Tuesday, April 10, 2007

Get Ready for the Doomsday Scenarios

Under section 4.10(b)(2) of the RTA Act the RTA board is not supposed to approve service board budgets unless they are balanced and based on "reasonable and prudent" assumptions. The RTA board failed to fulfill this legal obligation when it approved 2007 budgets for all three service boards that were not balanced and showed a total 2007 service board operating deficit of $226 million.

Was it "reasonable and prudent" for the RTA and its board to assume that the Governor and the General Assembly would step up and fill this budget gap with new money. It is evident from the reception they have given the RTA's Moving Beyond Congestion program that the answer is no. At the time it approved the budgets with $226 million in deficits the RTA had failed to line up any firm support for this sharp increase in operating subsidies. In other words, the RTA's 2007 budget is based on the unreasonable and imprudent assumption that the General Assembly and the Governor would spend their political capital to fix the RTA's $226 million operating deficit problem.

WBBM reports that in light of the less than enthusiastic reception the Moving Beyond Congestion plan has received thus far, the RTA has directed the service boards to prepare plans for the service cuts and fare increases that will be necessary to bring those budgets into balance by the end of this year. These scenarios will be particularly draconian because the measures necessary to bring the budgets back into balance will have to be concentrated in the last six months of the year.

In the article RTA Chairman Jim Reilly all but admits that the RTA approved the deficit budgets without a reasonable basis because the RTA had not lined up any political champion for the RTA's cause:

RTA Chairman Jim Reilly said, had work on new funding sources been further along in Springfield, or given footing by legislative leaders or Gov. Rod Blagojevich equal to that afforded education, health care and pensions in the proposed state budget, the step would not be necessary.

"The one thing I think we don't have yet, in a public way, is one of those people just adamantly saying transit funding has to happen," Reilly said.

The service boards are to get back to the RTA later this week. The RTA and the Moving Beyond Congestion proponents no doubt will use their "doomsday" scenarios to attempt to galvanize the public and their elected representatives to at least bail out the public transit system for another year.

Ironically, CTA President Frank Kruesi took a lot of heat the past two years from the RTA and others when the CTA rolled out such doomsday scenarios in an effort to focus the Governor and the General Assembly on both the CTA's immediate cash needs and the structural funding problems that affect the region's public transit system. It looks like the RTA will now be championing the same tactics this year.

Will another round of doomsday scenarios succeed in goading the Governor and the General Assembly to take action. Perhaps. But the RTA may have made a major strategic miscalculation by abdicating its legal responsibility to approve only balanced service board budgets. Had the RTA held firm last year, the service cuts and fare increases necessary to balance the service board budgets would have been rolled out by the service boards in January of this year. This would mean that the traveling public and the schools and employers that depend on a good public transit system would have felt the full force of those measures just when the General Assembly was in its current spring session.

Of course, it is possible that the public would have gamely accepted the real-life consequences of service cuts and fare hikes spread over a full year, just as it adjusted nicely to the most recent CTA and Metra fare increases. Maybe the RTA did not want to run this risk and figured that doomsday scenarios concentrated in the last six months of the year would give its program more political appeal.

We know, however, from the RTA Act what the General Assembly intended. That was for the service boards to begin the year with balanced budgets based on realistic projections of revenues and costs and not on mere hopes for a legislative bailout. When faced with the doomsday scenarios that will soon be coming, the Governor, the General Assembly, and the public must consider RTA's central role in causing this "crisis" and whether it is prudent to continue to entrust the RTA with managing the region's public transit system's finances.


Anonymous said...

The latest wrinkle in the debate over the RTA is to add Metra and Pace to its Board of Directors. Very bad idea. This would be like asking the fox to watch the henhouse. Consider that the CTA Board chair is already by law a member of the RTA Board, and yet the CTA is arguably the least responsive of the three service boards to RTA directives. Wiitness, CTA's unilateral decision to begin issuing its own bonds, and to restructure bus service in the Evanston/Skokie area and in the near west suburbs where Pace also operates.

Anonymous said...

Since the RTA always seems to look to the state when it needs more money, maybe the Governor should have some appointments to the RTA Board. The RTA already receives hundreds of millions each year from the state each year: 25% match for the RTA sales tax (Public Transportation FUnd), Reduced Fare Reimbursement (Additional State Assistance), as well as Additional Financial Assistance. Moreover, the state pays debt service on the RTA's SCIP bonds and has provided state funds (B-Bonds) directly to the service boards for capital projects. With this extensive state investment in transit in NE Illinois it seems to this writer like the governor should have representation on the RTA Board.

Moderator said...

I agree wholeheartedly with both comments. The service boards should not have representatives on the board of the agency that oversees them.

I also agree that the State of Illinois should have ample representation on the RTA board and perhaps even control the board. This is especially the case if the State steps up with substantial new operating and capital dollars for the RTA.

After all, two-thirds of the State's population lives within the six-county RTA region and public transit eats up a substantial share of State transportation money.

I think, however, that the regional transit agency that is the successor of the RTA should remain a free-standing regional agency and not become an IDOT department. IDOT lacks the talent and creativity to do much good in the public transit arena.

Just look at IDOT's success with airports. That gives you an idea of how it would do managing the region's public transit system.