The Chicago Transit Authority’s board of directors is scheduled to vote on the agency’s $1.24 billion proposed budget on Tuesday.

Under the proposed budget, CTA President Forrest Claypool hopes to close the agency’s $277 million deficit next year and avoid fare hikes or service cuts in large part by re-negotiating union contracts.

On Monday, budget watchdog group The Civic Federation released a statement supporting the budget plan. President Laurence Msall said changing the labor rules is the most reasonable way the CTA can balance its budget.

“These are enormously inefficient rules that need to be eliminated,” said Msall. “The riders of the CTA are having a difficult time paying their own bills and maintaining their jobs. And to go to a fair increase at this time would be very difficult.”

The Civic Federation warns if CTA can’t get the savings from union negotiations, it will have to raise fares or cut services.

Union leaders have said the estimated savings from those negotiations are exaggerated.