Doom looms over Chicago’s premier public transit system. The CTA is projected to have a $158 million operating deficit for 2008, and will cut service and increase prices Sunday if state legislators do not find a solution.

To learn more about the crisis, we spoke to Ian Savage, a Northwestern faculty member who researches public transit and has written about the CTA for the Chicago Tribune.

What should students know about the crisis that they probably don’t?

This crisis has been building for 15 years. If we looked back at previous crises –- I think there was one in the 1970s, one again in the early 1980s –- it took about three years each time for the problems to get resolved.

We’re seeing public policy being made in front of our eyes, in a crisis mode here. This isn’t some sort of crisis where we do something and it goes away. This is part of a bigger problem, and a solution to it isn’t just going to happen this week. It’s probable we’re going to have some stop-gap arrangement and then the legislature’s going to meet. We may still be two years away before we get to the final resolution.

It seems like they’re trying to say that they’re not going to put up with another stop-gap.

Of course, they actually accepted the stop-gap funding [in September]. It wasn’t like it was foisted on them. As [Evanston's State] Representative [Julia] Hamos says, you could think someone has maxed out their credit card and the credit card company says, “Hey, let’s give you a cash advance.” I don’t criticize the government, because that’s one of the few things it could actually do. But, ultimately, you’re digging yourself deeper into debt, and this isn’t a long-term solution.

What would be a long-term solution?

I do think some of the present crisis is the CTA’s own making. Particularly in the last 10 years, they have let costs increase far quicker than would be explained by oil prices, the labor market, and things like this. I think they were very rash in holding fares constant from ’93 through 2004. Also, by adding back service around about the year 2000 –- in retrospect, the little boom in ridership didn’t pan out. I’ve made the statement before that the CTA finds itself at the bottom of a six-foot hole at the moment. Two feet is caused by circumstances outside of their control, but four feet of it is things they did themselves.

It would be nice to have a solution in which the CTA themselves partly contributed. In the 1970s, when the subsidy funds came from a variety of taxes, there wasn’t a predictable source of funds. One of the advantages of the sales tax proposal is that it’s a reasonably predictable source of money, and it’s a dedicated source of money. When you’re budgeting for the future, you can see what’s going on.

How has the CTA let costs balloon out of control?

CTA has been publicly owned for 60 years, but for the first 20-25 years it was run as a commercial operation. They kept a tight rein on costs. Then public subsidies were introduced in the 1960s, and in the 10-15 years after that you saw the costs increase considerably. I’ve publicly said in an editorial in the Tribune that we should consider privatizing some of these routes. Clearly, one of the major objectives of privatizing is to rein in costs.

When students talk about the CTA, the first thing that comes into their minds is the El. The bus network is actually where most of the ridership is, and most of the cost. If you do some privatization on the bus network, the reduction of coverage costs could be in the region of $150 million a year, which is about the size of the projected deficit at the moment. Even if we put more tax revenues into the system, if you could reduce the cost of the service, you could put more service out there for the same amount of subsidy dollars. So this doesn’t necessarily mean job losses.

Are bus cuts and fare increases short-term solutions? If overall costs aren’t reined in, does that mean ten years down the line there’ll be another crisis?

I think that’s probably fair to say. People have said to me that even after the 1983 subsidy agreements, within two or three years it was apparent that trouble was brewing. The question is, if we do end up giving more tax money to the CTA, are we going to get something that as a public we actually want from it, or is it going to get squandered in ways that may not actually benefit the riders? If you just throw additional money at them, how can we know that in not-too-many years time, they’ll be back, having spent all that money?

Won’t cutting bus routes be more costly to the CTA?

You’ve got to remember that you’re running these services at a loss. Every good you make, it costs you a dollar but you only get 40 cents of revenue at best. So not producing is always better than producing. My observation is that the proposed list of cuts for next week, you could understand where that list came from. They’re ones which are a service which it might be questionable why you’re providing it; there are alternative routings, and things like that. I think the things for next Monday might even sound like something you might want to do. It’s possible you might have to see some sort of shutdown of the system. Doomsday may have to come in order to actually prod the legislature to do something.

What is out of the CTA’s control?

There has been a global trend for people not to take transit in favor of driving, and for people to move out of cities and into suburbs. Obviously the buses run on diesel fuel, and you’ve got the cost of oil here.

Could you give an idea of the economic effects of the bus cuts and fare increases?

At the heart of all of this: What type of city are we? Urban economists refer to Chicago as a weak-centered city. Some cities are always going to have a strong center: Manhattan, Tokyo. Compared to many places, Chicago has a lot going on downtown, but in some ways there’s no real reason for people to be downtown. They could be in Schaumburg; the Art Institute could be in Highland Park.

So why do you actually need a downtown? For many of us, because Chicago has a downtown with all of what we think are good things: cultural activities, government activities, business activities. The big problem with a weak-centered city is that not everyone who works in the Loop can get there by driving, because it would be physically impossible. However, off-peak you can get to the Loop quite easily. So unlike Manhattan, you’re not going to have people crowding the trains and the buses 24/7.

Transit in Chicago is necessary to get everyone to the center of town, but it needs to have a big economic base to justify itself across the day. If you’re a mayor of a weak-centered city, you’ll always have to remember what happened to Detroit. Seventy years ago Detroit had a strong central downtown; now Detroit doesn’t exist as a downtown. If the transit system went away, part of what you might be giving away is what it means to be a central city.

Is there anything else that a student wouldn’t realize about this whole thing?

The question is, why has the problem arisen now? One thing that is very difficult to comprehend is that there’s a huge hole in the pension fund. It’s a bit like General Motors. General Motors used to make automobiles. Nowadays General Motors is a pension fund for a bunch of retirees and they make automobiles on the side. In some ways, this is what’s happening at the CTA.

I don’t think their problem is unique. The state has this problem, Evanston’s firemen and policemen fund has this problem. It’s very easy when you have a pension fund to not pay into it when you’re having bad times. It appears that this was done to hold off the problem, and now basically they’ve run out of options.