Second Ave. Sagas

Category: MTA Economics

  • DiNapoli: MTA should rein in overtime spending

    According to New York State Comptroller Thomas DiNapoli, the MTA could save significant amounts of money by overhauling its approach to overtime. In a letter sent to the MTA and obtained by the Daily News, DiNapoli said that overtime spending cost the MTA nearly $577 million in 2008. Furthermore, fewer than 5 percent of the authority’s workforce earned 30 percent of the overtime with some LIRR mechanics — the most egregious overtime earners — taking home $200,000 in overtime pay or more than three times their base salaries.

    DiNapoli’s letter highlights the need for the MTA to reform its work practices and for its unionized workers to accept that reform. At a time when the authority’s deficit is spiraling out of control, the MTA simply cannot afford to be lax about its overtime regulations. “The high cost of the MTA overtime is a significant issue,” DiNapoli said. The overtime payouts “adds to concerns about whether the MTA has done all that it can to contain costs.”

    For his part, MTA CEO and Chairman Jay Walder promised reform. DiNapoli’s study covers the 2008 time period, and Walder has been in the job since only October 2009. Cutting overtime abuse has been one of Walder’s recently talking points, and he reiterated that to the Daily News. “My top priority,” he said, “is finding ways to reduce our costs by targeting areas like overtime and contracting, and we are grateful for any help the controller can provide as we begin to make the MTA more efficient.”

  • Report: Stimulus dollars for transit remain unspent

    These days, the MTA’s federal stimulus grants have become hot topics of conversation. Some would prefer to use the legally permissible 10 percent siphoned from the stimulus grant to help cover the ever-widening operating deficit. Others don’t feel comfortable taking money away from the also financially distressed capital budget. But what if the money isn’t being spent?

    According to a report issued recently by the New York Building Congress, few of the city’s $1.57 billion in transportation stimulus funds have spent. In fact, the city itself has spent only $857,000 of that money, and while the MTA has spent more of its allotted dollars, spending is far off pace. Of the MTA, the NYBC said:

    According to the State Comptroller’s figures, the MTA has spent $39,000 of stimulus funds on a bridge replacement on South First Avenue over the MetroNorth Railroad. Approximately $10.9 million is earmarked for this project.

    At the end of 2009, no federal stimulus money had been spent on the two MTA projects slated to receive the most ARRA funds; the Fulton Street Transit Center, which is expected to receive $423 million, and the Second Avenue Subway, which has been approved for $276 million.

    According to MTA, the agency has been allocated a total of $1.075 billion in ARRA funds and has awarded contracts worth $886 million. However, the MTA acknowledges that just $14 million has been spent to date.

    This data underscores a point I’ve made about the stimulus grants in the first place. Generally, shovel-ready projects were mostly funded, and the MTA — along with many other state organizations — used its stimulus dollars to cover project deficits. NYBC’s head echoed this sentiment.

    “As New York City nears the first anniversary of federal stimulus legislation, we remain greatly concerned about the slow pace of capital spending on transportation projects,” NYBC President Richard T. Anderson said. “Virtually all of the stimulus money spent and received to date has been devoted to programs designed to lessen the impact of the economic downturn on individuals, bolster the operating budgets of local governments, or fund small-scale construction projects. While such spending is important, it does little to stimulate the broader economy, create new jobs and prepare the region for renewed growth.”

    So what is to be done? If anything, this latest development strengthens the case for the Russianoff Plan. Congress passed the stimulus money in order to stimulate the economy, and an operating budget crisis at the MTA will lead to job losses that we as a city would prefer to avoid. If those federal dollars can be used to avert some cuts and some staff reductions, then, the money would be going to good use. Of course, some of the payroll fat at the MTA deserves to be cut, and some of the efficiency-based service changes should be implemented anyway. As of now, though, this money is just sitting there.

