By SHELLEY DAVIS

RTA CRI$I$: Not the first, but the worst The Regional Transportation Authority has become the very problem it was to have cured. Designed to coordinate and make more efficient the northeastern Illinois mass transit systems, the RTA is rapidly going broke for reasons having to do with the current economy and, possibly, poor management. THE MONEY-strapped Regional Transportation Authority (RTA), is again facing an economic crunch that is threatening to shut down the entire transit system in northeast Illinois if the state doesn't come up with some financial assistance. Reports started flowing in as early as January that if some short-term aid was not forthcoming, the RTA motors could stop churning as early as the end of March or the beginning of April. Noble experiment This is not the first financial crisis the system has faced in its seven year history, but it is the worst. Speaking February 26 at a meeting of the House Transportation Committee, RTA Chairman Lewrs Hill said the RTA is already behind about $60 million in subsidy payments to the Chicago Transit Authority (CTA). It is also behind $1.5 million in payments to its suburban carriers and $8 million to commuter railways, according to an earlier report issued by RTA General Manager Bernard Ford. Hill warned the committee that the RTA is "in a desperate financial situation" and will need at least $87 million to stay afloat until July. Chairman of the CTA Eugene Barnes echoed Hill's dark omens by pointing out that the RTA will owe the CTA approximately $73 million by March 23. Barnes said that without the money, the CTA will be unable to keep its buses running on farebox revenue alone. Then, to further stretch already strained budget funds, the RTA must begin payment March 1 on $37.5 million in bonds bought by the state last summer and continue payment on about $43 million in loan and interest payments given to the system in 1973 as an initial start-up loan. It seems that despite a 33 percent fare hike that went into effect January 1 and additional fare increases expected in April and August, the system is in trouble. The problem is clear — the state's largest transit system will experience a deficit of between $150 million and $200 million by the end of its current fiscal year in September if the state doesn't provide help. As to whether or not the system will get short-term relief, as it has asked for, or have to wait until a long-term solution is found remains to be seen. Neither the legislature nor the governor's office seems particularly eager to start finding solutions to RTA's money problems. Any solution will inevitably mean some form of tax increase. Gov. James R. Thompson has been criticized for not coming to the RTA's rescue sooner, but he feels any solution must be long-term and tied to the entire state's road program. There will be no

Despite the fact that the first sign of strain in the RTA's checkbook came last spring, no efforts have been made to take an intensive look at the system to discover what has gone awry. An immediate solution was given to the system last summer to ease a money bind in exchange for the promise that the legislature would look at the entire financial picture during the fall veto session. This didn't happen. Next, rumors that a special session would be called in January to deal with transportation began to circulate. Again, nothing was done. Then amid squabbles between Democrat and Republican House members, House Resolution 17 was finally passed. It set up a select committee to take a hard look at the financial problems of the RTA and come up with some answers. Proposed by House Speaker George Ryan (R., Kankakee), the committee released its report March 17. Although not recommending any solution for the RTA, it did indicate that a shutdown will definitely occur by April 16 if there's no help, and could come as early as March 28.

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The only irony that can be found in the current situation is that the RTA is having the same problems it was suppose to cure. The system was set up by the General Assembly in 1973 as an answer to the perennial trek that private transit carriers made to Springfield each year looking for funding. The Regional Transportation Authority Act was passed by legislators in December, and approved by the voters in the proposed district in a March 1974 referendum. The act set up the transit authority that would serve as a carrier coordinator, funding agency and service planner for the northeastern Illinois region of the counties of Cook, DuPage, Kane, Lake, McHenry and Will. The RTA was to purchase service agreements with the suburban carriers, the CTA and the commuter railways, spelling out working relationships with each one.

Original funding plan
Originally the RTA was funded by a state subsidy and a $5 million contribution by local governments in Cook County, mostly coming from Chicago. It also received federal funds from the U.S. Department of Transportation's Urban Mass Transit Administration. The state subsidy consisted of a contribution to the Public Transportation Fund of three thirty-seconds of the state sales tax collected in the six-county region and $7 from each of the $14 motor vehicle registration fees collected annually in the city of Chicago. In addition, through legislation, the RTA was empowered to enact a gas tax not to exceed 5 percent, if the need arose.

