Council Passes Ride-Share Tax to Fund Transit, CTA Announces $23M in Cuts, Reforms

The Cermak Green Line station. Photo: Jeff Zoline
The Cermak Green Line station. Photo: Jeff Zoline

Today the Chicago City Council approved Mayor Rahm Emanuel’s 2018 budget, including a new fee on ride-hailing trips to fund the CTA. In addition, the transit agency announced $20 million in cost reductions and $3 million in new revenue, which should help to plug the $33 million budget hole it’s currently facing.

The ride-hailing tax represents a sensible approach to leveling the playing field for buses and trains in the wake of recent studies that found services like Uber and Lyft are increasing congestion in cities and reducing transit ridership. According to the CTA’s latest monthly ridership report, released in May, the year-to-date total for bus and rail ridership had declined by 4.3 percent compared to 2016, which the agency attributes to competition from ride-hailing.

The new tax will add a 15-cent surcharge to the existing city ride-hailing fee of 52 cents per trip, 67 cents total, next  year. The surcharge, which will affect Lyft, Uber, and smaller competitors, will be increased to 20 cents, to 72 cents total, in 2019. The city projects this fee will raised $16 million in 2018, which the CTA plans to use on infrastructure improvements, with $21 million expected in 2019.

Active Transportation Alliance director Ron Burke applauded the measure. “The fee increases on Uber and Lyft rides to pay for public transit upgrades… is good news for everyone who cares about preserving healthy, sustainable and equitable transportation options across Chicago,” he said in a statement. “CTA faces an enormous backlog of repairs just to maintain current bus and rail infrastructure, and state leaders continue to slash funding despite the proven economic benefits of public transit investment.”

Indeed, the budget deal Illinois legislators approved last summer is largely to blame for the $33 million the CTA is facing. In a November 8 letter, Regional Transit Authority head Leanne Redden warned CTA president Dorval Carter that the transit agency should raise fares in order to balance its budget, or else face massive service cuts. Emanuel and several aldermen have said that reducing service is a non-starter, although they haven’t ruled out raising fares. Last week Carter promised he would look under every metaphorical couch cushion for possible cost-saving measures before turning to a fare hike as a last resort.

Today’s announcement of $20 million in non-service-related budget cuts, plus $3 million in increased ad and concessions revenue, seems to represent a step in the right direction. Among the cost savings the CTA says it has identified for 2018 is the elimination of 45 vacant behind-the-scenes jobs, plus a hiring freeze on for another 70 positions. The agency calculates that this will result in a savings of $12.5 million for 2018.

The CTA also says it will save $4.7 million in 2018 by locking in contractual prices for fuel and electricity. The agency also claims it will save $3 million next year “by holding the line on contractual expenses.” An additional $3 million is expected from ad sales and concessions to food and retail businesses on CTA property.

The CTA plans to release its final budget later this week, which will reveal whether or not a fare hike is also in the works.

  • Chicago60609

    It is indicative of how mentally challenged the CTA, local elected officials, and the Active Transportation Alliance are collectively, that their first “go to” is to tax people not using the CTA, instead of raising fares on those who do use the CTA.

  • asw

    It in indicative of how little Chicago 60609 understands about public policy that they think it makes sense to raise the cost of the behavior the city wants to encourage (using public transit) rather than that which the city wants to discourage (using ride-hailing services).

  • Tsk

    You have a typo. Ridership is down compared to 2016, not 2017.

  • Chicago60609

    Chicago has lost over 925,000 residents (over a third) since population peaked in 1950 census, so your central planning paradigm is a failure.

  • Jacob Wilson

    How about people who don’t use auto infrastructure stop paying for it. So no more federal or state subsidies at all for roads, fuel, parking and everything will be 100% fee based. There will also be fees for the cost of destroying the environment too. How’s that sound to you?

    I’m thinking $20 gallon gas is fair.

    Highways cost billions to build and maintain so tolls should definitely reflect that.
    I think the $8-10 it costs to go 5 miles on the Skyway is in the ballpark of what it costs to pay for highway infrastructure.

    DEFINITELY no more free storage of vehicles on public streets. Why should I have to stare out my window at your stupid car that I don’t use?

    As for the environmental and social impacts of auto use? I don’t even know where to start but I’m pretty sure you can’t afford it, Chicago60609.

  • Carter O’Brien

    I don’t think the City wants to discourage ride -sharing so much as milk it for additional revenue. You don’t want to set up a revenue source you are reliant on for public transit and then reduce that income stream.

  • planetshwoop

    Uber/Lyft (and their ilk) are attempts to provide an end-run around existing taxes and fees by being neither a taxi nor an employer, but somehow functioning like both.

    The city is right to level the playing field on a service that is trying do an end-run around existing laws. Ensuring Uber/Lyft pay taxes that are equivalent (or approaching) what taxis pay is entirely justified. Even if Uber/Lyft claim they aren’t taxis, the city is well within its rights to tax it like one and use the proceeds as it sees fit.

  • planetshwoop

    Can you elaborate? How, in your opinion, is central planning playing a role in population loss?

  • Carter O’Brien

    Agreed 100%. Just not sure either the business model (and thus the tax revenue) model is sustainable.

  • planetshwoop

    I see it as a supply and demand thing. If the price goes up (fuel costs/labor costs/VC subsidies), then demand will probably drop to some other level. We’re approaching full employment; investors will eventually want their money out of Uber; cities are getting smarter about regulating it. So long term, despite its incredible popularity, it seems that costs will rise and reduce demand for the service.

    So I think I’m saying it’s sustainable, but probably for fewer people than use it today. (One inevitability to me is that Uber and Lyft will merge.)

  • Tooscrapps

    I often wonder if ride-sharing would have gotten as big as it is with $120 oil.

  • planetshwoop

    That would dampen it. I suspect, based upon their efforts to have driverless cars, that the soft labor market for the last few years is more of a factor than fuel.

  • Tooscrapps

    Another good point.

  • Guy Ross

    Totally agree. That’s why the car, and its fuel needs to be taxed, not the business. Leaving the parking factor out, a city shouldn’t care if a person is driving themselves or being driven. Cost to the city is the same.

  • Guy Ross

    I get the point but think you are barking up the wrong tree. The real perversion is subsidies in general. Remove them so that everyone is paying for the form of transport they choose. This means 5 dollar CTA fare, 6 dollar gas and 2000 dollar annual registration for a car.

  • Guy Ross

    Chicago

    Central planning

    ‘The Jungle’ Upton Sinclair

    The irony is perfect.

    The ‘Central Planning’ you speak of was the decision to subsidize the private automobile to the hilt. Chicago didn’t lose population per se. We are all still here, we just live in Melrose Park and Oak Lawn

  • CIAC

    Chicago lost far less residents than other major cities, especially in the Midwest, during that time. All those cities had less central planning than Chicago. So your attempt to hook population numbers to interest by government and civic leaders in long term policy works the opposite of how you want. Obviously, all major cities lost population when the interstate highway system was built (which, by the way, was the result of central planning by the federal government). The more useful thing to look at is the level of population loss compared to other large cities.

ALSO ON STREETSBLOG