    I’m still not on board with the Russianoff Plan, but I can see where this debate is leading. Eventually, the MTA, faced with a huge debt and a pile of unused cash just sitting there, will take some of the stimulus funds from projects that, in a few years, will need more money. The economics of it all just keep getting more and more muddled as time goes on.

  • Brother, can you spare eight billion dimes?

    Those in charge of the MTA must be really glad Wedneday is over for it was yet another bad time in the long run of bad days for the MTA finances. As we learned late in the afternoon, revised budget projections from the state have opened up a wider gap in the MTA’s budget. Only later in the day did the extent of the cuts come into view.

    Basically, the MTA has been fleeced by the state. Promised enough money to avoid either financial ruin or extreme service cuts and/or fare hikes in 2010, the MTA has not been given the millions promised to it. Rather, the State Division of Budget continues to adjust forecasted revenues from the Regional Mobility Tax downward. A statement from the agency yesterday summed up the bad news:

    “The MTA anticipates that it may need to reduce the estimated receipts included in its 2010 budget by approximately $350 million (which includes $179 million of 2009 collections whose receipt was previously reforecast for 2010), with revenue loss of up to an additional $200 million a year thereafter. Combined with additional revenue loss previously projected in the Governor’s Executive Budget, the MTA could be faced with up to a $400 million new deficit for 2010.”

    And so when we add the new deficit to the old $383 million deficit, we find the MTA looking at a 2010 fiscal hole of $783 million — or nearly eight billion dimes. Got a few to spare?

    For its part, the MTA is “closely following” the state’s budget machinations and “remains prepared to take needed actions in order to maintain a balanced budget.” That’s agency-speak for “we’re screwed,” but the MTA, as I see it, has a few avenues it could pursue in order to gain more funding. Many of these approaches are politically unpalatable while others are generally unfeasible or simply not enough. Still, it’s worth an examination of the five proposals that should be on the table.

    1. Adopt the Russianoff Plan
    As much as I do not yet support moving stimulus funds from the capital budget to the operating budget, this move is clearly the most obvious one to close a budget gap of this magnitude. The only problem is that it falls woefully short of achieving that goal. Even if the MTA moves the $121 million allowed by law over from the stimulus ledger to the operating balance sheet and even if the MTA takes the $50 million PAYGO reserve and reinstates that into the operating budge, the agency would still be $612 million in the red. Plus, the strained capital budget — a necessary part of any future transit system that we will enjoy when the agency’s finances are stronger — would be further drained.

    2. More service cuts
    Right now, the MTA has a full slate of money-saving service cuts on the table. Although many of these cuts can be viewed as service reorganizations that better meet demand and costs, the MTA is still cutting train frequency and increasing load guidelines. These costs will save some money, but by themselves, the cuts can’t cover the deficit. If the MTA opts only to cut services, the cuts would be dramatic — think no overnight train service — and would cripple New York City. Still, if Albany doesn’t have or can’t find the money, this is truly a Doomsday option that remains on the table.

    3. Raise fares
    On Tuesday, I analyzed the debate between fare hikes and service cuts as budget-balancing approaches. In the end, 77 percent of those who voted in the poll supported fare hikes as a way to close the budget gap. For the MTA to cover this new gap, the agency would have to institute the already-planned service cuts and a fare hike that nets another $400 million revenue. To do so by fares would lead to a fare hike of around 10 percent across the board. Despite the MTA’s desires to avoid a hike, it seems almost inevitable.

    4. Congestion Fee/East River Bridge Tolls
    While one of these proposals could be passed without the other, I lump them into one item because they are, in effect, the same thing. Charging drivers who exact a cost on the city when they use unnecessarily free bridges would result in a guaranteed source of revenue for the MTA. Charging drivers who exact a cost on the city when they contribute to congestion and pollution would result in more funding for the MTA. The real problem here is that no New York politician seems willing to take the bull by the horns even though the majority of New Yorkers have, at times, voice support for either or both of these proposals. They too seem inevitable but not quite as soon as a fare hike does.

