The head of the Chicago Transit Authority says no fare increases and service cuts are slated for next year under a proposed budget that would close the agency’s more than $250 million deficit.

CTA President Forrest Claypool proposed a $1.24 billion budget for 2012 - a five percent reduction from last year - saying the agency would make cuts in management and renegotiate union contracts that expire this year to fill the $277 million deficit. Claypool said the agency could save around $160 million by getting rid of some perks unionized CTA workers get, such as guaranteed paid overtime and paid time to reinstate a driver’s license after a DUI charge.

“It is incumbent upon us to ask our labor partners to work with us first to eliminate archaic work rules that benefit a handful at the expense of our customers and their own employees,” said Claypool.

But those savings are contingent on union leaders agreeing to the reforms, which Claypool says are necessary to close the budget gap.

“The majority of workers do not game the system or benefit from most of the work rules, but there’s big money there,” said Claypool. “And we can protect their jobs and the service they provide if we can have - basically tackle work rules that really have encrusted like barnacles on the system over three decades.”

Claypool said an agreement must be reached by July 1 of next year to avoid fare hikes, service cuts or layoffs. He said if no agreement is reached by that date, more than 1,000 CTA workers could be laid off.

Meanwhile, CTA union members are criticizing the plan. Robert Kelly, who heads the Local 308 Amalgamated Transit Union, called the proposal “union busting.” He said he’ll let union members decide on how much they’re willing to concede.

“My job is to negotiate them the best possible contract. That’s what a president does,” said Kelly. “They’re going to have the ultimate decision. If they should vote, ‘no, we’re not going to give anything in,’ then there might be consequences for some of them. We know that.”