A look at the CTA pass price increase

By Chrissy Mancini Nichols

Jan 23, 2013

This post first appeared at metroplanning.org

Did you know?

For the fourth year in a row, the Chicago Transit Authority has held the line on per-ride tickets at $2.25 for rail and $2 for buses (or $2.25 when paying with cash.)

Last week, for the first time in four years, the Chicago Transit Authority (CTA) increased the price of some of its unlimited ride passes: 30-day passes will increase from $86 to $100, seven-day passes from $23 to $28, three-day passes from $14 to $20, and one-day passes from $5.75 to $10. About 55 percent of CTA riders use unlimited ride passes.

Are these fare increases reasonable? Talking Transit breaks it down.

Cost Comparison

The $100 price tag for a 30-day CTA pass ranks in the middle among the nation’s top five transit agencies; Washington, DC’s Metro is the highest at $230 and New York City’s MTA comes in second at $104. Los Angeles County riders pay $75 per month, while Boston charges $70. Prior to last week’s increase, CTA 30-day pass holders actually paid less than they did in 1998, when the cost was $88. 

CTA Revenues

The CTA serves 1.8 million bus and train passengers per weekday, a ridership level that has grown for 21 consecutive months. The system is providing almost 1 million more rides each month than it did this time last year. That’s good news for our region’s economy considering that, next to housing, transportation is the second-highest cost for American families, and public transit is more affordable than car ownership. Plus, the entire region benefits from reduced traffic congestion, faster delivery of goods and services, and lower emissions.

Still, CTA faces a $165 million budget deficit this year (down from $277 million in 2012), despite agency leaders taking a more innovative approach to generating revenues than ever. For example, MillerCoors’ sponsorship of New Year’s Eve’s penny rides brought in $630,500 to the CTA. The transit authority is also making better use of its real estate by leasing space to food and produce shops at train stations. This is a win-win: Customers have more amenities and CTA generates more revenue. In fact, system-generated revenue for CTA’s FY2013 is expected to cover 63 percent of costs, which is remarkable given that the fare recovery ratio for the top 50 U.S. transit systems is 36 percent (and all forms of transportation receive a public subsidy). The remainder of CTA revenue is generated from a regional sales tax. 

The pass price increase, along with negotiated labor savings, will close the 2013 deficit.

On the operating side, CTA also stacks up well compared with the other top five transit agencies in the U.S. CTA’s bus and rail expenses per passenger mile—the agency’s total operating cost divided by the total amount of miles traveled by passengers—is lower than the peer average.

Federal funding could decline without funding reforms

The CTA does receive some federal funds from the 18.4-cent per gallon federal fuel tax, mostly for capital projects such as the 2009 Brown Line station renovation project. However, because the federal fuel tax has not increased since 1993, it has lost significant purchasing power. This unsustainable approach has required $35 billion in General Fund bailout dollars to the bankrupt Highway Trust Fund over the past four years.

When Congress passed MAP-21, the current two-year federal transportation authorization, they didn’t address the revenue shortfall; instead, they diverted another $20 billion from the General and other funds to the Highway Trust Fund. What’s more, the Congressional Budget Office projects that when factoring in new fuel efficiency standards with today’s transportation revenue and spending policies, there will be $63 billion less in federal funds available for mass transit over the next 10 years than projected outlays. 

The nation cannot rely on General Fund bailouts to pay for our transportation investments, particularly with the uncertainty surrounding the federal deficit debate and the potential for sequestration. Relying on the General Fund will only decrease federal funding for transit.

Meeting customer needs

Still, customers are demanding new and better CTA services, and even without a fare increase in four years, the CTA has greatly improved the system. In the past year alone, more than 100 stations have had a “face-lift,” some a total rehab, and a new station was constructed at Morgan Street to serve riders. Arrival time signs have been installed at bus and train stops, as have thousands of security cameras. New bus and train fleets have been rolled out, slow zones repaired, maintenance facilities rehabbed, and new, faster bus service launched on Jeffery Boulevard, called the Jeffery Jump. Longer term plans include the modernization of the Red and Purple Lines on the North Side, a new 95th Street station and extension of the Red Line south, Bus Rapid Transit on Ashland and Western avenues and in the Loop,  and a new fare payment system called Ventra, which will make Chicago the first major U.S. city with an open fare payment system for its public transportation network. 

The Solution

It is possible to adequately fund our public transit system. First, the U.S. needs a new, reliable revenue source to fund the transportation improvements commuters and employers are demanding. The Chicago Metropolitan Agency for Planning recommends, and the Metropolitan Planning Council (MPC) supports, increasing the Illinois fuel tax by eight cents per gallon and indexing it to inflation as a near-term solution. MPC also supports advancing user-based charges, or allowing state and local governments to toll existing capacity, both of which could provide new, stable transportation revenues to be shared with transit along those corridors. Further, innovative financing tools such as public-private partnerships and value capture instruments can supplement these funding sources. San Francisco, Atlanta, and Virginia are just a few places using value capture tools to generate revenue to improve transit service and transform communities.

Of course, any funding enhancement must be linked with performance measures at the federal and state levels that target investments to advance coordinated regional goals and a strong national vision that outlines clear priorities for our transportation system.

Taking all of this into account, the CTA pass price increase is reasonable. The agency has held pass fares stagnant for four years and has chosen to keep per-use fares level, while at the same time improving the system to make it more convenient for rides and paying down its deficit. With federal funding reform uncertain, riders must share the burden in helping Chicago build a first-rate transit system.