    5. Market-Rate On-Street Parking
    Last July, I ran some numbers and explored why New York should be charging its residents hundreds of dollars for the privilege of on-street parking. As real estate rates remain among the highest in the nation, the city gives away valuable space to cars for free. If the city instituted a residential parking permit program with tiered fees based upon proximity to transit and guaranteed those revenues to the MTA, the transit authority would be able to close a significant portion of its budget gap. Again, though, this proposal is politically unlikely.

    So in the end, we’re left with the same options under consideration for the better part of the last two years. Even though more equitable funding solutions exist, when the dust settles, my money is on a combination of fare hikes and service cuts. The auto drivers — a small percentage of New York City’s commuters — will enjoy their free rides as the MTA limps toward financial ruin.

  • With new state budget release, MTA’s finances head further south

    When the MTA institutes its sweeping package of service cuts this summer, the agency will do so in an attempt to save nearly $400 million. It’s now going to have to find double those savings to stave off economic disaster. According to the latest budget totals from New York State, the estimate revenue generated by the payroll mobility tax will now be $700 million less than expected from 2009-2011. With this news, the MTA faces even more economic uncertainty and a 2010 budget gap that will grow to at least $400 million after the cuts are instituted. At this point, fare hikes for 2011 are shaping up to be quite substantial.

    Meanwhile, the ideological divide between those who want the MTA to receive proper funding is growing. In response to this news — a development that highlights the need for a long-term fix — Gene Russianoff sent out a statement again supporting a short-term stimulus fix that won’t even close this new estimated gap. “The MTA’s widening deficit makes it more important than ever for the cash-starved agency to use currently available federal stimulus money to keep running as much transit service as possible,” he said, when in fact this widening deficit makes it more important to find a stable source of year-to-year revenue and not a funding source that will dry up after it’s tapped.

    On the other side of the debate is John Petro of the Drum Major Institute. In a Huffington Post piece, Petro explains why bridge tolls and congestion pricing schemes are both inevitable and beneficial for the MTA and New York. With wider gaps projected for this year and next, Petro’s is the kind of proposal transit advocates need to be supporting right now. A stimulus fix, estimated to provide under $200 million in funding, just won’t cut it right now.

  • Searching for a perpetual funding source

    Over the weekend, as part of their campaign to convince the MTA to use stimulus dollars as a quick fix for most of its budget gap, James Vacca, Christine Quinn and Gene Russianoff penned a Daily News op-ed putting forth their plan. By now, we know the argument: It is legally permissible for the MTA to use 10 percent of its stimulus dollars for operating costs. That contribution of around $120 million plus the $50 million in operating expenses reserved for pay-as-you-go capital needs would be enough to take the service cuts off the table while the city and state should work out a funding plan for the Student MetroCard program.

    On the surface, their proposal doesn’t sound like a bad one, but I’ve had my reservations. Without exhausting the other options first, I don’t support taking money that should be used for capital resources or the PAYGO fund to cover operating deficits. Furthermore, having spent some time examining Transit’s service cuts proposals, I believe many of these cuts should stay as is. It simply doesn’t make sense for the MTA to run bus services that cost $12-$25 per passenger and service just 1100 riders per week as Staten Island’s S60 bus does.

    In the end — at the 11th hour when no better solution is on the table — I would be willing to support this so-called Russianoff Plan, but for now, I want to see New York try to find that better solution. Today at The Transport Politic, Yonah Freemark tackles a similar subject. He explores how transit riders are no longer surprised by Doomsday cuts and questions the way American municipalities fund transit operations. He writes:

    If there is no obvious way to avoid these reductions now, governments at all levels of the federal system should learn from this recession in order to prepare for the next one. In most other countries, despite economic downturns similar to the one being experienced by the United States, transit services have not been cut back at all. One explanation, of course, is a more stable source of revenues than the sales tax relied upon by most American transit systems to fund system operations and capital programs. Similarly, other countries have stronger social support networks, ensuring that when they experience recessions, they’re less likely to see tax revenues drop to a degree seen in the U.S. Finally, most other developed countries don’t immediately turn to inefficient, ineffective tax cuts to solve economic problems.

