CHICAGO — The agency that provides commuter rail service in the Chicago region approved a 2015 budget that set the stage for the agency's debut as a tax-exempt borrower.
Metra's proposed 2015 spending includes $753.1 million for operations and $328.9 million for capital.
The agency has long had state authorization to issue up to $1 billion of debt but has hesitated to tap it over repayment concerns -- until now. Metra's $100 million borrowing proposal was unveiled earlier this fall as part of a proposed $2.4 billion, 10-year capital program.
Metra's proposed long range plan relies on borrowing, including $100 million of bonds or a "similar financing" next year, and the continuation of state and federal funding totaling $710 million. Metra would phase in fare increases to help repay the borrowing, cover routine capital spending, and rising operational expenses.
"We can pretend the problem doesn't exist, and try to get by with aging equipment and aging infrastructure. But that creates a downward spiral," board chairman Martin Oberman warned in budget documents.
"It costs more to maintain that infrastructure, leaving us less money for reinvestment while service reliability and quality degrades. That's why we believe Metra must act now and not continue to wait for the federal and state governments to take the lead," he added.
The first 11% fare hike would take effect February as part of the 2015 budget. A portion of the additional fare revenue would eliminate a $27 million deficit in 2015 and go to begin repaying debt service on Metra's inaugural bond issue.
Fares would eventually rise a total of about 68% from current prices --generating more than $1.2 billion in new revenue -- to help upgrade a system with rail cars that date back to the Eisenhower administration.
The commuter rail system serves six counties, with 241 stations on 11 lines, primarily bringing commuters into central Chicago.
Metra still needs $1.3 billion in funding for the 10-year plan.
"We will aggressively pursue all options, including new financing strategies and alternative financing mechanisms. If we can find ways to avoid higher fares, we will do it," Oberman said in his budget letter.
The agency is hoping for action at the state level on a new capital budget as the state's ongoing $31 billion capital program winds down. The current infrastructure program provided $2.7 billion for transit agencies.
The 2015 capital program and operating budget now go to the Regional Transportation Authority of Illinois, which provides fiscal oversight of Metra along with the Chicago Transit Authority and Pace suburban bus service.
The larger capital program would allow Metra to replace its aging rail cars and locomotives, fund a maintenance program for some cars and engines and cover the costs of installing the federally mandated Positive Train Control safety system.
Metra would follow up its borrowing next year with the same amount in 2017, 2019, and 2022.
The RTA had long served as the primary borrower for its service boards backing its bonds with a general obligation pledge supported by transit's share of sales taxes, but it's exhausted most of its authority. The CTA more than a decade ago rejoined the ranks of borrowers selling debt backed by its share of sales taxes and leveraging its federal capital grants.
Metra's capital needs are estimated at $9.9 billion over the next decade to maintain a state of good repair with the total tab for the three service boards at about $32 billion.
Metra has warned the $2.3 billion would not cover all its needs and additional funding would be needed to cover upgrades to its tracks, signals, stations, and other facilities. The average age of its fleet in 2012 was 29.7 years, while the average age of the fleets of other large commuter railroads was 19 years.
The CTA does not have a cap on borrowing and last sold debt in June with a $550 million issue backed by sales taxes. Pace has $100 million of authority and plans to borrow $12 million next year to fund the conversion of a garage into a compressed natural gas facility.
