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Three days before the Chicago Transit Authority (CTA) was set to hike fares, cut service and lay off more than 2,000 workers, the Illinois General Assembly passed a transit funding reform bill that will provide much-needed operating funds for Chicago-area transit agencies.

Approved by the general assembly yesterday, House Bill 656 includes a quarter-percent sales tax increase in the six-county service area of the Regional Transportation Authority (RTA), which oversees CTA, Metra and Pace. The legislation also authorizes the city of Chicago to increase the real estate transfer tax to help support CTA, provides free train and bus rides to senior citizens, and includes a plan to reform and improve the CTA pension and retiree health-care system.

In addition, the bill requires RTA to provide financial oversight of its service boards; adopt a strategic plan, five-year capital program, annual budget and two-year financial plan; conduct audits of each service board at least every five years; and establish an Innovation, Coordination and Enhancement Fund, ADA Paratransit Fund and Suburban Community Mobility Fund.

Gov. Rod Blagojevich is expected to sign the bill into law.

Now, the general assembly will consider a funding plan that would address the transit agencies’ capital needs, which include new trains and buses, and station and track improvements.