    In other words, the declining state of American transit operations today is more a reflection of a general lack of political will to maintain public service stability. If it is disappointing to watch agencies reduce services dramatically now, it is downright depressing to note that nothing is being done to ensure that a similar situation won’t occur again.

    Early last year when the MTA was facing another budget crisis, Freemark explored the state of MTA financing. Two aspects of our transit agency — very high payroll costs and an over-reliance on taxes that fluctuate with the economy — left the MTA high and dry. Paris, for example, relied upon some robust payroll taxes and heavy local subsidies along with a reduced payroll to avoid these economic problems while maintaining control of its fixed costs. New York now has that payroll tax, but it’s such a small part of the MTA’s overall budget that it can’t act as a countervailing measure to a bad real estate and sales economy.

    Right now, the MTA’s funding problems are those of a lack of political will. Albany and City Hall have left the MTA with fewer subsidies than ever before, and payroll obligations are starting to spiral out of control. Before the MTA moves stimulus funds to cover operating deficits — a move that may bring the MTA to break-even this year but will leave them with the same problems next — the major players must try to contain these costs and find a more stable annual revenue source. The city and the MTA can’t keep playing this same economic game year in and year out.

  • The dangerous allure of a quick stimulus fix

    Over the last few weeks, as the MTA’s funding woes have risen to the surface, a debate over the use of stimulus funds to cover the budget deficit has emerged. On the one side are the City Council and Gene Russianoff’s Straphangers Campaign who support using stimulus funds to cover the gap. On the other are, for example, the Regional Plan Association and I believe it to be a bad idea. Today, we see exactly why it’s a dangerous plan to put forward.

    On its surface, Gene Russianoff’s idea almost makes sense. The MTA is legally allowed to take 10 percent of its stimulus dollars to cover operating costs. Of course, the capital fund too is stretched to its limit, and future investment in the system even in the face of temporary operating shortfalls is a key component to the long-term health of New York City. If the Russianoff Plan is enacted, the MTA would be robbing its future self to cover numerous services that deserve to be reexamined anyway.

    One of my counterarguments to the Russianoff plan is the way it provides only a quick fix. The MTA has an institutional funding problem in that the city and state are shirking their responsibilities to the organization, and a one-off stimulus fix does nothing to address those problems. An economic crisis should be the time for New York to establish a better approach toward funding transit.

    I’ve also argued that politicians will embrace the stimulus funding plan because it allows them to disregard further their duties toward the MTA. Why bother trying to solve a problem when they can just plug a hole for one year? Not surprisingly, that — with a twist — is exactly what some upstate politicians are trying to do. As the Poughkeepsie Journal reported earlier this week, five U.S. House representatives have asked Gov. David Paterson to reduce the MTA’s payroll tax and use stimulus funds to cover this year’s gap.

    I won’t mince words here: This is a terrible idea. It would take another $110 million away from the MTA at a time when the authority is already running deficits of around $300-$400 million. It would leave the MTA with less guaranteed money after 2010. At Mobilizing the Region, Steven Higashide says it best: “This would blow a hole in future MTA budgets, since it would replace yearly tax revenues with one-year stimulus funds.”

    Higashide’s Tri-State Transportation Campaign is one of the co-signers of the Russianoff Plan, but it is a plan that puts more faith in our politicians than they seem to deserve. The use of stimulus funds to hide this year’s budget gap is a dangerous move to make, and our politicians are slowly starting to show us why.

  • Can Sen. Gillibrand save the MTA?

    Most New Yorkers wouldn’t recognize Kirsten Gillibrand, the state’s junior senator, if they ran into her on the street. An upstate politician who replaced Hillary Clinton one year ago, Gillibrand is suffering from mediocre poll numbers and may face a primary challenger for her Senate seat later this fall. Yet, Senator Gillibrand might just be the MTA’s last hope.