The RTA chugged along contentedly for the next three years, showing surpluses in both fiscal 1975 and 1976. A new, uniform fare structure, which took effect in August 1976, was the only change made until the summer of 1977. It then became apparent that the state subsidy just couldn't be stretched far enough. Predicting about a $5 million deficit for fiscal 1978, the RTA board of directors used its legislated power to enact a 5 percent gas tax in the six-county region. It was expected to generate an additional $85 million to $90 million annually.

The gas tax was a 5 percent tax on the sales. The tax was computed on the base price of gasoline minus any other state or local sales taxes. During the two years it was imposed, the tax added between three and four cents to the price of a gallon of gas.

However, the gas tax, which showed up on the pumps in December 1977, was disappointing in yield. The actual amount collected from the tax in its first year was only about $70 million. It was clear by June 1978 that the financial health of the RTA was again slipping. But it managed to pull through again when the amount of its federal subsidy was increased for fiscal 1979. It went from $50 million to $80 million, an increase which matched the exact amount of the predicted $30 million shortfall.

By the following year, however, the diagnosis was that the RTA had a serious financial problem. Predictions showed that the system was going to come up at least $50 million short in fiscal 1980. The board of directors adopted a balanced budget, assuming the General Assembly would come up with a new funding package to resolve the RTA's ills. A special session was called, and with the help of the mayor of Chicago, Jane Byrne, the governor and the General Assembly, a funding package was passed that promised to come up with more money for the system.

Thompson/Byrne plan
Basically, the medicine prescribed this time for the RTA's ailment was to end forever the state subsidies to the system by increasing its taxing powers. The plan was to eliminate both the state subsidy (about $138 million in 1979) and the unpopular, two-year-old, 5 percent tax on gas (approximately $75 million in 1979). In their place was to be a new surtax on sales of 1 percent in Cook County and a quarter percent in the collar counties of DuPage, Kane, Lake, McHenry and Will to take effect November 1979. It was predicted by the Illinois Transportation Study Commission that the sales tax in its first year would give the system an additional $156.3 million over the amount generated by its gas tax. The commission projected the new sales tax would generate about $1.5 billion over a five-year period. The total revenue estimate for the RTA under the Thompson/Byrne deal was about $300 million annually.

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Current cash bind But, however enthusiastically the new program was touted, it didn't lick the problem. Talk of state assistance to the troubled system started floating around Springfield before the end of the 1980 session. By April 1980 the RTA officials were citing a cash bind in order to allow them to borrow additional money in tight money situations on a short-term basis. The sales tax, collected by the state and then funneled back to the RTA for distribution, was causing unforeseen problems

The evidence questioning the wisdom of the 1979 funding changes was quickly accumulating. An estimated $314 million would have been collected under the old system, opponents were saying, while only about $280 million will be gleaned from sales tax revenues. Passage of the Thompson/Byrne "move ahead road program" was suppose to be the miracle drug to permanently cure the RTA's money maladies, but the mass transit system didn't regain its health. Not even a year had gone by when the RTA required a shot in the arm to keep it going. In July, after receiving assurances that the RTA would postpone fare increases until a long-term solution could be found, the General Assembly approved legislation that would allow the RTA to sell $75 million in emergency short-term bonds, with half to be sold to the state and half to be sold to private lending institutions. The state also received assurances that the RTA would repay the $75 million by August 1981.

However, the leaves started falling and still the RTA was not brought up in the legislative chambers of either house. In the meantime the RTA's checkbook was falling further and further behind. The transit system missed $6.5 million in payments to commuter railways in October, and was more than $40 million in arrears in subsidy payments to the CTA. Speculation was that the RTA would be $150 million in the red for fiscal 1981 if no help came from the state. The RTA board approved a series of fare hikes that would raise the base fare to 80 cents from 60 cents in January, add another 15 cents April 1 and go to $1 August 1.

