Evaluating the costs and benefits of increased funding for public transportation in Chicago

Abstract

(cont.) off-peak ridership, is at or slightly below break-even with respect to net benefits if the CTA cost structure and tax source of subsidy remains unchanged. In order to justify any significant additional long-term funding for the purpose of growing ridership, the CTA should make operational changes to lower its costs and should seek additional funding from sources with lower societal costs.

The Chicago Transit Authority (CTA) faces an immediate financial crisis and a long-term struggle to maintain its role as a meaningful transportation provider in Chicago. Political and financial constraints will induce significant ridership losses in the near term unless additional operating funds are made available. Moreover, even if funding for current fares and service levels is maintained, the CTA risks a continuing decline in market share unless additional action is taken. This thesis investigates the costs and benefits of increased funding for the Chicago Transit Authority under various scenarios. First, it examines historical and political factors that have created the current tenuous environment for public transportation in Chicago. Then, it establishes a framework for assessing the potential effects of increased funding. A distinction is emphasized between measures that are internal to the agency, such as cost-effectiveness, and external measures of benefit to riders and the region. A simplified, strategic cost-benefit framework is outlined, focusing on three major benefit categories that drive political decision-making: transit rider mobility (or generalized cost), congestion mitigation, and regional air quality. Examination of the likely near-term effects of the financial crisis shows that additional funding is clearly justified in order to avoid the projected fare increases and ridership losses, even when the costs of public funding are included. However, achieving additional ridership growth through endogenous agency action is more difficult. It could be achieved through fare reductions, but political constraints make such a move unlikely. A straightforward expansion of service, even if targeted at buses and more responsive