    Currently, in Washington, D.C., Senate Democrats are working to propose another bill aimed at jobs creation. Within this bill would be significant levels of spending on infrastructure including public transit. As Streetsblog Capitol Hill reported yesterday, the current iteration of the bill would feature $14 billion for roads and $7.5 billion for transit. The bill would again allow discretionary operations spending for transit authorities, and the MTA would be able to apply ten percent of any funds allocated toward it to cover operating deficits.

    Meanwhile, Gillibrand is lobbying on behalf of transit. As Michael McAuliff of the Daily News reported late last week (with an erroneous take on the news), Gillibrand has penned a letter to Senate Majority Leader Harry Reid asking him to include $15 billion in spending for transit. Relying on the current financial plight of the MTA to frame her request, she wrote:

    I urge you to include $15 billion for transit investments, and include provisions to allow up to 10% of transit funds to be used for operational expenses. This funding flexibility can help alleviate service cuts as the State looks to right its budget during this recession. This funding will not only help maintain employment levels to a system that is so critical to the region’s economy, but will spur job grown throughout the Tristate area.

    There is, of course, not a small measure of politics involved here. Gillibrand needs to put forward an effort to fight for the jobs of New Yorkers as she faces a difficult election year. But at the same time, she could be the last best hope for the MTA. As it stands now, the MTA does not expect the state to further fund transportation in New York, and the plan is to move forward with the service cuts come late June. The money would have be in hand before that for bus routes, student MetroCards and a full slate of subway service to remain. If Gillibrand can deliver and deliver quickly, there is hope yet.

    Of course, this promise of federal funds and my belief that it could be used on operations stand in stark contrast to my repeated opposition to Gene Russianoff’s calls to use currently allocated stimulus funds to cover the budget gap. In that case, Russianoff’s plan calls for a reallocation of money already promised to MTA capital projects. Here, the MTA would be getting federal funds with the express, original belief that the money would be going to operations. There is a subtle, but important, distinction.

    In the end, though, we can’t put too much faith into federal funding. These dollars are the equivalent of a sugar high: It might feel good to avoid the cuts now, but it doesn’t do anything to address the institutional problems inherent in the way the city and state do not provide adequate funding mechanisms for the MTA. For now, if avoiding service cuts this year right now is the goal, it just might do the trick.

  • For Walder, labor costs an 800-pound gorilla in the room

    When MTA CEO and Chairman Jay Walder pledged last Friday to reform the way the MTA does business, he stressed the redundancies inherent in the way the transit organization is set up. There are, he said, 92 different public phone numbers and five call centers fielding complaints from the public. Over 5000 workers perform administrative tasks, and many of those jobs overlap. “There will,” he said, “be layoffs.”

    Since his speech on Friday, Walder has received qualified phrase from those watching. The Daily News urged every government official to strike a similar tone, and transit activists were equally enthusiastic about Walder’s priorities. “The speech,” Gene Russianoff of the Straphangers Campaign said, “was a candid assessment of the financial challenges the MTA faces and of the agency’s commitment to tackling them, such as lowering hundred of millions in administrative, inventory and overtime costs.”

    At the time, Walder skirted around the issue of the MTA’s labor relations. “Our unions must be active partners,” he said but refrained from going into detail. After all, at a time when the MTA could least afford it, its largest union had just been awarded a three-year raise, and the agency’s decision to appeal the arbitration result had left many at the TWU bitter toward the authority.

    Yet, some would prefer to see Walder, with proper political support, tackle the union and the MTA’s labor cost problem head on. Nicole Gelinas, who has made exploding pension costs her fight, is one of those people, and in yesterday’s Post, she offered up her take on the MTA’s cost problem:

    Here are some specifics. The MTA spends $6.4 billion a year on current-worker wages and benefits. A unionized city transit worker earns nearly $94,000 a year, including more than $26,000 in benefits. The unionized commuter-rail worker earns even more — well above $120,000.

