When I took over the MTA in October, we had a balanced budget and the opportunity to really focus on improving service for customers. Not for long. By December, state budget cuts had helped put the MTA in a nearly $400 million hole, and the shortfall doubled to almost $800 million by February.
Of course, this is hardly the first MTA budget crisis in memory. What’s different is that this time we’ve thrown out the old MTA playbook. Instead of going cap-in-hand to Albany for money, or threatening enormous fare increases, we’re overhauling how we do business, turning the organization upside down in search of better ways of providing our critical service. The extent of the gap has forced us to make difficult choices, including cutting some service. But our focus has been on doing things differently and we are already seeing results.
We started by cutting 20 percent of MTA Headquarters, and 15 percent of administrative payroll across our agencies. That represents a savings of nearly $50 million in 2010. In February, we announced the elimination of more than 1,000 positions and there are more to come. It is extremely painful to lay off employees, but I believe we can do the job more efficiently, and we will.
From there we re-evaluated all 280 projects in our operating budget – everything from facility improvements to software upgrades and replacement of vehicles – to make sure each was absolutely necessary this year. Instead of taking the usual “salami-slice” approach of shaving small amounts off of each project, we looked for initiatives that could be eliminated entirely. And guess what? More than half – 141 total projects – were removed from the 2010 budget, for a savings of $40 million in 2010.
Then we approached our 50 largest vendors and suppliers, looking for more savings from companies that benefit from our business. Instead of being handcuffed by existing contracts, we asked them to work with us to get through this difficult time. The result? Tuesday we announced that 43 vendors worked with us to identify annual savings of nearly $40 million, including $18 million on existing contracts in 2010.
We are taking this same aggressive approach to our entire organization, doing things that businesses across the state are doing to survive. As you can see, I will not shy away from the tough decisions that are needed to drive down costs at the MTA. We are doing our part, but $800 million is a massive shortfall.
If we are to succeed, our labor unions must contribute to the solution. Before I arrived at the MTA, an arbitrator awarded our largest union 11 percent raises over three years. Our employees work extremely hard and deserve to be well compensated, but that compensation comes with the responsibility to maximize productivity and eliminate waste. The reality is that our labor force costs taxpayers far too much. With families and businesses struggling across the State, it is time for labor to address outdated work rules, limited employee availability and rising pension and medical costs.
So it’s true, deficit reduction isn’t what I had in mind when I accepted this job. But I believe we have a once-in-a-generation opportunity to make changes at the MTA that are long overdue. By creating a leaner, more efficient organization we can restore the MTA’s credibility and position ourselves to make great improvements to our system when the economy recovers. Here in New York, where transit is more fundamental to our lives than anywhere else, it’s something we should all be rooting for.
Jay Walder is chairman and CEO of the MTA.