CTA: Unsustainable Transit

Published September 29, 2004

Anti-car environmentalist groups regularly denounce the automobile-based urban mobility system that prevails in Western Europe and North America. Among other complaints, they say automobility is “unsustainable.”

But in Chicago, unsustainable urban transport bears the logo of the CTA–the Chicago Transit Authority. CTA, as we know it, is fiscally unsustainable. The proof can be found in budget crises that have plagued the system for decades.

Now CTA wants still more money from the state. The agency has threatened that service will be cut, even during peak periods, if Springfield does not require taxpayers from Cairo to Rockford to subsidize transit riders even more than they currently do.

CTA is not exactly running out of money … but it is on the way to running out of passengers. Over the past 20 years, CTA has lost more than one-quarter of its ridership. As a result, the public subsidy per rider has risen at least 20 percent, after adjustment for inflation. If CTA had kept its subsidy per passenger within inflation, it would be spending approximately $100 million less per year today.

Why should taxpayers be required to pay more for less? Just as importantly, why should taxpayers pay more than necessary? And they surely are at the CTA.

In 1998, my colleagues and I produced a study for the Metropolitan Transit Association estimating what could be saved if CTA began competitively contracting bus service to the private sector. This would involve private carriers using CTA buses to operate some routes; the integrated fare and transfer system would continue and be guaranteed by the CTA.

Such contracting out is commonplace around the world. Virtually all of London’s famous red bus transit system is competitively contracted. As a result, inflation-adjusted costs per mile in that system are down approximately 50 percent from 20 years ago. Copenhagen contracts all of its bus service, while Stockholm contracts all of its bus and rail service. Other urban areas in Western Europe have also competitively contracted their services, or are in the planning stages for doing so. In Australia, Perth, Melbourne, and Adelaide now contract all of their subsidized service, as do all urban areas in New Zealand.

In the United States, competitive contracting has been implemented for parts of bus systems from the Washington, DC area to Los Angeles and San Diego and places in between. In every case, cost savings have been substantial. And, in each of these places, the principal justification for conversion to competitive contracting was a recognition that transit was financially unsustainable as it was organized.

The problem is monopoly. We know from simple economics that monopoly results in higher costs, because customers have no choice and thus providers have no incentive to keep costs low. And we know from experience–worldwide and across the U.S.–that there is no reason for transit service to be produced by a monopoly.

Only when CTA is reorganized to take advantage of competition will it become financially sustainable.

Soon after we submitted our 1998 report, the Regional Transit Authority (RTA) conducted a conference featuring competitive contracting experts from around the world. But what has been the result? Nothing–except CTA begging for even more in taxes. If our recommendations had been implemented, cost savings would have been at least $400 million by this time, and CTA’s $75 million 2005 budget deficit would have been instead a substantial budget surplus. Our proposal would have required no CTA layoffs, as the conversion could have taken place within the rate of employee retirements and resignations.

What Chicago transit riders need is not more money from Springfield, but rather more accountability from CTA. The money CTA needs to preserve service levels is in its coffers today. The journey from unsustainable to sustainable begins with putting riders and taxpayers first.

Wendell Cox is a senior fellow of The Heartland Institute; a consultant to public and private public policy, planning and transportation organizations; and a visiting professor at a French national university. This commentary was published by the Chicago Tribune on October 6.