    Nor is it just union jobs. The average white-collar worker at NYC Transit and Metro-North earns well above $120,000, too. And LIRR administrators beat them by a mile, topping $142,000 each. (Patronage, anyone?)
    MTA labor relations aren’t white-collar vs. blue-collar — but everyone against the taxpayers.

    The savings Walder laid out are worthy. But cutting, say, 10 percent from administrative personnel would yield just $90 million — a rounding error in the authority’s $12 billion budget. Saving 10 percent in union labor costs, on the other hand (including pensions over time), would yield a much heftier $546 million, because the union workforce is much bigger.

    The MTA has long tried doing this in the cooperative “let’s work with our labor partners” way for years — and we’re still waiting for results. What riders need is for Walder to call for full support — from Paterson and the Legislature — for a full labor overhaul. Workers must pay more for health care, and future workers must pay more for pensions, saving hundreds of millions. (Instead, the new contract for subway and bus workers has them paying less toward retirement.)

    Gelinas’ basic point is a sound one. From top to bottom, from management to track workers, from blue collar to white, the MTA’s compensation scales are crippling the organization. It’s bureaucratic flow chart makes no sense, and its willingness to give away perks have driven up labor costs in every sense. Cutting from MTAHQ will save some money, but the rising tide of pensions and health care costs will sink all ships.

    So what is to be done? In this pro-labor city, it’s tough to tackle the unions. They enjoy public and political support, and workers’ rights shouldn’t be eroded as is. But as some point, the MTA will be unable to pay, and everyone — the riding public, the train workers, the desk jockeys — will lose.

  • Early state budget cuts MTA revenues by $104M

    As the first step in New York State’s complicated budget process, Gov. David Paterson unveiled his executive budget for fiscal year 2010-11 this afternoon, and the news is not good for the beleaguered MTA. The Governor will, on paper, increase the overall value of subsidies by approximately $161 million from FY2009-10, but in real dollars, the MTA may be short $104 million in 2010.

    Basically, it comes down to a matter of projections. When the MTA planned its 2010 budget and when Albany passed the funding plan earlier in 2009, state tax officials projected certain revenue totals for the MTA based upon estimated tax intakes. Now, the state is saying these revenue totals will be $104 million short, and the MTA will face yet another year of fiscal crises.

    MTA CEO and Chair Jay Walder issued a statement this afternoon:

    The proposed Executive Budget Governor Paterson presented today reflects a further deterioration in the tax revenues dedicated to the Metropolitan Transportation Authority. This continued erosion of the MTA’s revenue base amounts to $104 million in this calendar year. We continue to be very concerned about the impact of current economic conditions on the revenues dedicated to the MTA, including the recently enacted payroll mobility tax. The continued uncertainty about the economy underscores the necessity of the course I’ve set for the MTA.

    As I have often said, MTA must use every dollar that it receives from taxes, fares and tolls as efficiently and effectively as possible. That is why we are undertaking a fundamental restructuring of the way that the MTA does business. To that end, we have begun to dramatically reduce our administrative costs. We are renegotiating contracts with suppliers. We are re-evaluating how we provide service.

    I know that the Governor and the Legislature are acutely aware of the MTA’s importance to the economy of the New York City region and the MTA’s positive economic impact on the rest of the Empire State. I appreciate that the Governor’s Executive Budget does not repeat the MTA cuts enacted in the Deficit Reduction Plan in December. During this budget process, we will continue to work with the New York State Department of Taxation and Finance to better understand the issues related to the dedicated taxes that support the MTA.

    Meanwhile, the restoration of some subsidies seems to be a victory for the MTA, but even that is just spin from Paterson. Paterson is proposing to fund just $25.3 million of a Student MetroCard, and while that includes a restoration of $18.9, that’s barely half of the $45 million the state contributed in 2008 and prior years. MTA officials say the agency can reap over $200 million by charging fares and expects that much from the state and city to continue the free student transit program.

