NEWS

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November 6, 2007

Governor’s emergency funds prevent CTA doomsday again

“Doomsday” for Chicago commuters has been averted once again.

In a last-minute stay of execution, Governor Rod Blagojevich allotted $21 million in grants Friday to the ailing Chicago Transit Authority (CTA), which was slated to introduce a harsh first round of fare hikes, service cuts, and employee layoffs last Sunday. The new funds will allow the CTA to continue its previous service without change through the end of the year.

Pace, the suburban bus company facing service cuts and fare hikes similar to the CTA’s, was given an additional $6 million in grants.

Proposed cuts were set to increase train and rail fares by up to $1.25, eliminate 39 bus routes across the city, and result in the layoffs of more than 600 CTA employees. Under the CTA’s contingency plan, these changes would have been followed up in January with still greater fare increases, layoffs, and the elimination of 43 more bus routes.

The last-minute aid from Springfield was reminiscent of last September, when, just days before the first proposed implementation of dramatic service cutbacks, Blagojevich authorized a loan of $91 million to the CTA and Pace.

“I’ll be the first to admit that the number and increasing severity of doomsday plans, accompanied each time by stopgap funding measures at the last minute to postpone the crisis, create a serious credibility issue for the CTA,” said CTA president Ron Huberman (A.M., M.B.A. ’00) in an interview with the Chicago Tribune.

This newest wave of financial first aid is different than September’s in that it is in the form of a grant rather than a loan. This means that the CTA will not have to pay back the funds to the government.

“We couldn’t take another loan,” CTA Chairman Carole Brown said. “This is a grant for transportation dollars for the state that would be applied to CTA, but it’s not expected that we would have to pay it back.”

In contrast, September’s loan was an advance of funds set aside for use by the two transit agencies in 2008. The CTA and Pace will have to find a way to replace this money next year.

The CTA cannot legally run a deficit and must submit a balanced budget every year. Friday’s grant puts the agency in the clear for 2007, but 2008 looks as though it will be even rougher: The CTA has projected that it will run a $158-million deficit unless drastic changes are made.

Unless the state legislature and governor are able to bridge the funding impasse, January will likely bring fare increases, route cuts, and layoffs even more dramatic than those proposed through the last two rounds of funding debate. The CTA says that they will figure out the details of the January “doomsday” within the next two weeks but hopes that the General Assembly is able to pass budget legislation that has been under debate for months.

“I am hopeful that we can work with the governor and the legislators on finding a solution so we are not always on the edge,” Huberman told the Tribune. “Our worst-case scenario is that no action is taken again and our credibility gap gets even bigger.”