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On Tuesday, the Chicago Transit Authority’s (CTA) board approved a $1.24 billion budget for fiscal-year 2012 that will “hold the line on fares” and maintain current service levels, while relying on “deep management cuts and work-rule changes from labor unions,” CTA officials said in a prepared statement.

The budget is 5.1 percent less than the 2011 budget, they said.

Management initiatives will cut a $277 million deficit by $117 million, and the proposed budget will close the remaining gap with “anticipated work rule changes, health care reforms and restraint in wage growth consistent with other metropolitan transit agencies,” CTA officials said.

The agency has borrowed $554 million since 2008, implemented a fare hike in 2009 and made deep service cuts in 2010.

“Despite these actions, the CTA faces escalating costs that far exceed other big city transit agencies,” agency officials said.

Also on Tuesday, the board approved an agreement to launch a new, open standards-based fare-collection system that will benefit riders, improve operations and save money, CTA officials said.

The agency plans to convert its current proprietary fare system to an open-fare system with contactless cards that use financial and information security industry “open standards” technology. Riders will “tap” their contactless credit, debit and bank cards or CTA-branded prepaid cards on a card reader to board trains and buses.

The change in technology, expected to be implemented by early 2014, will modernize and streamline the current fare-collection systems, said CTA President Forrest Claypool, adding that Chicago will become the largest U.S. city to switch to the new fare technology.