Chicago Area Local News

CHICAGO (CBS) ― Is it a crisis averted or a crisis delayed? The CTA has reached a deal with the governor to avoid fare hikes for two years. But the deal does nothing to address the agency's long-term revenue problems.

The transit system will borrow nearly $170 million and Gov. Pat Quinn said he found some state cash to cover the cost of the loan. The governor said extra federal funding for Medicaid freed up some discretionary funding he could use for mass transit.

But you know what happens when you borrow money: someone has to pay it back eventually, with interest. CBS 2 Political Editor Mike Flannery says it seems like some state leaders think they have a bottomless pot of gold to play with.

Even they admit the state can't keep this up forever. At some point, though, the borrowing will have to stop and the paying will have to begin.

The good news for transit riders on Wednesday was that CTA fares would be frozen for two years. But that couldn't conceal the bad news about what happens after that.

Regional Transportation Authority Chairman Jim Reilly said, "Eventually, there have to be fare increases."

Still, Reilly called Wednesday's announcement a good deal, because it postponed a fare increase until the economy has hopefully recovered.

The CTA had threatened to increase fares to as much as $3 for an L ride. Proposed service cuts remain on the table, but CTA Chairman Terry Peterson said the agency continues to talk with the state and with its unions to find ways to avoid service cuts.

If the cuts go ahead, trains will run less frequently, meaning longer wait times, mostly during off-peak hours. Also, nine express bus routes with duplicate local service will be eliminated, and dozens of other buses will run less often creating longer waits.

Pace will also receive additional funding from IDOT to hold the line on paratransit fare increases. Pace will receive $8.5 million a year in 2010 and 2011 for these services.

A local taxpayer watchdog, though, said he thinks the two-year fare freeze will prove to be a very bad deal in the long run.

Civic Federation President Laurence Msall said, "Now the fares are going to have to be much higher … and the service cuts are going to have be much deeper. And the impact over the next couple of years on the CTA could be very negative."

With buses and trains that often break down and long stretches of deteriorating track that force trains to slow down, the CTA now needs about $7 billion for repairs.

That situation has gotten so bad because, for many years, the CTA has used capital money to pay workers and other operating expenses. It's like skipping that roof repair to spend $300 on groceries, only to end up with a bigger problem costing far more.

"I think you're just prolonging the inevitable. So, they should try and fix the budget," said transit rider Marsha Palmer, of Chesterton, Ind. "I don't know what the answer is, but they address that, they'll be better off."

But rider Steve Saltzman said, "It's a good idea to hold fares right now and see where else it's possible to save money."

The CTA has attributed its budget shortfall to the slumping economy, which has cut into sales tax and property transfer tax revenues.

The original proposal to raise fares and cut service called for express bus and all train fares being hiked to $3.00 a ride. Local bus fares would have been $2.50 each way, up from $2.25. And the cost of a monthly, unlimited ride pass would have increased $24.00.

But even without the fare hikes, the CTA is still planning to make $90 million in service cuts next year.

Asked when the state and other government agencies in Illinois would stop borrowing money to pay their bills, Gov. Pat Quinn said, "I think we've done a very good job of fiscal management and, ultimately, hopefully our economy very shortly will get back on its feet."

Those who supported the temporary borrowing plan pointed to what happened after big fare increases and service cuts hit the CTA during hard time in the early 1980s.

Ridership dropped by 16 percent as tens of thousands abandoned the system.

The state will pay the interest cost on the transit system's borrowing for the next two years, but there are no promises after that, meaning the CTA could end up in deeper hole if economy does not bounce back.

(© MMX, CBS Broadcasting Inc. All Rights Reserved.)

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