It’s a question that Metra customers naturally ask when we raise fares: “Why don’t I get better service if my fares go up?”
The answer is: we’re working on it, but it’s going to take some time.
To begin, fares do not generate nearly enough revenue to cover the costs of running the railroad – and they never will. Fares cover about half of our operating costs and a fraction of the costs to maintain our assets like bridges, stations, railcars and locomotives. For years, Metra’s capital asset needs have been far, far greater than the amount of money we receive from Springfield and Washington to help pay for them.
And, rather than raise fares consistently over the years, our agency and stakeholders have left the public transportation system, including Metra, underfunded. This has left us with a huge backlog of improvements that need to get done in order to modernize and improve our operations. The most recent estimate from the RTA indicates that Metra’s unmet capital needs over the next decade total $11.7 billion.
That’s why the Metra Board decided in fall 2014 to no longer wait but to prioritize our capital needs by approving the first long-range railcar and locomotive purchase plan in Metra history. They announced a 10-year, $2.4 billion modernization plan to replace and rehabilitate hundreds of railcars and locomotives and install the federally mandated yet unfunded safety technology system called Positive Train Control.
That plan relies in part on Metra borrowing $400 million during that timeframe, with the rest of the funding provided by anticipated and hoped for state and federal funding sources. That borrowing will be funded by a regular schedule of fare increases, a part of which also may be needed to fund increased or new operating costs.
At that time, the anticipated increase for 2016 was 5 percent. However, we were able to manage our operating costs this year due to $5.7 million in efficiencies, lower fuel prices and higher sales tax receipts. That’s why we were able to keep the fare increase to 2 percent this year.
That 2 percent increase in fare revenue will generate $6.5 million. With an annual budget of $945.5 million in 2016, the funding that comes from the fare increase is a drop in the bucket. As a point of reference, $6.5 million is what it costs to purchase just one locomotive.
And where does it go? Why do we need it in 2016? Half of the $6.5 million raised through the fare increase will go to pay for new operating costs we will incur from PTC, and the other half will help fund the purchase or rehabilitation of railcars and locomotives.
Metra just started the second year of a modernization plan that will take a decade to fully implement. Railcars and locomotives are currently being rehabbed and returned to service. We anticipate new railcars will start arriving in 2018 and new locomotives in 2020 - enabling us to provide far more reliable service due to fewer mechanical problems that cause delays. And, once PTC is installed, our system will be in full compliance with the federal mandate and feature the latest, state-of-the-art technology to ensure the safety of our passengers.