Chicago Transit Authority President Forrest Claypool announced a $277 million dollar deficit heading into 2012 on Tuesday. Claypool said the days of borrowing millions for operations are over and that it’s time to face the hard decisions.

He blamed pension, health care costs and union contracts that he says give bus and rail operators the highest cost-adjusted salaries in the nation. Claypool is also coming down on employees that abuse company policy and contribute to the CTA’s chronic absenteeism.

“These are difficult, complex issues and it’s not something I can wave a magic wand and happen. It’s going to take cooperation from the unions, it’s going to take cooperation from some of our partners in government and business,” he said.

Claypool wouldn’t say if a fare hike is coming. The 2012 budget is slated to be released later this month.

A labor union representing many CTA rail workers is expected to address the agency’s budget issues later Tuesday.