Additionally the sales tax collection was proving disappointing. With the recession, actual dollars collected from the tax were running behind estimates. In October and November 1980, an estimated $50 million was to be collected. However, only $45.3 million was received by the system. If this trend continued, officials were predicting that by March 1981 the sales tax revenue would be about $10 million short of expectations, further putting the squeeze on an already tight money situation.

Future huge deficit
So how did the RTA get so entangled in the exact circumstances it was designed to avoid? Inflation has been the reason most cited to explain why the system is so deeply in debt. A study conducted by the Metropolitan Housing and Planning Council (MHPC) in December 1980 points out that while there has been an 197.7 percent increase in expenditures from fiscal 1975 to fiscal 1979, there has only been a corresponding 153.4 percent increase in revenues. Further, it states that sys-temwide operating expenses increased 59 percent while farebox revenues, which ideally should provide between 45 and 50 percent of total revenues, increased by only 14 percent. The results — a deficit that rose by 206 percent in five years.

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The RTA, and mass transit all over the country, also face a deep slice into the federal grant pie from the knife of President Reagan. As part of his plans to balance the federal budget, the president has called for elimination of federal subsidies to all mass transit systems in the next five years. Gov. Thompson has said under the president's current plan the state could lose an estimated $200 million in transit and highway funds next year. Presently, the RTA receives about $80 million in federal subsidies. That amount represented more than 25 percent of all revenues last year, although that money usually represented less than 20 percent in prior years.

The RTA's dollars are certainly shrinking and some cost-cutting measures are in order. The MHPC report also stated that without any kind of change in the financing structure of the RTA, it could have a deficit of $450 million by fiscal 1985. Something has to be done to offset costs which are rising as fast or faster than the rate of inflation. There has been a 43.8 percent increase in the cost of diesel fuel, 44.9 percent increase in the cost of supplying electrical power for rapid transit and a 10.6 percent increase in salaries in 1980 alone.

Many point to the RTA's poor management as a large part of the reason for its troubles. Even Chairman Hill has said the system is unable to keep down costs. Improvement that can be made include restructuring the RTA board to make it more accountable; changing the RTA's method of budgeting; instituting fares based on peak time usage; and consolidating and coordinating routes.

Currently there are approximately 17 bills introduced in the General Assembly that deal with some kind of RTA reform. Some of the funding changes suggested include making the gas tax a 10 percent per gallon fee instead of the present 7.5 cents per gallon tax; reinstituting some type of state subsidy; and increasing the "sin taxes" on cigarettes and alcohol. But these are long-term solutions that probably will end up being eleventh hour issues. The RTA is in trouble now. The only bill that would have provided short-term, immediate relief to avert the threatened shutdown March 23 died in the House Transportation Committee in a partisan shootout despite desperate pleas from transit officials. The measure, H.B. 294 sponsored by Rep. Benedict Garmisa (D., Chicago), would have given the RTA bonding authority to help alleviate the current cash flow problems that threaten a shutdown. It would also have prohibited any fare increases or service cutbacks until the interim financing notes were repaid.

Regardless of what the final solution to the RTA's problems are, one thing is clear. Something must be done to ensure transit service to the 875,000 people who depend on the system daily. A shutdown is also bad for business, both at the state and metro levels. When the transit system in Boston stopped rolling for just one day in December, the losses were around $6 million. Predictions are that Chicago, and Illinois, would experience a worse blow if the wheels of the RTA suddenly stopped turning in northeastern lllinois.

On March 16 the RTA board decided to defer the fare increase scheduled for April 1, a move which Rep. Thomas Ewing (R., Pontiac), chairman of the RTA study committee, called potentially harmful to the chances of the legislature approving any funding package. On March 18, the Senate Transportation Committee approved a bill sponsored by Senate President Philip Rock to allow the RTA to sell almost $1 billion in bonds to the state (to pay new bills, not to cover the present $73 million debt). Thompson was to address a joint session March 24 to unveil his transportation package. □

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