Metra could face 40% service cuts under ‘fiscal cliff’

CHICAGO — For most of Wednesday’s annual presentation to Northwestern University’s Sandhouse Rail Group, representatives of Metra and Northern Indiana Commuter Rail District, or South Shore Line, were able to highlight a string of positive accomplishments and coming attractions.

But the tone changed dramatically as the session at Metra headquarters wound down, as someone asked about the commuter rail operator’s potential “fiscal cliff.”

“The fiscal cliff is real,” said Metra CEO/Executive Director Jim Derwinski. “It’s going to hit us in mid-2026. What that means from a budgeting standpoint, if we do not have a hole-filler budget from the state of Illinois by, I’ll say June 1, we have to build our budgets with a potential 20% reduction of expense, which will be a 40% reduction of service into ’26. … We have to reduce expenses that much.

“We continue to go to hearings … And we’ve got to get a solution in place. Without that solution, we unfortunately will have to go down the arduous path of figuring out how to shed that expense.”

To plug the hole in 2026 created by the combination of lower ridership in the post-pandemic era, and the end of federal pandemic funding, will take about $230 million, Derwinski said. But that budget will include the last federal COVID money. In 2027, he said, that budget gap will grow to about $330 million, “and that’s just for the service you have today.”

Added NICTD President/General Manager Mike Noland, “Our fiscal cliff is this year. We run out of money (in) December, January. Indiana budgets every two years, and we’re in a budget session, so we have to fix it this year.” And for South Shore service, even the unsavory prospect of service cuts is a problem with a different dimension.

“Theoretically, I could turn the lever and look at what service I could cut, but I signed a contract with the federal government for full-funding grant agreements to build $1.6 billion of projects and committed to service,” Noland said. “So if I do cut service, I’m in breach of those agreements.”

Derwinski was also asked about the situation regarding operations on Metra’s three Union Pacific lines, in the wake of media reports that service could be halted. Those reports followed Metra’s filing last week asking the Surface Transportation Board to compel UP to permit commuter operations, which Metra said could be stopped because of the two sides’ inability to agree to financial terms for Metra-operated services on the North, Northwest, and West lines [see “Metra asks STB …,” Trains News Wire, March 7, 2025].

“Obviously, UP asked the courts for a declaratory statement on whether or not they have the ability to shut the service down,” Derwinski said. “The courts did agree with them that, yes, they do not have an obligation to continue running the service.” [See “Court rules Union Pacific is not obligated …,” News Wire, July 28, 2023].

“We’ve been negotiating with them for many years now to take over the service,” Derwinski continued. “knowing the fact that they have that card. We basically are now in a position to say, ‘Well, if you do this, then what else happens?’ And so that’s what’s really going on now.

“There are some dealings in the courts and dealings at the STB that are going to help us to get closer together. We still have a common goal of finishing these negotiations by the end of the year.”

— More from Trains News Wire on Metra from the Sandhouse Rail Group meeting is available here; coverage of the South Shore from the meeting is here.