Should RTA borrow to fix its transit systems?

  • Daily Herald file photoNew locomotives could be coming if the RTA takes out a loan to pay for transit infrastructure.

    Daily Herald file photoNew locomotives could be coming if the RTA takes out a loan to pay for transit infrastructure.

Posted9/14/2012 6:57 PM

As sales tax revenues that pay for public transit continue to surge upward, should the extra money go to capital needs -- new buses and fixing track -- or operating costs -- salaries and fuel?

That debate emerged Friday as Regional Transit Authority leaders proposed borrowing $2.5 billion to pay for keeping the Pace, Metra and CTA systems in a state of good repair.


The plan came amid the backdrop of Chicago Transit Authority and Metra officials anticipating budget problems in 2013. Metra Chief Financial Officer Tom Farmer said the agency was contemplating fare increases or service cuts to meet a future shortfall.

But capital needs are pressing, also, RTA Chairman John S. Gates Jr. said, citing a $30 billion backlog over 10 years. "The capital side is a disaster area and it's getting worse. We don't have the resources from the state or federal governments to solve this. This (the $2.5 billion) will go a long way toward getting into a state of good repair," Gates said.

An estimated annual 3 percent growth in sales taxes would allow the agencies to pay back the debt, RTA Executive Director Joe Costello said. Repairing and replacing outdated equipment and infrastructure should also generate new revenues to offset the debt.

The proposal would provide the CTA with $1.4 billion, Metra with $800 million and Pace $300 million.

RTA board Director Carole Brown said she liked investing more in a capital program but was concerned how transit agencies would fare if sales tax revenues don't meet expectations and operating costs increase with inflation.

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"I'm curious if we've thought about using federal dollars more efficiently," she said.

The plan would be to use 1 percent of the estimated 3 percent growth in sales tax for the $2.5 billion program and put the other 2 percent into operating, Gates said.

The RTA must obtain approval from the Illinois General Assembly to increase its borrowing capacity.

Tied in with that request will be legislation seeking to streamline the budgeting process, which is an arcane system now, Costello said. The legislation would keep the traditional allotment of revenues at 56 percent to the CTA, 32 percent to Metra and 12 percent to Pace. But it would rid the process of steps that exacerbate competition between the CTA, Metra and Pace for money, officials said.

The agency has informed legislative leaders of their plans. "No one's said, 'yes' or 'no,'" Gates said.

"We won't take it to Springfield unless the majority of the board is enthusiastic and we won't take it if there's resistance from the service boards. As you get into it, there's a lot to like."

Some of the possible uses for the money include new buses for the CTA and locomotives for Metra, better subway ventilation, grade separations and Metra bridge repairs.

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