RTA drills down into costs of fiscal crisis from ‘pizza tax’ to 10% higher fares
A 10% fare hike is an essential prop to keep transit from collapsing, but it’s only part of the solution, Regional Transportation Authority officials said last week.
Metra, Pace and the CTA are facing an estimated $771 million shortfall in 2026 when federal aid intended to counter ridership losses during COVID-19 runs out.
The Illinois Senate approved a governance reform and funding bill in May, but House members balked amid controversial tax proposals. Negotiations are continuing with a veto session set for October.
RTA planners updated riders on the status of what’s been dubbed the “fiscal cliff” at a forum Wednesday. Here are some key takeaways.
Higher fares, efficiencies
Transit agencies are preparing two budgets for 2026. One is a worst-case scenario with drastic reductions in buses and trains. The other anticipates a funding antidote from the General Assembly.
The RTA is recommending raising fares systemwide by 10% in both cases, noting there’s been no increase since before the pandemic. That action would raise about $50 million.
“Our regional fare structure continues to be affordable after past prices were reduced during the pandemic,” Communications Manager Melissa Meyer said. “But generating another $50 million in system-generated revenues will help lower the funding gap.”
The agency is also looking to trim expenses, estimating that about $150 million in efficiencies could be achieved.
Police, transit ambassadors’ costs
Crime on the CTA has been a huge concern for riders and state lawmakers who stressed that beefed up security was a crucial part of legislation.
The Senate-approved bill includes a systemwide police force and transit ambassadors, who would provide unarmed staff to assist passengers in distress or who need directions, plus monitor activity and liaise with police.
The scale of the new programs “is not clearly defined in the legislation, so it’s possible their costs could limit overall improvements to mainline transit service,” Intergovernmental Policy Principal Kyle Whitehead said.
A regional police force could cost $150 million to $200 million annually, while transit ambassadors are in the $50 million to $60 million range, projections show.
Some real numbers
The upside of the crisis is that an influx of cash could revitalize transit, advocates say. They estimate $1.5 billion annually is needed to provide more frequent buses and trains, service expansion, improved safety and upgraded amenities.
The Senate bill included over $1 billion in new revenues, some controversial, but specifics were scant when it was passed late on May 31, the final day of the session.
RTA planners provided some details.
• A $1.50 fee nicknamed the “pizza tax” for online deliveries, exempting prescriptions and groceries, could generate $891 million a year.
• Extending a real estate transfer tax from Chicago to suburban Cook and the Collar Counties could mean $131 million.
• A 10% tax on rideshares, such as Uber and Lyft, in the region could raise $150 million.
Nationwide crunch
Transit agencies are facing similar financial crucibles in cities such as Philadelphia, Boston and San Francisco, RTA Program Specialist Beatrix Yan said.
The Southeastern Pennsylvania Transportation Authority, which serves the Philadelphia region, announced major cuts Thursday after state lawmakers couldn’t agree on a funding solution.
Effective Aug. 24, “riders will first see the elimination of 32 bus routes and significant reductions in trips on all rail services, longer commute times and more crowded conditions on board,” SEPTA told commuters.
Planners were hopeful the Illinois General Assembly will intervene, but acknowledged Draconian slashing would cause a rapid downward spiral.
“Within two or three years, the system would be unrecognizable,” Senior Deputy Executive Director Maulik Vaishnav said.