Metra proposes smaller 2016 fare hike than predicted
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Metra riders would face slimmer fare increases next year than originally predicted — an average 2 percent instead of 5 percent — under a $945.5 million budget plan released Thursday.
Under the plan, as of Feb. 1, fares would rise by flat amounts per ticket, regardless of the distance traveled, with increases ranging from zero to 7.7 percent.
The most popular Metra ticket, a monthly one, would increase by $2.50. A 10-ride ticket would rise $1.75. A one-way ticket would increase 25 cents. There would be no change in the price of a one-way reduced-fare ticket.
The overall average 2 percent fare increase is 3 percentage points less that what officials predicted last year, when they revealed plans for 10 years of fare increases as part of a $2.4 billion modernization program.
“The fare increases — when understood — are actually good news because Metra is finally putting itself on a sound and responsible financial footing,” Metra Chairman Martin Oberman said at Thursday’s board meeting.
“It really didn’t do any good to pretend over many years that costs don’t go up and then have the railroad deteriorate,” he said.
Next year would mark the second year of fare boosts intended to bankroll the overhaul of the oldest fleet among peers, an expensive but unfunded federal safety mandate and typical increased costs of doing business.
It would come on the heels of this year’s 10.8 percent fare increase and could be followed in 2017 by the second-largest projected fare increase in the 10-year plan: 8.5 percent.
But rather than increasing 2016 fares more as originally planned and using the extra revenues to shrink 2017’s much heftier projected fare boost or make more capital improvements, officials are standing by a promise to minimize each year’s fare increase as much as possible.
“We thought it was more important to stick with our plan — to rebuild our integrity with the public,” Oberman had said earlier this week. “This is what we said we’d do.”
On Thursday, Metra board members authorized the release of the proposed budget and announced eight public hearings on it.
That includes, for the first time, a hearing at Metra’s busiest commuter location: Union Station, 500 W. Jackson. It’s set for 5 p.m. to 8 p.m. Wednesday, Nov. 4, in the Legacy Club in the station’s southwest corner. Additional budget hearings will be held in Hanover Park, Homewood, Woodstock, Mundelein, Joliet, Clarendon Hills and Geneva.
Oberman said he found it “ridiculous” that only seven people showed up last year at the single downtown budget hearing at Metra headquarters. The Union Station location should encourage turnout, officials said. The hearing also will be webcast live.
Under the plan, across almost all types of tickets riders closest to downtown would shoulder the biggest percentage increases.
But Oberman did not seem worried that this might trigger defectors to the CTA among those who have such a choice. Some Metra riders threatened to bolt after last year’s fare increases were announced.
“There are people that ride Metra that don’t want to ride the CTA,” Oberman said.
Last year, officials projected their 10.8 percent average fare increase could cause a 1.1 percent ridership loss, and a 1.2 percent dip has materialized year to date, Metra spokesman Michael Gillis said.
Given next year’s far lower proposed increase, officials are building only an .8 percent ridership loss into the 2016 budget, Gillis said.
Metra was able to shrink its original 2016 fare increase projections due to $5.7 million in efficiencies; $19.4 million in lower fuel prices; and an expected increase of $19.6 million in Regional Transportation Authority sales tax revenue, officials said.
Part of the fare increase will support $15.6 million in capital expenses to shore up a bare-bones capital budget, where officials warn that needs over the next decade amount to $11.7 billion. On the operating side, some fares will cover a federally mandated but unfunded Positive Train Control safety system, as well as increased operating costs and any raises.
But the budget comes with a caveat due to the current state budget stalemate. Metra’s 2016 spending plan assumes no state funding changes and does not reflect the $170 million in total RTA funding cuts proposed by Gov. Bruce Rauner earlier this year, Metra CEO Don Orseno said. Metra’s share of that loss was estimated at $20.8 million.
“We’re saying we have faith this will work out,” Orseno said.
If state funding shrinks, Metra would have to cut services, raise fares or impose a mix of both, officials said.
Filling the $20.8 million hole with only fare increases would translate into a 6 percent fare increase instead of 2 percent one, they said.
And, on the capital side, if $400 million in promised state capital dollars does not materialize, 2017’s projected 8.5 percent fare increase could be even higher, officials warned.
Springfield’s inability to pass a budget so far this year prompted Metra to withhold floating the first of four rounds of bond offerings, originally planned to start in 2015, to help fuel its massive modernization plan, officials said.
Metra figured bidders could shy from entering the fray for such a huge rail and locomotive order given the open question mark hanging over state funding, Oberman said.
“It’s very, very difficult to responsibly manage a billion-dollar business with all this uncertainty,” Oberman said. “It’s thrown off our ability to function.”