TY - JOUR
T1 - Management objectives and the causes of mass transit deficits
AU - Savage, Ian
N1 - Funding Information:
Overall, annual profitability declined by just $8m. However, there were signs that management would like to break out of the exogenously determined profit constraint. The State of Illinois was, unsuccessfully, approached three times over the period to obtain small operating subsidies. Moreover, in 1957 the CTA produced an expansive 20-year plan that was in stark contrast to the productivity-based modernization plan of the previous decade. Unlike the earlier plan, there was no suggestion that it should be funded by the CTA’s own depreciation trust fund. A request to divert gas taxes from the State highway trust fund for capital investment was unsuccessful. At that time, the balance of power in the State of Illinois was held by “downstate,” or rural, legislators who opposed funding to benefit residents of Chicago.
Funding Information:
At the turn of the new decade, three major events contributed to the end of the free fall in finances, and a reversion to the management objectives pursued before 1970. First, by 1979 it was clear that the RTA, the regional funding agency, was no longer financially viable due to unreliable taxing authority, and mounting demands for financial support from the CTA, suburban bus companies, and commuter rail operations. Second, a transit strike in December 1979, while bringing a short-term victory and higher wages, ultimately proved disastrous for the union. The public became cognizant of the considerable gains by organized labor in the previous 15 years, and how this had contributed to the run up in subsidies. Third, labor lost its political as well as its public support, as the death of the legendary Mayor Richard J. Daley marked the beginning of the end for “labor-oriented, big-city Democratic Party machine politics.”
PY - 2004/3
Y1 - 2004/3
N2 - Based on data for the period from 1948 to 1997, exogenous decreases in demand and increases in costs are estimated to have reduced the annual profitability of the Chicago Transit Authority (CTA) by $1 billion. Half of this decline was recouped by reductions in service, increased fares and increased productivity. Even more would have been recouped had the CTA not given away earlier productivity gains during the 1970s. This was during a period when subsidies were increasing rapidly, and seemingly without constraint. When faced with financial challenges, management has preferred to increase fares rather than reduce service levels to the detriment of social welfare.
AB - Based on data for the period from 1948 to 1997, exogenous decreases in demand and increases in costs are estimated to have reduced the annual profitability of the Chicago Transit Authority (CTA) by $1 billion. Half of this decline was recouped by reductions in service, increased fares and increased productivity. Even more would have been recouped had the CTA not given away earlier productivity gains during the 1970s. This was during a period when subsidies were increasing rapidly, and seemingly without constraint. When faced with financial challenges, management has preferred to increase fares rather than reduce service levels to the detriment of social welfare.
KW - Chicago
KW - Management objectives
KW - Subsidies
KW - Transit
UR - http://www.scopus.com/inward/record.url?scp=0442312855&partnerID=8YFLogxK
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U2 - 10.1016/j.tra.2003.10.003
DO - 10.1016/j.tra.2003.10.003
M3 - Article
AN - SCOPUS:0442312855
SN - 0965-8564
VL - 38
SP - 181
EP - 199
JO - Transportation Research, Part A: Policy and Practice
JF - Transportation Research, Part A: Policy and Practice
IS - 3
ER -