uh oh, CTA wants to raise fares (Chicago, Union: bankruptcy, salaries)

[oakparkdude]

Originally Posted by Vlajos

I don't understand how revenue is declining. Train use has increased 40% in the last 10 years. I haven't seen figures on bus use, I guess it's probably down due to service cuts.

The unions have to give in.

CTA relies heavily on sales tax revenue for funding. Obviously that pot of money hasn't been doing so well these past few years.

[Vlajos]

Originally Posted by oakparkdude

CTA relies heavily on sales tax revenue for funding. Obviously that pot of money hasn't been doing so well these past few years.

Good point, I totally forgot about sales tax. Thanks, I imagine collections have picked up a bit lately though.

[Chicago60614]

Due to the 0.25% increase for CTA a few years ago, the CTA has actually gotten more and more sales tax revenue each year from 2000 straight through 2010.

RTAMS - Sales Tax

The issues are payrolls, benefits, and pensions. Those amounts have grown far faster than any revenue increase would or could. They HAVE to make the unions give some ground or there's never going to be a fix to this problem. The CTA will shrink into nothing.

Noting that the CTA has borrowed $554 million in the past four years to cover operating deficits, despite a 2009 fare hike and 2010 service cuts, Claypool said it was time to deal with these challenges and make decisions that will fix the CTA’s broken fiscal system.


“We can’t defer the hard decisions any longer. The CTA’s cost structure is too high given the revenues and tax receipts we have to operate it,” Claypool said.

“Changes are needed now to shore up the CTA’s fiscal situation. A robust, modern transit system is not just important to transit riders. It is important to the livability of the region and its ability to attract jobs and businesses. An investment in transit is an investment in the future of this region.”


The financial crisis affecting the CTA has taken years to develop, Claypool said, and has its roots in funding formulas that shortchange the agency, neglected infrastructure, and a growing list of expensive state and federal mandates, the release said.


But Claypool says the biggest contributing factor has been unrestrained wage and benefit growth in labor agreements, and a plethora of arcane work rules that cost tens of millions annually.

[Vlajos]

Originally Posted by Chicago60614

Due to the 0.25% increase for CTA a few years ago, the CTA has actually gotten more and more sales tax revenue each year from 2000 straight through 2010.

RTAMS - Sales Tax

The issues are payrolls, benefits, and pensions. Those amounts have grown far faster than any revenue increase would or could. They HAVE to make the unions give some ground or there's never going to be a fix to this problem. The CTA will shrink into nothing.

Yep, same problem with State Government.

[jdiddy]

Originally Posted by Chicago60614

The issues are payrolls, benefits, and pensions. Those amounts have grown far faster than any revenue increase would or could. They HAVE to make the unions give some ground or there's never going to be a fix to this problem. The CTA will shrink into nothing.

This, too.

[emathias]

Originally Posted by Chicago60614

Due to the 0.25% increase for CTA a few years ago, the CTA has actually gotten more and more sales tax revenue each year from 2000 straight through 2010.

RTAMS - Sales Tax

The issues are payrolls, benefits, and pensions. Those amounts have grown far faster than any revenue increase would or could. They HAVE to make the unions give some ground or there's never going to be a fix to this problem. The CTA will shrink into nothing.

It's interesting. The Cook County portion has more or less kept up with inflation, although it has varied some year-by-year.

Overall, for Cook County only, 2010 generated 25% more sales tax revenue for the CTA as compared to 2000. According to this inflation calculator, inflation between 2000 and 2010 was a nudge over 26%.

Adding in the revenue now collected in the other counties, though, the CTA received 37.8% more in 2010 than in 2000.

Year-by-year, Cook County CTA sales tax:

00-01 < 1% decrease
01-02 ~$2.5 million, ~1% decrease
02-03 ~$3.5 million, ~1.3% increase
03-04 ~$8 million, ~3% increase
04-05 ~$10 million, ~3.7% increase
05-06 ~$20 million, ~7.3% increase
06-07 ~$4.5 million, ~1.5% increase
07-08 ~$12.9 million, ~4.2% increase + $30 million from outer counties
08-09 ~$4.4 million, ~1.4% decrease + $32 million from outer counties
09-10 ~$14.3 million, ~4.6% increase + $33 million from outer counties

In 2000, the CTA had a budget of about $819 million.
In 2010, the budget was proposed at $1,285 million, and increase of 57%.

In the 2010 budget, labor alone accounted for $852 million, 66% of the total budget with about 9,500 positions. In 2000, labor accounted for $613 million, which was nearly 75% of the budget, with about 8,700 positions. 39% increase in wage costs, which exceeds inflation even accounting for additional workers for additional riders. All things being equal, if the ratio of labor to non-labor expenses is decreasing, it points to a bigger issue with non-labor costs than with labor costs. In this particular example, though, I think it points to an across-the-board problem with costs being out of control.

In 2000, the CTA carried 450.5 million riders, in 2010, the CTA carried about 517 million riders, an increase of about 14.8%. I think that probably means that the 9% increase in employees is at least somewhat defensible even if steps could be taken to make it not strictly necessary. What seems to be less defensible, however, is the much-higher-than-inflation growth in wage costs.

But looking at the budget numbers, what really jumps out to me is not just the accelerated growth in employee compensation, but the jump in the category of "Other Expense," that leaped from $49 million in 2000, to $192 million in the 2010 budget.

One thing that has been unavoidable, for the most part, is the jump in fuel and electricity costs from $35.5 million in 2000 to $139 million in 2009 and $103 million in 2010 (bus cuts=less fuel).

Fuel is what it is. We can help address that by replacing regular buses with hybrids, or continuing to have higher load factors and drive riders to electric trains but that's not a good short-term fix for a budget crisis.

Wages would seem to need to be curtailed. Seeing the wages exceed inflation during a time when private sector wages have increased below inflation is not sustainable.

And I really would like to know what the "Other Services" aka "Other Expense" category includes. That seems to have been a significant jump in those costs in 2010 vs. 2000.

[Chicago60614]

^ that's awesome! Thanks for the information.

[Vlajos]

Originally Posted by Chicago60614

^ that's awesome! Thanks for the information.

I agree, great info emathias. So now I don't understand where the huge decrease in revenue is coming from for next years budget. Anyone know?

[jdiddy]

Originally Posted by Vlajos

I agree, great info emathias. So now I don't understand where the huge decrease in revenue is coming from for next years budget. Anyone know?

Fed/State contributions? just a guess.

[emathias]

Originally Posted by Vlajos

I agree, great info emathias. So now I don't understand where the huge decrease in revenue is coming from for next years budget. Anyone know?

They've reached their mandated limit for borrowing. Last year some of the "revenue" were dollars the State essentially forced them to borrow. I don't know for sure that accounts for all the revenue difference, but I would guess it's a big part of it.