IL: RTA officials could transfer $74 million from Metra and Pace to CTA to delay city service cuts

Regional transportation officials may transfer $74 million from Metra and Pace to the CTA in an attempt to delay catastrophic cuts to Chicago’s transit system.

On Thursday, Regional Transportation Authority board members will vote on the measure, which the oversight body said would help delay catastrophic cuts to the CTA early next year while all three transit agencies hope lawmakers will come to their rescue with more state funding.

The CTA, Metra and Pace are facing a budget gap in the hundreds of millions of dollars next year as federal pandemic aid runs out. All three agencies are preparing to cut service as much as 40% next year, and, most likely, to increase fares. But the CTA is scheduled to hit its fiscal cliff first, some months before Metra and Pace.

Allocating more money to the CTA, the RTA has said, would push CTA’s fiscal cliff back two or three months until the middle of 2026, leaving more time for state lawmakers to pass long-term funding for public transit throughout the entire region.

Lawmakers, who failed to pass transit funding during their spring legislative session, plan to return to Springfield in October to try again. But advocates have warned that a veto session rescue, if it comes, may come too late. The transit agencies will need to start sending out layoff notices months before the cuts are set to take place, they argue, and planned cuts, after a certain point, could become tough to reverse.

Additionally, experts say it may take time for revenue streams created by any new legislation to generate enough tax dollars to avert service cuts.

“This year’s approach reflects a one-time allocation method proposed only for 2026,” the RTA wrote in a memo on the proposed ordinance. “This deviation is mainly to allow time for the Illinois General Assembly to act on long-term sustainable funding for transit in the Chicago region that averts the impending fiscal cliff.”

Most of the public funding for the CTA, Metra and Pace is allocated by a formula mandated by state law. But a smaller amount of discretionary funding is available each year. The $74 million that could be flexed to the CTA represents an estimated 1.7% of the entire regional budget, according to RTA spokesperson Tina Fassett Smith.

If board members approve the measure, the CTA would receive all of the RTA’s discretionary funding in 2026, and Metra and Pace would receive none.

But Metra and Pace would still receive small increases in funding compared with what they were previously projected to receive next year. That’s largely because the RTA expects to have more sales tax revenue on hand than expected because of an expansion of that tax to include more online transactions. An expected $10 to $20 million in extra sales tax each month, the RTA has said, will help delay the transit fiscal cliff and could mitigate its magnitude.

In a statement, Metra spokesperson Michael Gillis indicated the agency was on board with the proposal to move discretionary funds to the CTA.

“Metra understands the need for the region’s transit agencies to work together and share resources to address this unprecedented financial situation,” Gillis said. “We are hopeful that Springfield will soon reach a solution in which all of us receive stable and adequate funding to continue and expand service for all of northeast Illinois.”

Pace Executive Director Melinda Metzger said in a statement that the agency “is focused on working with our sister agencies to address the fiscal cliff collectively, recognizing CTA’s timeline in early 2026 and preparing accordingly.”

Still, she said, “we are mindful that shifting resources away from suburban service will have real impacts on our riders, and we encourage funding solutions that support the entire region.”

Discussions around transit funding and reform in the Chicago area have been marked by a city-suburban divide. Suburban critics have taken aim at what they view as efforts to consolidate Chicago’s power over the region’s transit systems at their expense. Backers of a more city-centered perspective, meanwhile, maintain that the entire region is reliant on the health of Chicago’s economy, which itself is dependent on reliable transit service within the city.

Catherine Hosinski, a spokesperson for the CTA, said the agency had stretched its pandemic dollars further than most peer agencies in other major cities. “The CTA is the last major transit agency in the country to hit the fiscal cliff without state or local intervention,” she said.

Other mass transit agencies in cities including Washington, D.C., and Philadelphia — where massive transit cuts are expected to start Sunday regardless — have received stopgap funding from state or local governments.

Hosinski added that the CTA was “eager to achieve legislation that provides reliable transit funding that not only maintains current service levels, but also helps to deliver the levels of public transit service the region deserves.”

Justin Marlowe, the director of the Center for Municipal Finance at the University of Chicago, described the proposed transfer of funds to the CTA as “maybe a necessary evil.”

The RTA, he said, was making a tough decision from a menu of bad options. “They’re using up, in effect, all of their wiggle room,” he said.

In a typical economic environment, Marlowe said, the RTA could reasonably expect that gamble to pay off. But economic uncertainty combined with pressure on state government to make up for federal cuts, particularly to Medicaid, mean the agency should take neither the appearance of additional state transit funding nor elevated sales tax revenues for granted, he said.

Meanwhile, Pace, which operates federally mandated paratransit service for the entire region, is facing a multimillion-dollar shortfall of its own.

Paratransit costs have ballooned since last year’s introduction of a popular ride-share program, which allows approved paratransit riders to call Ubers in lieu of using traditional paratransit. Each ride-share trip costs less money to provide than a traditional paratransit ride, Pace has said. But the program has proven so popular that costs have spiraled out of control.

So on Thursday, the RTA board will vote on bailing out the paratransit program in part with $34 million in this year’s discretionary funds.

Pace is also expected to help plug the gap by making cuts to the ride-share program starting later this year.

“Our goal is to maintain as much service as possible with available funding,” said Metzger, Pace’s executive director.

On Wednesday, three Illinois Senate Democrats co-signed a letter to fellow lawmakers calling for a special legislative session before Aug. 31 to address transit funding. State Sens. Mike Simmons of Chicago and Laura Fine of Glenview — both of whom are running for the same U.S. House seat in next year’s election — and state Sen. Graciela Guzmán of Chicago warned that without action by the end of the month, “40,000 workers who operate our transit systems are set to start receiving pink slips as soon as early September.” But there’s no indication that legislative leadership in the General Assembly is planning for a special session.

Instead, lawmakers have set a goal to come up with new transit funding and reform legislation during the two-week fall veto session in October. Gov. JB Pritzker acknowledged this during an event Wednesday in the south suburbs.

“I could tell you that there is a bill that’s being developed, and resources that are associated with that bill, that will come forward at the time of our veto session in October,” Pritzker said. “So, there’s still a lot of work being done on it. Lots of it has come together already. But it’s not, kind of, it’s not soup yet is the way I would say it.”

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