Metra’s 2016 budget includes fare increase to cover PTC, capital needs

Written by Jenifer Nunez, assistant editor
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Nate Beal

Chicago's Metra has proposed a $945.5 million budget that provides for $759.8 million in operating costs and $185.7 million to fund capital improvements in 2016.

 

Last year, when Metra announced a $2.4-billion 10-year modernization plan, the agency had projected that it would likely need a five percent increase in fare revenue in 2016, including three percent to cover expected inflationary operating costs. Metra was able to cover inflationary cost growth with $5.7 million in budget efficiencies, lower gas prices and higher regional sales tax receipts. Therefore, the agency is now proposing a two percent net increase in fare revenue instead of five percent for a total of $6.5 million. This fare increase will pay for the new operating costs for the Positive Train Control (PTC) safety system and help fund a bare-bones capital budget.

Metra says it has huge capital needs and requires $11.7 billion over the next decade to achieve and maintain a state of good repair. As part of this year’s budget process, it identified more than $500 million in capital needs for 2016 alone. But, given its limited funding sources, it reduced its list of capital needs to $185.7 million to fund those projects that represent the bare minimum investment it can make in 2016 to keep the system safe, reliable and able to operate efficiently.

For 2016, Metra is expecting to receive $165.4 million from federal sources and $4.7 million from the Regional Transportation Authority for its capital needs. It is anticipating no capital money from Illinois and, in fact, about $400 million that Metra expected to receive from the state is currently on hold.

Fares paid by Metra customers normally fund the operating budget, though a small portion goes to fund capital improvements. To get to the bare-bones level of capital investment it needs in 2016, Metra plans to allocate $15.6 million in fares to capital, which is $3.2 million more than last year.

The remaining $3.3 million in new fare revenue is needed to pay for expected higher operating costs for PTC. When PTC is fully implemented by 2019, maintenance and operating costs are expected to be $15 million to $20 million a year.

“If not for our growing PTC operating costs and our huge capital needs, we could get by without a fare increase in 2016,” said Executive Director and Chief Executive Officer Don Orseno. “But, we want to be clear, without a state bond program in 2016 and due to the budget stalemate in Springfield, approximately $400 million of Metra’s capital projects are currently on hold. If the state’s bond program proceeds do not materialize in 2016, we may need an even larger-than-expected increase in fare revenue in 2017.”

Metra’s proposed operating budget will increase $15.1 million or two percent compared to the 2015 budget, from $744.7 million to $759.8 million. Historically, Metra’s operating costs have increased an average of three percent per year.

Metra expects its operating expenses to grow by $40.2 million in 2016, including $23.2 million in contractually obligated wages and benefit increases; $6 million in reduced capital project billings; $1.5 million in higher snow removal costs; $1.4 million in new information technology software and system enhancements; $1 million in increased maintenance costs due to an aging fleet; $800,000 in added police costs for video surveillance monitoring; $700,000 for new safety equipment and new positions to enhance safety functions and training regulations; $500,000 for new marketing initiatives aimed at growing ridership; $3.3 million in higher PTC operating costs and $1.8 million in price changes for materials and utilities, increases in rent, maintenance and utility costs at downtown stations and joint facilities, changes in credit card and bank fees and other changes.

The increases are partially offset by $5.7 million in efficiencies and $19.4 million in lower fuel prices, for a net growth of $15.1 million.

Metra’s proposed 2016 capital budget includes $85.4 million for railcar and locomotive work; $23.9 million for replacing or improvement ties, ballast, crossings and bridges and other track and structure work; $36.9 million for signal, electrical and communications work, mostly PTC-related; $17.1 million for facilities and equipment; $13.2 million in station and parking improvements and $9.3 million in support activities.

 

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