CHICAGO - The Chicago Transit Authority's $1.4 billion 2015 budget won the endorsement of the Civic Federation of Chicago, recognizing what it called the agency's fiscal strides.
The budget reflects the agency's improving fiscal stability made possible through past efforts to shore up its pension fund and modernize its labor practices, the federation said. The agency is also benefitting from reduced financing costs in its next budget for the renovation of a major rail transit line by securing a federal Transportation Infrastructure Finance and Innovation Act loan.
"We've seen a significant fiscal turn-around for the CTA in its past three budget cycles," said Civic Federation President Laurence Msall. "The agency is working under a more sustainable labor agreement, no longer relies heavily on one-time revenue sources and has balanced its budget for the past three years without increasing base fare rates."
The Civic Federation report issued Tuesday recommended that the agency develop a long-term financial plan for keeping the agency on this fiscally sustainable path, especially given its significant capital funding challenges and back-loaded debt service costs projected for future years.
The federation also raised some concern over what it called the agency's optimistic 8.25% investment rate of return on its pension fund investments, which is higher than other local funds use.
"Additionally, the fund's current 50-year plan to get to 90% funded is less than ideal from an actuarial perspective," the report said. "If the CTA pension fund is to remain stable over the long run at an affordable cost to taxpayers, these ongoing issues must be examined and addressed."
The report also cautioned the CTA about relying too heavily on the state for funding given its budgetary woes.
The CTA earlier this year sold $555 million of sales tax with back-loaded principal repayment. Ahead of the sale, the CTA sought ratings from Standard & Poor's, which has previously rated its sales tax bonds, but dropped Moody's Investors Service in favor of Kroll Bond Rating Agency. Both assigned AA ratings and stable outlooks to the credit.
Proceeds are funding CTA's $3 billion capital program that runs through 2018. It funds the purchase of more than 800 new rail cars, a major track and station overhaul of a key train line, the purchase of 300 new buses and rehabilitation of another 1,000, as well as other track and station improvements. The CTA is also upgrading its line to O'Hare International Airport to reduce travel times.
