In 2010, Chicago buses and trains will likely be more crowded and run less frequently. But at least it won’t cost more to ride them.

At a board meeting Thursday, the Regional Transportation Authority approved a deal that will head off planned fare hikes on the CTA. The deal was worked out last week between the RTA and Gov. Patrick Quinn. It will allow the Chicago Transit Authority to balance next year’s budget without raising bus and rail fares. CTA President Richard Rodriguez had originally proposed fare hikes in mid-October.

Fares will be frozen at $2.25 for the next two years, according to a Nov. 11 press release from the Governor’s Office. Prior to this agreement, the CTA had planned to raise basic bus fares to $2.50 and express bus and rail fares to $3. The cost of daily, weekly and monthly passes were to rise as well.

In return for freezing fares for the next two years, the CTA will receive money from the RTA to the tune of $166.6 million. This amount matches the estimate of revenue the CTA would have received from the proposed fare hikes.

RTA’s board Chairman Jim Reilly commended the CTA’s initial efforts to close its $300 million budget gap by reducing service and raising fares at the board meeting. But, he said, at this time it is smarter to accept the state’s help, particularly because the transit authority raised fares in 2009, from $2 to $2.25.

“Fare increases are not awful things,” Reilly said. “But doing two increases in two years of this size doesn’t appear to be good policy. It seemed to me that it was reasonable to work with the CTA on ways to mitigate the fare increase.”

Reilly said higher fares would drive down ridership, which is not what the CTA needs right now. Neither of the other two service boards under the RTA – Metra and Pace – will raise fares next year.

Under the agreement, the RTA will issue bonds for capital projects for 2010 and 2011. The RTA then will funnel this revenue to the CTA, which will use the money to pay for operating costs.

For its part of the deal, the Illinois Department of Transportation will cover RTA’s debt service costs for the first two years that the bonds are issued. After that, the RTA will be expected to pay off the bonds, at an estimated rate of $10 million per year, said RTA Executive Director Stephen E. Schlickman.

With the fare hikes, the CTA had anticipated $83 million in fare box revenue for 2010, Schlickman told the board. He said the regional authority can issue two separate $83.3 million bonds or one $166.6 million bond.

“Ten million dollars in debt service is a good deal,” Reilly said.

Two days after Quinn's announcement, the Civic Federation released a blog post slamming the deal. The federation supported the fare hikes included in the CTA's initial 2010 budget.

"The CTA's original revenue plan was far superior to the Governor's deal because it increased the system's self-sufficiency and reduced its dependence on transferring capital funds to the operating budget," the post read. "Borrowing money will only put off the inevitable fare increases needed to balance the CTA budget and compound the problem when the $166 million in funding runs out. This will mean even steeper fare hikes in 2012."