Metra’s ten-year plan for fare increases: A gutsy decision

In its proposed Fiscal Year 2015 Program and Budget, Metra announced it's prepared, if necessary, to implement a ten-year plan for regular fare increases to fund not only its day-to-day operations, but also to begin the long slog to finally address their $8.6 billion backlog of and on-going annual infrastructure needs.

This is a gutsy move on Metra’s part given that fare increases used to fund operations are a touchy subject. The past reticence of Metra to adequately fund operations have led to below-industry wages, archaic business management systems and little in the way of operating innovations.

By assiduously avoiding fare increases over the last 25 years, Metra’s fare revenue growth has been below the Consumer Price Index and well below the growth of U.S. industry peers like Boston, Philadelphia and New York.

Metra is now faced with reversing that trend. They know that it was only six years ago that Illinois increased the region’s annual transit operating funds by approximately $400 million. Metra can’t expect a state that has its own dire financial difficulties to run to the rescue with more funding just so Metra and its sister agencies, Pace and CTA, can avoid regular fare increases for operations.

The long-time assessment that the region has been under investing in its transit infrastructure was confirmed in 2009 by the RTA in a comprehensive capital assessment analysis. It showed a ten-year capital need of $24.6 billion between 2010 and 2019 to bring the entire northeastern Illinois transit system to a state of good repair.

Based on capital funding trends, the region was short $17 billion to achieve this goal. Since 2009, the shortfall has grown to $26 billion, despite a five-year boost of $2.7 billion in infrastructure capital funding from the now expiring Illinois Jobs Now capital program.

The federal transit capital program has also been of little help. After three years of delay in reauthorizing the federal highway and transit programs, Congress kicked-the-can down the road with a no growth two-year funding bill in 2012.

This year facing a depleted Highway Trust Fund (which funds both the highway and transit programs), Congress granted an eight-month extension of the Fund with an infusion of general revenue rather than finding a long-term solution. This trend indicates that Congress is unlikely to do anything in the foreseeable future to even modestly increase transit capital funding.

So it is not surprising that Metra’s anticipates less than one percent annual federal funding growth over the next five years.

Metra’s budget is also doubtful on the prospects of a new multi-year state capital program. To confirm Metra’s skepticism, one only has to look at the past 25 years of practice where the state initiates a new five-year capital program every ten years. In other words, five years on and then five years off.

So it was inevitable and responsible for Metra to assume that its future financial destiny lies with what it controls through cost containment and regular, but modest, fare increases. This is prudent transit management.

This guest blog post was authored by Steve Schlickman, executive director of the UIC Urban Transportation Center and member of the Active Trans Board of Directors.