August 11, 2010
Illinois Governor Pat Quinn recently announced his plans for $500 million in mass transit infrastructure improvements across the State. $442.7 million of that will go to the Regional Transit Authority for repairs to the Chicago Transit Authority’s rail infrastructure, the rehabilitation of Metra train stations, and new vehicles and a system-wide radio system for Pace. Click here for a list of all RTA projects. Click here for a list of all non-RTA projects.
The funding for all these improvements comes from the Illinois Jobs Now! capital improvement program, paid for through current State funds, capital purpose borrowing, and some federal funds. The money for the non-roadwork repairs was delayed for over a year from the spring 2009 signing of the Illinois Jobs Now! program by the Illinois General Assembly. The roadwork portion was authorized shortly after the capital bill was signed by the General Assembly. The reasons for this delay are unclear. The State maintains that the delay was the result of the State’s current budget issues and the need to audit projects to ensure they were worthy of funding and “shovel-ready.”
The money for these infrastructure improvements cannot come soon enough as transit systems nationwide are falling into disrepair. According to its FY2010 budget estimates, the CTA may need $7 billion in capital investment.
The CTA’s operating budget also faces great challenges, however, and in the past the CTA has diverted capital funds for operating purposes as a means to solve short-time crises. Last year the CTA announced its plan to lobby legislators in Springfield for reduced restrictions on the use of capital funds for operating expenses. This signaled that the CTA intended to transfer capital funds to the operating fund as an ongoing budget-balancing strategy. The CTA’s constant need to use capital funds for operating expenses is an indication that the Authority may have a structural deficit. Consistently borrowing from capital funds to pay for operating expenses is also a poor long-term financial practice. Instead of seeking legislative authority to continue dipping into its much-needed capital funds, the Authority should be looking to continue right-sizing its operations and developing adequate reserves once the economy recovers, thereby negating the need to access its capital funds on an annual basis.