Interviewing Jay Walder: On the MTA’s fiscal stateBy
When Jay Walder moved his family and career back to New York from London 14 months ago, he did so with the expectation that he would head a fully-funded MTA. Gov. David Paterson had tabbed Walder to head the MTA as its new CEO and chairman because of his background in technological innovation. Walder was to use his expertise to modernize an authority struggling to incorporate 21st century technology into an early 20th century system.
Instead, Walder had to face head-on the MTA’s greatest economic crisis in a generation. Thanks to lower-than-projected tax revenues and the outright theft of dedicated funds by the state legislature, the authority found itself $800 million in the red. To balance the budget, Walder oversaw an intense effort to trim the MTA’s operating costs that included $500 million in administrative savings and steep service cuts with a fare hike to come at the end of December. Needless to say, it is not, as I noted in August, how he anticipated spending his first year back in New York.
Before the Thanksgiving holiday, Walder sat down with me for a 30-minute interview on all things MTA — or at least all things MTA we could cram into a half an hour. I’m going to run the Q-and-A in pieces this week. I’ve edited Walder’s answers only for grammar and, at times, removed some words for clarity and brevity. The words are his. I conducted the interview shortly after the MTA unveiled its latest 2011 budget projections and started off with questioning focusing on the authority’s economic outlook.
Second Ave. Sagas: What do you see as the best hope for avoiding future service cuts?
Jay Walder: Answer: I think our plan avoids future service cuts. When we looked at this, we felt that the best way to stabilize the finances of the transit system were as follows. We needed to continue to reduce our costs. We’ve saved over $500 million a year this year from cost actions, a portion of which — less than $100 million — is from service cuts but — and I’m not minimizing that — the other $400 million plus was not that. So we need to continue to reduce costs. We need to find ways to really improve productivity. In what you’ve seen us do right now, you haven’t seen that [increased productivity] within the broader work structure.
Second Ave. Sagas: Does that include the various initiatives announced in May, including consolidating the Bridges & Tunnels shops and ensuring that LIRR maintenance crews can service Metro-North trains and vice versa?
Walder: It includes any number of institutional arrangements, work rules, other things like that. While respecting the fact that our employees should be well trained and well compensated, we have rules in many different ways that stand in the way of getting the most productivity and efficiency and being the most cost effective. What we really want to be able to do is prove to everybody that we are actually making every dollar count, that we are an efficient and effective provider of public transit services. And I think if we can do that, than that gives you a very very critical plank in protecting the services that people want. That’s the first part.
The second part is I think we need to accept that periodic fare and toll increases are necessary in supporting the public transit system. I don’t think we should shy away from that. I don’t think there’s anything wrong with that. I think we should build them into a business plan but I think we should recognize that they need to be predictable and they need to be at amounts that we think are fair and reasonable which broadly approximates inflation and things of that nature.
The third part is that there is no public transit system anywhere in the world — perhaps with one exception — that operates without public support beyond the riders of the system, and there are lots of reasons why that makes sense. The transit system allows a degree of economic development that would not take place otherwise. You do not capture back into the transit system the value of that economic development. It gets captured into state taxes, local taxes. It gets into the tax base. It provides for environmental benefits that come from it, and it provides in terms of our socially conscious elements. It provides for mobility and opportunity with limiting prices as an impediment to doing that. We have to recognize that’s the third leg of the stool.
The first leg of the stool is to show that you’re an efficient and effective provider of public transit and that you’re meeting people’s needs in doing that. The second leg of the stool is accept the fact fares are part of the picture and what you’re doing, and the third leg of the stool is the fact that we will rely on public support to do this. If we want to be operating in a way in which we’re protecting the services, we have to ensure all three of these things. Many of these things are interrelated. Your best ability to be able to protect subsidies that come to the transit system is actually showing people that we’re using the money well.
Second Ave. Sagas: You announced recently that the authority is still waiting for a payment from the state, and Gov.-elect Andrew Cuomo recently spoke of the fungible-ness of transit funding. Are there concerns that the state is going to repeat last year and take money away that’s supposed to go to transit to fill their general budget gap? Where does that leave the MTA?
Walder: The general budget gap for the state is clear. The state is obviously dealing with a very, very difficult financial situation, and I think that’s clear right now. Clearly all we can do is to project that the taxes that have been raised on the basis that they will be supporting our transit system…the only basis we can work on is the view that those monies will be available to and will come to the transit system. That doesn’t mean that we predict that the economy will get better or other things of that nature. It’s only saying that whatever comes into those funds is available for the transit system. It’s the only reasonable basis for which we can work, and I think you’re seeing some public view put forth by a number of people that says the taxes were raised on this basis. In fact, they were very explicitly stated as “We’re raising this tax to be able to support our transit system because we want to have a transit system that prospers, that allows the region to prosper, that provides opportunity and does other things like that.”
Are there risks that are there? You’d be hard pressed to say there aren’t risks. I think the fact is that there clearly are risks that are there, but the best argument you can make is that the taxes were raised for this purpose. We’re using the money well, and it’s meeting a public objective that we need to meet.
The next parts of the interview will focus on Walder’s tenuous relationships with the MTA’s various labor unions, the future of the Second Ave. Subway and the authority’s next-generation fare payment technology. Check back this week for more.