More Money For The CTA: Hold On Says IPI Study

From reading his column I have always imagined that Dennis Byrne, the Chicago Tribune columnist, channels the spirits of Lenora Helmsley and George Wallace. Yet, Byrne's column in today's Tribune lambasting the Chicago Transit Authority does us a real service by pointing us to a new analysis of CTA spending and operations by the Illinois Policy Institute.

We have recently compared the CTA's bus system's performance to the performance of Pace's bus system and found that Pace's system appeared to be more cost effective on every measure examined except public subsidy per passenger. The IPI analysis compares the CTA's performance today to its past performance. Here are some of the key findings:

• Rail ridership is up 25%, from 152 million to 190 million since 1979.

• Bus ridership has plummeted by 45%, from 552 million to 304 million since 1979 and overall ridership is down 23% since 1969/70. Bus operations are a key area ripe for improvement.

• The average CTA employee today is less productive than the average CTA employee in 1969 or even 1979. This is illustrated in a number of ways. Spending (cost) per rider is up 41% from $1.55 to $2.19 since 1969/70 and up 31% (from $1.67) since 1979. Correspondingly, riders per employee are down, from 56,299 per employee to 45,292 since 1979. The bottom line is that today’s CTA spends more to deliver a rider and each employee delivers fewer per year on average. This is a root cause of the CTA financial crisis and most of it rests within the bus operations.

• By achieving the 1979 spending benchmark alone ($1.67 per rider), the CTA would save $257 million and more than close the funding gap without having to ask the taxpayers for more.

• By achieving the 1969/70 spending benchmark ($1.55 per rider), the CTA would save $316 million per year.

• The CTA is earning more system (non-subsidized) revenue per rider today than it was in 1979, $1.13 versus $.88, an increase of 28% and certainly a step in the right direction.

• Advertising and concession revenue are up 478%, from $4.3 million to $25 million.

• The public subsidy per rider is up 35% since 1979, from $.79 to $1.07. The taxpayers are more than doing their part in subsidizing the CTA’s operation.

• This 35% increase in the public subsidy on a per rider basis illustrates the fallacy of the CTA public relations and budget document claims that the CTA’s pubic subsidy has not kept pace with inflation. While that fact is true in total dollars, it is a misleading fact since the key data point is the subsidy per rider. In fact, one could make the case that the subsidy is excessive by $138 million ([$1.07 - $.79] x 494 million riders for 2007).

• Bus operations are a key area for improvement. While ridership is down 45% since 1979, total miles driven per year is only down 14%, from 83.5 million to 71.9 million. Further, the total route miles covered (the aggregate miles of the route map) has more than doubled, from 1,042 route miles to 2,529 route miles in 2007. This is unsustainable and the underlying reasons for this must be addressed.

• Today the CTA runs 154 bus routes versus 134 in 1979, an increase in routes and corresponding expense of 15% while ridership fell 45%.

• The bus operations data indicate that in 1979 the CTA operated a tightly focused, more market sensitive route map with more traffic per bus per route operated and bus run made. Today, with the route miles up 143%, it appears the CTA is running too many route miles for too few riders, making the bus system inefficient.

The IPI then makes a series of recommendations that it claims can save the CTA more than the $158 million deficit it faces in 2008.

IPI's short and cogent analysis is well worth a read. It challenges the conventional wisdom that a series of unfortunate events has overwhelmed the CTA, Metra and Pace, necessitating greater public subsidies. Instead, the analysis suggests that the bailouts past and present have allowed the CTA to avoid taking the steps necessary to prudently manage its business.