Metra fare hikes on table, as agency tries to erase red ink

Fare increases and service reductions are on the table as Metra grapples with a deficit.

“If we don’t change what we’re doing with operating and capital, we will face a downward spiral,” Executive Director Alex Clifford said Friday at a Metra meeting.

High fuel costs and disappointing sales tax revenues are among the reasons Metra has established a habit of borrowing from its capital fund to bail out operating expenses.

“It’s not a pretty picture but it’s an accurate one,” Clifford said.

Depleting capital funds equates to shortchanging equipment, track repairs and stations, staff noted.

The agency had projected an $18.5 million deficit this year but federal grants, restricting the Seniors Ride Free program to low-income riders and internal cuts staved off the need for immediate action. Sales tax revenues were also slightly higher than budgeted although still below long-term projections.

The possibility of a fare hike comes at a time when Metra is trying to regain public confidence in its financial management after former Executive Director Phil Pagano committed suicide in the midst of an investigation into misuse of funds. It was revealed he wrongfully obtained $475,000 in vacation pay along with permitting a climate of perks for top executives.

The board is expected to meet this month to discuss options that will include possible fare hikes, service cuts or continuing to transfer from capital to operating.

“It’s a challenge,” Metra Director and Arlington Heights Mayor Arlene Mulder said.

Metra Director Jack Schaffer of Cary suggested the agency poll its riders for their suggestions on cutting the deficit.

“I suggest we put the options out and ask their opinions. We’ve reached a point in the electronic age where we could get a good look at what our riders want,” he said.

Metra Director Jack Partelow of Naperville said he was adverse to cutting back on service.

“I think service cuts will destroy our potential for growth. My personal feeling is we’ll have to look at fares,” he said.

In terms of the operating fund, which pays for items such as salaries, a shortfall of $56.5 million is estimated for 2012 and $75.5 million by 2013.

Financial staff estimated the agency will be short $7.4 billion for capital needs as of 2016. The immediate fallout from cutting corners on capital will mean reduced on-time performance, more crowded trains and the inability to match federal funds for New Starts projects such as the STAR line, a suburb-to-suburb commuter rail service.

“We will not be able to get approvals from the Federal Transit Administration to move forward if we don’t have the capital dollars for a 50/50 match,” Clifford said. “We have to resolve the structural deficit.”