Budget challenges have plagued the Chicago Transit Authority for years.

Now, as expenses grow and revenue sources dry up, last year’s threats could turn into this year’s layoffs.

CTA employees could lose their jobs if the agency's board approves an ordinance Wednesday authorizing workforce reductions. The ordinance is intended to meet this year's $1.3 billion operating budget as belts tighten at the city's public agencies.

Transit-authority officials were unable to discuss details of the ordinance in advance of Wednesday's regular board meeting, spokeswoman Sheila Gregory wrote in an e-mail yesterday.

Last year, former CTA President Ron Huberman estimated that labor costs would total 67 percent of the budget, about six percentage points fewer than in the previous year.

He proposed cutting positions for 210 administrators and 186 maintenance workers and facility operators. Huberman also called for cuts to 135 positions for bus and rail operators -- mostly track flagmen, customer assistants and towermen -- citing decreased construction this year.

If the board approves the ordinance, the cuts could come after agency officials threatened to raise fares, eliminate 81 of 154 bus routes and lay off more than 2,400 workers last year. Officials said they would have been forced to cut service because of insufficient state funding.

Gregory did not immediately respond to requests for comment on past reduction proposals.

Officials are bracing for another difficult budget year as the cost of diesel fuel climbs and the nation's economy continues to wane.

"Unfortunately, belt tightening alone will not result in a balanced budget," Huberman wrote in his 2009 budget recommendations.

Most of the CTA's operating revenue comes from public funding. The Regional Transportation Authority, which oversees the CTA, Metra commuter rail and Pace suburban buses, sets a funding mark for the agency based on projected yearly revenue.

The 1 percent RTA sales tax, authorized in 1983, is the primary source of that public funding. The CTA receives 100 percent of the tax collected in the city of Chicago and 30 percent of it collected in suburban Cook County. In 2008, revenue from this tax totaled $303 million for the CTA.

Money from Illinois' Public Transportation Fund and the Real Estate Transfer Tax also contribute to public-funding revenue.

In all, public funding this year is projected to total $723.3 million, a rise of 9.3 percent over last year.

System-generated funding -- primarily fares paid by riders -- makes up the second-largest part of CTA revenue, an estimated $548.1 million last year, and officials are trying to boost that part of the budget.

In January, the transit authority implemented an across-the-board fare increase: 25 cents for cash fares and 20 percent on passes. While reduced fares remained unchanged, it was the first time since 1998 that pass fares increased.

According to the president's report, several factors have contributed to budget woes at the agency.

Ridership is falling. Huberman projected that a rise in ridership would resume in 2010. But this year, as unemployment rises, total ridership is expected to decline. While train rides are expected to rise by 8.1 percent this year over last, bus rides, a larger revenue source, are expected to decline by 6.6 percent.

Also, the state required that seniors, who previously paid half fares, ride free, and the City Council required the same for disabled veterans and military personnel. Together, those policies reduced revenue by about $30 million per year.

Further, the loss of an annual reduced-fare subsidy contributed a $32.2 million revenue reduction per year.

"The challenges facing the CTA in 2008 are likely to endure in 2009," Huberman predicted.

Wednesday's meeting begins at 11 a.m. in the CTA headquarters boardroom, on the second floor of 567 W. Lake St.