotten more expensive, both because of national trends (fuel costs) and state trends (the state cutting back subsidies). And over the past couple years, the CTA’s gotten some additional help that it hasn’t always received, and can’t count on. In 2010 and 2011, it received $83 million a year from the RTA for not raising fares. That money’s gone. And in recent years, the CTA has transferred capital funds for preventative maintenance, up to a high of $128 million in 2009. The CTA doesn’t want to keep using capital for maintenance, so it’s trying to prevent that.

Capital maintenance used to get a lot of support from the federal government, but as federal support to cities has declined over the years, so have federal subsidies to city transit:

The operating subsidies from the federal government were always somewhat modest, considered a supplement to local funding and farebox revenue. Capital funding, however, was largely taken up by state and federal government, mostly by the latter. By 1980, federal subsidies accounted for 80% of the capital expenditures for CTA and suburban transit, with state government providing most of the remaining 20%. Meanwhile, the level of operating subsidy began declining soon after its inception, steadily dwindling over a period of 25 years. In 1979, the Chicago region received about $80 million in operating fund subsidies (~$200 million in 2003 dollars), while in 1985 CTA got over $50 million (~$90 million in 2003 dollars). Around 1994 the operating finding levels took a nose-dive, with the federal government ceasing to provide operating funds in 1998, leaving those subsides, if provided, to state and local governments. The federal government was not shirking its duty to provide transit subsidies per se, but had made a conscious decision in the 1990s to pool all of its subsidies into capital grants. The bulk was for New Start Programs, designed to provide cities with no or poor mass transit with the funds to build new system infrastructure. Indeed, the CTA has been one of the beneficiaries of this decision, obtaining funds to renovate the Douglas, Ravenswood, and Dan Ryan lines, as well as other projects, under this capital assistance program. But, paradoxically, this has the possibility of creating a scenario in which systems have new, modern infrastructure but lack the funds to operate a satisfactory level of service on it, let alone a service of such quality and frequency to lure significant numbers of people from their cars.

Which brings me back around to Canon, who writes: “A word in the mayor’s general defense. There aren’t all that many options for cities. Since the 1970s, the neoliberalization of urban planning and policy, at the federal and state levels, has starved cities of revenue and left mainly regressive revenue sources, or issuance of debt in the form of bonds, as the principal tools.” The CTA did receive hundreds of millions of dollars from the federal stimulus package, but that’s gone, and the trend threatens to go in reverse, over the fiscal cliff.

The mayor didn’t help his case with his ill-considered statement, but it’s worth remembering that neither he nor the CTA exists in a vacuum. For all that it can control, like labor costs, there are many things its can’t, like declining federal funding, state subsidies, and gas prices, and the budget reflects that.

 

Photograph: Buddahbless (CC by 2.0)

 

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