As part of developing his budget recommendations for 2010, Chicago Transit Authority President Richard L. Rodriguez has announced a series of internal cost cutting measures and efficiencies aimed at reducing a projected $300-million revenue shortfall that has resulted from lower than expected tax revenues.
In 2010, the CTA will again
be deferring merit pay increases and will be instituting more furlough days and
unpaid holidays for non-union employees. In addition, it will eliminate at
least 70 non-union jobs, and reduce intern and fellows programs for a combined
savings of approximately $21.6 million. In addition, by scaling back contracts,
reducing expenditures and hedging fuel, the CTA estimates it can save another
$10.5 million. Finally, by transferring $90 million of eligible capital funds
to the operating budget for preventive maintenance, the CTA can reduce its
shortfall by a total of $122 million.
"Like everyone else, CTA
has been hit hard by the recession. Our primary revenue sources-sales taxes,
real estate taxes and fares-are all tied to the health of the economy," said Rodriguez.
"Public funding has been especially weak. This year, CTA’s tax-funded revenues
were 34-percent lower than anticipated when the budget was developed and next
year will be even worse. We have to make the tough management decisions and
continue to cut costs internally. That means that we will be expecting
additional sacrifices from our employees next year."
The CTA has been carefully
managing its budget through ongoing belt-tightening steps that include
aggressive management of overtime, a hiring freeze on non-essential personnel,
reducing all department budgets, using strategic capital investments to lower
operating costs, such as replacing aging buses with more fuel efficient
hybrids, and requiring furlough and unpaid days for management.
In 2009, the CTA required
up to six unpaid days off for management and deferred raises for non-union
employees. In 2010, pay increases for non-union employees will be deferred once
again. They also will be required to take additional furlough days and won’t be
paid for the CTA’s six regularly scheduled holidays. The number of required
furlough days will be determined on a sliding scale based on salary, with
higher earning employees required to take 12 days and other employees required
to take either eight or four furlough days depending on their salaries. Rodriguez
said that the furlough days and unpaid holidays are equivalent to a 10% salary
reduction for non-union employees.
"I know this will be a very
unpopular decision with employees, but furlough days are the new reality for
both the public and private sectors," said Rodriguez. "In this economy, where
taxpayers, our riders and the general public are all suffering, the responsible
thing is for CTA to do all it can to cut internally before considering steps
that would impact riders. Reducing costs is a critical step necessary to
balance the 2010 budget. Personnel costs comprise nearly 70 percent of the CTA’s
operating expenses and must be part of any budget balancing strategy."
Rodriguez said he is also
exploring other ways to reduce labor costs. Although layoffs over the past few
years have reduced the workforce by more than 400 positions, Rodriguez has
challenged management to cut deeper. The plan announced today will restructure
certain areas to eliminate at least 70 more non-union positions and streamline
management ranks as well as outsource select services and reduce intern and fellows
programs. With the proposed job reductions, CTA will have reduced its non-union
workforce by 17 percent since 2007.
Further labor savings and
transfer of state capital funds to operating could potentially bridge the
remaining budget gap. Rodriguez said that he was reluctant to borrow money from
the capital budget but given the size of the projected shortfall, it was
important to exhaust all internal avenues to bridge the gap.
"We were careful to
maintain a sufficient capital budget to deal with our most urgent needs," he
said. Because additional state capital funds are expected due to the recent
mini-capital bill and state capital program, CTA is also seeking authorization
to use a portion of those funds to further reduce its operating shortfall.
The CTA continues to benefit
from efficiencies that were implemented following a 2007 report by the Illinois
Auditor General including implementing a performance management program to
track key performance metrics and reprioritizing the capital program to move
the system to a state of good repair. Initiatives have included replacing aging
buses that are costly to maintain with more efficient hybrid technology,
improving cleanliness throughout the system and aggressively tackling
deteriorating tracks that result in slow zones.
Some recommendations from
the report would require modifications in union agreements and the CTA is still
pursuing relevant labor changes. Rodriguez said he is reaching out to the CTA’s
unions to ask their cooperation in reducing costs for 2010. Union members received
a 3.0 percent wage increase in 2009 and are scheduled to receive a 3.5 percent
increase in 2010. Nearly 90 percent of the CTA’s workforce is unionized.