Illinois RTA Board OKs $166M To Trim Chicago Transit Deficit

CHICAGO — The board of the Regional Transportation Authority of Illinois late last week approved the issuance of up to $166 million of bonds to free up federal capital funds to help trim a Chicago Transit Authority budget deficit and stave off a fare increase.

The plan was proposed earlier this month by Gov. Pat Quinn.

Under the agreement, the RTA will issue about $83 million in fiscal 2010 and another $83 million in 2011 with the state covering about $15.3 million of debt service for the first two years. Future assistance with debt service would be evaluated on an annual basis.

In exchange, the CTA agreed to cancel its proposed fare hikes of between 25 cents and 75 cents per ride that had been included in its $1.3 billion budget for 2010. The authority would also hold the line on fares in 2011. The CTA is still looking at service cuts and layoffs to fully erase a $300 million deficit in 2010.

Revenue from sales taxes and the transit agency’s share of the city’s real estate tax are expected to fall $213 million below previous projections while labor contracts call for a 3.5% increase in wages.

The CTA also faces increased debt service on its $1.8 billion of pension-related debt issued last year.

The RTA — the parent agency of the CTA, Pace suburban bus service and Metra commuter rail — has $2.3 billion of outstanding general obligation debt that carries ratings of AA-plus with a negative outlook from Standard & Poor’s, a Aa3 from Moody’s Investors Service with a stable outlook, and AA-minus with a negative outlook from Fitch Ratings.

The agency’s bonds are secured by a gross pledge of sales taxes and other state aid. The RTA has limited borrowing capacity remaining but expects to receive funds from state bonds under a $31 billion capital program approved by state lawmakers and signed by Quinn earlier this year.

The CTA operates the second-largest transit system in the country. Moody’s recently downgraded the agency’s $1.9 billion of pension-related debt to A1. The bonds are rated AA-plus by Standard & Poor’s. The authority also has outstanding debt backed solely by federal grant funds.

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Transportation industry Illinois
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