November 15, 2017
Joe Cahill on Business
Joe Cahill on Business
Fare hikes have become routine for Metra riders after four consecutive annual increases. But the hike approved by Metra’s board last week is different. It comes with service cuts, marking the first time in many years that the commuter rail agency has reduced service for financial reasons. Along with $17 million in fare increases, Metra is eliminating or curtailing a handful of trains.
Sure, the cuts will affect only a relatively small number of commuters. But they’re an ominous sign for an agency that needs to plug a $45 million budget gap for fiscal 2018 and address mounting long-term financial pressures exacerbated by recent state budget cuts. Metra officials warn that more service cuts may be needed if finances don’t improve. “The current situation is unsustainable, and threatens the future viability of the important service Metra provides,” Metra Chairman Norman Carlson said in a statement on the 2018 budget.
Fare hikes and service cuts are a poisonous combination for public transit. Riders defect as fares go up and trains run less often and make fewer stops. Declining ridership drives down revenues, leading to more fare increases and service cuts, in a self-perpetuating downward spiral that becomes harder and harder to stop as it gains momentum.
We can’t let that happen to a vital public asset that distinguishes Chicago from most other U.S. cities. Metropolitan Chicago is one of the country’s few population centers with an extensive commuter rail network linking its central business district with distant suburbs. Businesses, workers and the region as a whole benefit in many ways. “Metra is an unappreciated gem,” says public transit expert Joseph Schwieterman, director of DePaul University’s Chaddick Institute for Metropolitan Development.
Metra knits together city and suburbs into a single, cohesive economic unit. Without it, we become more like Dallas, Atlanta, Detroit and other cities where an urban core has decoupled from sprawling suburbs.
Far-reaching commuter rail systems allow businesses to choose optimal locations, knowing they’ll be able to draw employees from around the region. McDonald’s, for example, can move its headquarters from Oak Brook to the West Loop and still offer suburban workers a convenient, efficient commuting option. Even Caterpillar, which recently moved to north suburban Deerfield from Peoria, picked a spot near a Metra station that will enable city-dwelling employees to commute by rail. Commuter rail service also checks an important box on Amazon’s second-headquarters wish list.
Among local workers, the most obvious beneficiaries of Metra service are nearly 150,000 commuters who ride the trains to and from work on weekdays. Metra saves them the expense, time and stress of commuting by car on clogged area expressways. Total ridership is down 1.7 percent to 59.4 million passenger trips for the nine months through September.
Even those who commute by car benefit from Metra’s availability. Imagine how much worse traffic would be with another 150,000 rush-hour drivers. We may find out. If deepening financial woes force Metra to keep cutting service and raising fares, waves of train commuters likely will hit the roads.
The agency’s budget woes have several causes. Metra attributes $30 million of the $45 million 2018 deficit to “normal growth in expenses.” Some $23 million of the expense growth reflects labor and fringe benefit costs, the agency says. The Chicago Tribune recently reported that Metra’s payroll climbed 32 percent in the past five years as headcount, salaries and overtime all increased.
BLAME THE STATE, TOO
Metra says it had to add workers and pay more overtime to maintain its aging rolling stock and track equipment. Another fiscal drain is a federal mandate that commuter rail operators implement a new safety system called “Positive Train Control,” which will cost Metra $400 million over several years.
Spokesman Michael Gillis points out that the 2018 budget cuts $11 million in various overhead expenditures unrelated to the service cuts. “We’ll continue looking for ways to save,” Gillis says. In a written statement, he adds: “We are cutting labor where we can. Next year we will achieve about $5 million in labor savings, mostly by abolishing and freezing some positions,” but he points out that deeper reductions in Metra’s labor force would mean cutting train crews needed to maintain service levels.
Metra’s money troubles got a lot worse this year as public funding streams that cover half its operating expenses shrank by $15 million. Illinois’ long-delayed state budget allocated less to Metra, which also collected less revenue from its share of sales tax receipts in metropolitan Chicago.
Much of the fiscal pain can be traced to chronic capital funding shortfalls. Illinois hasn’t passed a capital spending plan since 2009, leaving Metra without enough money to work off a $12 billion backlog of projects needed to keep its equipment in good working condition. Metra will spend only about $200 million on capital projects this year, barely one-sixth of the annual upkeep requirement. Inadequate capital investment contributes to service breakdowns and expands operating deficits by driving up spending on repairs and replacement parts.
Metra’s financial crisis is still in its early stages, but could quickly gather steam if state officials ignore the problem. Continual service cuts on top of regular fare hikes will drive off riders in ever-larger numbers. Metra needs to look harder for administrative savings that don’t affect service, and lawmakers need to act quickly to restore operating funds and pass a capital spending plan. Delay on any of these fronts will only bring Metra closer to the point of no return.