Friday, December 15, 2006

Money and Family Frictions

The immediate pressing goal of the Moving Beyond Congestion project is to secure additional operating subsidies for the service boards so they do not have to cut service and/or raise fares. Given their fractious working relationships, it is a credit to the RTA that it has been able to get the service boards under one tent, however uneasily.

The RTA's 2007 Proposed Budget shows that the needs of the service boards for additional operating funds ("New State Funding") are very different. CTA and Pace are pretty desperate, while Metra is in a much better position. Their unequal shares of new revenue--should it ever arrive--undoubtedly puts strains on the "family" of service boards.

The RTA Budget (pg. 8) states that the mainline services (i.e., not including paratransit) need additional operating funding from the State as follows (in millions):

2007: $143,426
2008: $200,308
2006: $306,152

The service boards will not share equally in this hoped-for New State Funding. The amounts to each service board and their percentages of the New State Funding are as follows:

2007: $110,000 (76.7%)
2008: $169.495 (84.6%)
2008: $270,990 (88.5%)

2007: $10,550 (7.4%)
2008: $4,659 (2.3%)
2009: $4,449 (1.5%)

2007: $22,876 (15.9%)
2008: $26,154 (13.1%)
2009: $55,369 (10.0%)

The ridership shares of the three service boards are roughly: CTA (80%); Metra (14%); Pace (6%). Over the three-year period the New State Funding will be distributed as follows: CTA (84.7%); Metra (3.0%); Pace (12.3%).

Pace thus does especially well on a per rider basis, claiming a share of the New State Funding double its share of riders. CTA starts out a bit below its ridership share, but its voracious appetite for more subsidies yields it more than its share of the New State Funding on a ridership basis.

The RTA's projections for New State Funding underscore that the CTA and Pace are in a financial free fall. Recall, that this New State Funding is on top of the operating subsidies the RTA distributes to the service boards based on the RTA sales tax revenue, the State's 25% match of that revenue (the Public Transportation Fund distributions), the RTA distribution of discretionary operating fund, and contributions from the City of Chicago and Cook County.

For Pace, the New State Funding starts out at almost half of Pace's system generated revenue, and stays at that level through 2009:

2007: 42.8%
2008: 48.1%
2009: 55.4%

2007-2009: 48.8%

At the CTA, the New State Funding grows rapidly as a percentage of the CTA's total system generated revenue:

2007: 19.9%
2008: 30.2%
2009: 47.5%

2007-2009: 32.7%

Metra's share of New State Funding as a percentage of its system generated revenue is much less:

2007: 3.7%
2008: 1.6%
2009: 1.5%

2007-2009: 2.3%

The picture is thus very grim. Over a three-year period the amount of projected New State Funding grows a jaw-dropping 113 percent. There is no indication from the numbers or the budget narrative that the needs of Pace and CTA for New State Funding on top of several layers of subsidies will level off.

Given its size, the CTA's financial problems are clearly the driver for increasing amounts of New State Funding. The RTA Budget Book shows that the CTA's total operating deficit will rise sharply during the next three years:

2007: 16.8%
2008: 12.8%
2009: 17.9%

In contrast, the operating deficits rise during the same period at about 5.4% annually for Pace and 2.9% annually for Metra.

Given these numbers there must be a terrible temptation on Metra's part to try to find a way to go it alone and not be tarred by association with the financial problems at Pace and the CTA. The more the public and the politicians begin to look closely as the RTA's sales tax structure (1% in Cook County but .25% in the collar counties) and distribution formula the more the pressure will mount on Metra and its collar county allies to preserve what has been a very sweet deal under the current RTA Act and governance structure.

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