NCPA - National Center for Policy Analysis


October 26, 2009

Despite its storied history as one of the nation's premier transit agencies, the Chicago Transit Authority (CTA) has suffered heavy ridership losses since its modern peak in 1979.  A principal reason for this decline was a series of devastating fare increases that would not have been necessary if costs had been maintained within inflation, says Wendell Cox, a member of the Los Angeles County Transportation Commission (LACTC).

How bad has cost escalation been at the CTA?

  • In 2007, CTA spent 13 percent more (inflation adjusted) to run its buses and trains than in 1979.
  • That would be fine if ridership had risen 13 percent (or more), since then both riders and taxpayers could feel that they had obtained value for money, however, ridership dropped by more than 2 percent
  • If CTA had kept its costs per passenger within inflation, it would have at least $400 million more each year, and would have no need to consider fare increases or service reductions.

What about national transit cost escalation?

  • Between 1982 (the last year before the federal gas dedicated gas tax for transit) and 2007, national transit ridership (passenger miles) rose 44 percent.
  • At the same time, transit expenditures, adjusted for inflation, rose 100 percent.
  • This means that each new inflation-adjusted $1.00 for transit delivered $0.44 in new value (additional ridership).
  • If transit had kept expenditures growth within inflation, there would have been in excess of $13 billion in 2007.

In contrast, the price (or cost) of most products and services rise about with the rate of inflation or slightly more or less, says Cox:

  • Over the same period of time, automobile and airline costs per passenger mile have declined, producing more than $1.00 in value for each new inflation adjusted dollar.
  • Food costs have declined 3 percent relative to inflation, energy costs have declined 2 percent relative to inflation and housing costs have risen 1 percent relative to inflation.

Source: Wendell Cox, "The Limits of Transit: Costly Dead-End," New Geography, October 21, 2009.

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