    All in all, this is yet another transit funding mess. Last year’s funding package hasn’t delivered the funds lawmakers promised, and the MTA is left dangling from a fiscal cliff with no Richard Ravitch to step in and save the day.

  • After 100 days, a plan for ‘Making Every Dollar Count’

    One hundred and three days ago, Jay Walder assumed control of the Metropolitan Transportation Authority. As an incoming CEO and Chairman with a career’s worth of experience in transit, Walder set about to figure out a way to improve the MTA. As he worked to figure out how to streamline the MTA and improve services, the authority ran headlong into budget problems, and his review shifted to focus on cost cutting measures and efficient spending.

    This week, as promised, Walder released his 100 days report and earlier today, he spoke at the ABNY breakfast about the plan. On the surface, his report — available here as a PDF — sweeps broadly. It highlights bus lane improvements and newer fare collection technologies. The only major new development to come out of it is a plan to eliminate tollbooths and replace them with high-speed tolling technologies to cut down on congestion. The Times covered that angle this morning.

    But on the other hand, Walder’s speech drove home some points about how the MTA will be searching to improve services while cutting down on organizational efficiencies during a period of economic distress both for society at large and the agency specifically. Instead of rehashing the platitudes set forward in the report, I’ll leave it up for you to read the short, 20-page document or the even shorter press release. Here, I want to focus on what Walder said this morning.

    After the obligatory introductions about the current state of the system as compared to that of the 1970s and 1980s, Walder landed on his main theme: improving the customer experience through efficient spending. Starting with the countdown clocks in the subways, he talked about how in London, train riders “had a sense that someone was in control, that your commute was not in chaos” because the clocks told riders when the next train was coming, and the train would then arrive as scheduled.

    In New York, the system is different, and straphangers are naturally skeptical of the MTA because of the inherent uncertainties of riding the train. “We lean over the edge in hopes of seeing a white light at the end of the tunnel,” he said. “What comes across is a sense of angst and anxiety.”

    Buses too are plagued by these same uncertainties. “It’s difficult to go more than a block or two without seeing a car or a delivery truck in the bus lane,” Walder noted. “We must convince people that, if they’re in a bus lane, they will get a ticket. If we can, the bus can become a reliable mode of transportation in New York.”

    Now, these words seem to ring true every time an MTA head starts speaking in public, but Walder, with a background at McKinsey, seemed to recognize that improving the system starts with efficient spending and ends with cutting out the fat. He listed numbers: The MTA has 92 different public numbers and five call centers to handle complaints. The authority has 5000 employees doing administrative tasks. “There will be layoffs,” he said.

    In terms of fiscal responsibility, though, Walder is prepared to tackle the MTA’s problems as any good consultant would. Right now, for instance, it costs the agency 15 cents to collect $1 in fare revenue. Even a savings of 2-3 cents would increase the MTA’s revenue streams by tens of millions of dollars. That, he said, is one of the driving forces behind replacing the MetroCard.

    He also highlighted the need to cut wasteful services. In highlight express buses, an area I tackled this week, Walder picked on the X25, a little used route from Grand Central to Wall Street. “A grand total of 20 take this bus each day, and it costs the MTA $80 per person to run this service,” he said. “I can assure you that we won’t be running the X25 much longer.”

    In the end, Walder focused on the need now during lean economic times to turn around the MTA’s internal structure. He said he’s already been working with agency heads and labor leaders to “address outdated processes and work rules that drive up the costs and hurt the credibility of the MTA and its unions.” He discussed the “once-in-a-generation opportunity” to “change how the MTA does business.”

    Of course, Walder’s actions this year will speak louder than words, but Walder seems to understand the challenges he and the MTA face in the eyes of a skeptical public. With the speech behind him, the tough parts — the cost-cutting, the realization of savings, the service improvements, the move toward an efficient transit organization — have only just begun.