One of the big stories in Chicago at the moment is the Chicago Transit Authority (CTA), its expenditures, and its management decisions. Last week I mentioned the ongoing construction and expansion of the Brown Line stations, as well as Time Out Chicago’s set of feature articles.
But there’s more frustration and discontent simmering than I indicated. This article from Crain’s Chicago Business summarizes the problems facing the CTA, many of which they have created for themselves: complaints of being underfunded, but willing to splash out for “ostentatious expansion projects” instead of spending on routine track maintenance, a concomitant increase in “slow zones” because of deteriorating track, and so on. Our train ride to the airport last Friday took more than 50% longer than usual (35 minutes instead of 20 from the Irving Park stop) because much of that distance is now covered by slow zones). Shockingly, one of the largest urban rail systems in the world also still has manual and mechanical signals. Yes, you read that right: at junctions like the one I go through to ride to work, Belmont, a person sitting up in a little white tower does the switching that coordinates three different train lines where two sets of tracks meet. And the switching is mechanical, not electronic, which boggles the mind. Electronic switching would actually increase the capacity utilization, or load factor, on the rails, because it would enable more trains to travel more frequently. That would improve service.
For frustrated commuters, the CTA’s most pressing need might be the $727 million it would take to finish replacing mechanical signals, built as far back as the 1950s, with electronic gear. Modern devices are more reliable and can handle more trains, Mr. Fish says. Mr. Paaswell calls such spending “probably the best investment you can make” on a train system. “It’s better than expansion.”
And yet expansion is what the CTA often has opted for under Mr. Kruesi.
Mr. Kreusi is Frank Kreusi, CTA President. In my view, Kreusi is a very poor manager who lays blame for the CTA’s failings entirely on funding. And he may have a point; this article from the Time Out series compares the CTA with urban rail in other large cities, including Paris, London, and Tokyo. Chicago has approximately the same number of miles of track as London, but less than one-third of the funding. The CTA makes do with a substantially smaller budget per mile of track than the other major urban rail systems. But also note in the same table that the average frequency of trains is every 10 minutes, in comparison to every 90 seconds in New York or every 5 minutes in London. So yes, the CTA makes do, but by at least one measure they do not provide as much service.
And yet, the past decade has seen a 25% increase in ridership, which means lots more fare revenue. And then there’s the federal and state funding. As Crain’s reports,
Remarkably, the CTA is coming off a relatively flush period, having funded major work on four lines (Brown, Red, Blue and Green) in recent years with federal cash and the proceeds of Illinois First bond issues. But the Illinois First money has about run out. If the General Assembly doesn’t come up with a new funding source this spring, the CTA may not have the local dollars needed to qualify for matching federal funds.
Even when it was flowing, Illinois First money wasn’t enough to tackle many of the CTA’s thorniest problems, especially along North Side routes, where some of the oldest transit lines run through many of the city’s fastest-growing neighborhoods. For instance, among the CTA’s $5.8 billion in unfunded capital needs are large, crumbling sections of concrete walls supporting the 1920s-era Red Line from Wilson Avenue to Howard Street that are held together by steel braces and plates. Estimated cost of replacement: $406 million. At least five seedy, forbidding subway stations on that same line need to be rebuilt at $50 million-plus each.
Instead, what is the CTA doing with some of that federal/state money? They are building a mega-stop in the Loop, under Block 37, to anchor an express line to O’Hare that doesn’t even have any public or private funding in the near future.
The CTA is spending $130 million building a super-station under the Block 37 development on State Street that would anchor express service to O’Hare. The idea behind the station, which is also getting $42 million in city subsidies, is to let air travelers check their luggage downtown before being whisked to the airport. To help pay for it, the CTA shifted money from equipment purchases and viaduct work in Evanston, transit sources say. But that service will never begin unless a private operator can be found to bring up to $1.5 billion of its own capital to the project.
So my question is this: from economics/management/free market perspectives, what is the most sensible policy approach at this point? I’d start by showing Frank Kreusi the door, to show that taxpayers do not reward his showy grandstanding priorities. But then what? I think one big conundrum in public transportation is the connection among management quality, funding, and incentives. Is the CTA doing the best it can with its limited budget, and will it thus spend wisely if its budget were increased? Clearly, as is true with any management situation, the Board of Directors is supposed to provide oversight and make sure that the incentive structure is set up properly. The 5-member CTA Board is appointed by Mayor Daley, and while Board Chairman Carole Brown has been critical of some of Kreusi’s decisions, it is not clear that the Board is providing the oversight that is in the best interest of the riders and the taxpayers. If they are, they certainly are doing a poor job of communicating that belief effectively to riders and taxpayers.
Simply put: what is the most efficient and fair way to fund and manage existing and future urban rail public transportation? Public ownership and management is not performing well in this case, but is privatization feasible? Or is there more going on than just a simple public/private ownership difference in incentives and performance?